City Council
City of Garden Grove
Garden Grove, California
We have audited the financial statements of
the governmental activities, the business
-
type
activities,
the aggregate discretely presented component units,
each major fund, and the
aggregate remaining fund information of the City of Garden Grove
as
of and for the year
ended
June 30,
202
4 ,
and
have issued our report thereon dated
December
3 0
, 202
4 .
Professional
standards require that we advise you of the following matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our
engagement letter dated
July
2 5
, 202
4 ,
our responsibility, as
described by professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance wi th accounting principles generally
accepted in
the
United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements i ncludes consideration of
internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control o
ver financial reporting. Accordingly, as part of
our audit, we considered the internal control of
the City of Garden Grove
solely for the purpose
of determining our audit procedures and not to provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures fo r the purpose of
identifying other matters to communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, and
our firm have complied with
all relevant
ethical requirements regarding independence
under the American Institute of
Certified Public Accountants (“AICPA”) independence standards, contained in the Code of
Professional Conduct
.
We identified independence threats related to
proposing adjusting or correcting journal entries
detected during the audit and
the preparation of the financial statements.
We have applied
certain safeguards to reduce the threats to an acceptable level, including having the City’s
management review and approve all proposed journal entries and using an independent party
within the firm to perform a quality control review of the financial statement s
, and obtaining
confirmation from the City of Garden Grove’s ma
nagement that their review of the financial
statement
s
included comparing the financial statements and footnotes to the underlying accounting records.
Significant Risks Identified
The auditing standards require us to identify audit risk areas when performing the audit. As a result, we have identified the
following significant risks:
New debt:
We reviewed bond documents and journal entries
to ensure the new debt
transaction w
as
recorded correctly. We ensured that financial statements contain complete and accurate disclosure of the new debt.
Compliance with Federal grant requirements.
Qualitative Aspects of the Entity’s Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City of Garden Grove
is
included in Note
A
to the financial statements. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting p
olicies in controversial or emerging areas for which there is a l ack of authoritative guidance
or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility t hat future events
affecting them may differ markedly from management’s current judgments.
The most sensitive accounting estimates affecting the financial statements are :
Management’s estimate of amount recorded as claims and liabilities is based on management’s reliance on a
third
-
party
claims administrator. We evaluated the key
factors and assumptions used to develop the amounts by the third
-
party
claims
administrator and determined that it is reasonable in relation to the financial statements taken as a whole
and in relation to the applicable opinion units.
Management’s estimate of transactions related to net pension and OPEB liabilities based on actuarial information. We evaluated the key factors and assumptions used to develop the amounts by the actuary and determined that it is reasonable in relation to th
e financial statements taken as a whole.
Management’s determination that certain notes receivable with third parties are fully collectible. We evaluated the key factors and assumptions used to arrive at that
determination and determined that it is reasonable in relation to the financial statements taken as a whole.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The most sensitive disclosures affecting
the City of Garden Grove
’s financial statements relate to
the net pension
liability and related amounts and the net OPEB liability and related amounts.
Significant Difficulties Encountered during the Audit
We encountered no difficulties in dealing with management relating to the performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also
require us to accumulate all
known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communica
te the effect of uncorrected
misstatements related to prior periods on the relevant classes of transactions, account balances or
disclosures, and the financial statements as a whole and each a pplicable opinion
unit.
There
were no uncorrected misstatements
.
In addition, professional standards require us to communicate to you all material, corrected misstatements
that were brought to the attention of management as a result of our audit procedures.
The following material misstatements that we identified as a result of our audit procedures were
brought to the attention of, and
corrected by, management:
a
djustments to
reclassify grant revenue as unearned and unavailable revenue
and
an
adjustment to
reclassify
a
capital asset
in the proper fund
.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City
of Garden Grove
’s financial
statements or the auditor’s report. No such disagreements arose during the course of the audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in our
letter
dated
December
3 0
, 202
4 .
Management’s Consultations with Other Accountants
In some cases,
management may decide to consult with other accountants about auditing and accounting matters.
During the fiscal year, the City employed an outside accounting firm to assist with preparation of the bank reconciliations.
Other Information
Included in
the Annual Comprehensive Financial Report
Pursuant to professional standards, our responsibility as auditors for other information ,
whether financial or nonfinancial, included in
the City of Garden Grove
’s annual reports,
does
not extend beyond the information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have
read the information and considered whether such information, or the manner of its presentation, was materiality inconsistent with its presentation in the financial statements.
Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsist ent with the
information, or manner of its presentation, appearing in the financial statements.
This report is intended solely for the information and use of the City Council of the City of
Garden Grove
, and management of
the City of Garden Grove
and is not intended to be and
should not be used by anyone other than these specified parties.
Irvine, California
December
3 0
, 202
4