6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707
December 16, 2025
To the Honorable Mayor and the Members of the City Council of the City of Fairfield
Fairfield, California
We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Fairfield, California (the “City”) for the year ended June 30, 2025. Professional standards require that we pr ovide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated May 1, 2025. Professional standards also re quire that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 1 to the financial statements, the City implemented the following accounting standards:
New Accounting Standards
GASB Statement No. 101 – In June 2022, the GASB issued Statement No. 101, Compensated Absences. The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certa in previously required disclosures. Implementation of this Statement had a moderate effect on the financial statements.
GASB Statement No. 102 – In December 2023, the GASB issued Statement No. 102, Certain Risk Disclosures.
The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnera bilities due to certain concentrations or constraints.
The disclosures will provide users with timely information regarding certain concentrations or constraints and related events that have occurred or have begun to occur that make a gove rnment vulnerable to a substantial impact. As a result, users will have better information w ith which to understand and anticipate certain risks to a government’s financial condition. Im plementation of this Statement did not have a material effect on the financial statements.
No other new accounting policies were adopted and the app lication of existing policies was not changed during 2025.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
To the Honorable Mayor and the Members of the City Council of the City of Fairfield
Fairfield, California
Accounting estimates are an integral part of the financ ial statements prepared by management and are based on management’s knowledge and experience about past and current events and assum ptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Management’s estimate of the investment fair mark et value is based on information provided by the State of California for its investment in the Local Agency Investment Fund , Negotiable CDs, and by the Medium-Term Notes, Supranationals, CAPM, th e trustee for the City’s investments in U.S.
Treasuries and U.S. Government Agencies. We eval uated the key factors and assumptions used to develop the investment fair market value in determining that it is reasonable in relation to the financial statements taken as a whole. Management’s estim ate of the depreciation and amortization on capital assets is based on the industry st andard and past experience on actua l useful life of the asset groups.
We evaluated the key factors and assumptions used to develop the depreciation and amortization on capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the net pension liability is based on the actuarial valuation on total pension liability and based on audited financial statements on fiduciary net position for CalPERS plans. We evaluated the key factors and assumptions used to develop the net pension liability in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the net other postemploym ent benefits (“OPEB”) liability is based on the actuarial valuation on total OPEB liability and fi nancial statements on fiduciary net position. We evaluated the key factors and assumptions used to deve lop the OPEB liability in determining that it is reasonable in relation to the financial statements taken as a whole.
Management’s estimate of compensated absences is based on the City’s adopted methodology, consistent with the provisions of GASB 101. We ev aluated the key factors and assumptions used to estimate the compensated absences determining that it is reasonable in relation to the financial statements taken as a whole.
Certain financial statement disclosures are particularly sen sitive because of their signifi cance to financial statement users. The most sensitive disclosure(s) affecting the financial statements were:
Note 1 – Summary of Significant Accounting Policies
Note 9 – Leases
Note 14 – Retirement Plans
Note 17 – Commitment and Contingent Liabilities
Note 22 – Subsequent Event
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
To the Honorable Mayor and the Members of the City Council of the City of Fairfield
Fairfield, California
Corrected and Uncorrected Misstatements
Professional standards require us to accumu late all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of th e misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, repo rting, or auditing matter, whether or not resolved to our satisfaction, that could be si gnificant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated December 16, 2025.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of th e type of auditor’s opinion that may be expressed on those statements, our professional standards require the consu lting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Financial Statement Disclosures
The City’s disclosure of the defined benefit pension plans, net pension liability and related deferred inflows of resources and deferred outflows of resources in Note 14 to the financial statements. The valuation of the net pension liability and related deferred outflows/inflows of resources are sensitive to the underlying actuarial assumptions used, including, but not limited to, the investment rate of return and discount rate. As disclosed in Note 14, a 1% increase or decrease in the discount rate has a material effect on the City’s net pension liability.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the a pplication of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
To the Honorable Mayor and the Members of the City Council of the City of Fairfield
Fairfield, California
Other Matters
We applied certain limited
procedures to the Management’s Discussion and Analysis (“MD&A”), the Schedules of Changes in the Net Pension Liability an d Related Ratios, and the Schedules of Contributions - Pensions, Schedule of Changes in the Net OPEB Liability and Related Ratios, and Schedule of Contributions – Net OPEB Liability, and Budgetary Comparison Schedules, which are Required Supple mentary Information (“RSI”) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the informa tion for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on combin ing statements and indivi dual fund statements, which accompany the financial statements but are not RSI. With respect to this suppleme ntary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United St ates of America, the method of preparing it has not changed from the prior period, and the information is appropria te and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the Introductory and the Statistical Sections, which accompany the financial statements but are not RSI. Such inform ation has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Rest
riction on Use
This information is inten
ded solely for the information and use of the Honorable Mayor and Members of the City Council and management of the City of Fairfield and is no t intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Santa Ana, California