1611 E. Fourth Street, Suite 200
Santa Ana, CA 92701
(714) 569-1000
203 N. Brea Blvd, Suite 203
Brea, CA 92821
(714) 672-0022
21 Waterway Avenue, Suite 30089
The Woodlands, TX 77380
(936) 828-4587
2151 River Plaza Dr., Suite 150
Sacramento, CA 95833
(916) 503-9691
24422 Avenida de la Carlota, Suite 275
Laguna Hills, CA 92653
(949) 829-8299
www.lslcpas.com
January 29, 2024
To the Honorable Mayor and Members of the City Council
City of Manhattan Beach, California
We have audited the financial statements of the governmental ac tivities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Manhattan Beach, Califor nia (the City) for the year ended June 30, 2023. Professional standards require that w e provide you with information about our responsibilities under generally accept ed auditing standards, Government Auditing Standards, and the Uniform Guidance, as well as cert ain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated April 10, 2023. Professional standards also require 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 6 to the financial statements, the City changed its accounting policies related to subscriptions by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 96, Subs cription-Bases Information Technology Arrangements. Accordingly, the cu mulative effect of the account ing change as of the beginning of the year is reported in the Statement of Net Position. All significant tran sactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial stat ements prepared by management and are based on management’s 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 that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were management’s estimates of its net pension liability and net other post-employment benefits asset based on actuarial valuation specialist assumptions. We evaluated the key factors and assumptions used to develop the net pension liability/asset and net other post-employment benefits asset in determining that they are reasonable in relation to the financial statements taken as a whole.
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 Members of the City Council
City of Manhattan Beach, California
Corrected and Uncorrected Misstatements
Professional standards require u s to accumulate all known and l ikely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We are pleased to report that no such misstatements were identified during the course of our audit.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our s atisfaction, that could be sign ificant 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 January 29, 2024.
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 the type of auditor’s opinion that may be expressed on those statements, our professi onal standards require the con sulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledg e, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s audi tors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to management’s discussio n and analysis, the budgetary comparison schedule for the General Fund, and the required pension and other postemployment benefits schedules, which are required supplementary information (RSI) that supplements the b asic financial statements. Our procedures consisted of inquiries of management regarding the methods of p reparing the information and comparing the information 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 s tatements. 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 the combining and individual fund financial statements and schedules which accompany the financial statements but are not RSI. With respec t to this supplementary 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 princip les generally accepted in the United States of America, the method of preparing it has not changed from the pr ior period, and the information is appropriate 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 prepar e the financial statements or to the financial statements themselves.
To the Honorable Mayor and Members of the City Council
City of Manhattan Beach, California
We were not engaged to report on other information included in the annual report which is comprised of the introductory and statistical sections, which accompany the fina ncial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in th e audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Future GASB Pronouncements
The following Government Accounting Standards Board (GASB) pronouncements will be effective for the following fiscal years’ audits and should be reviewed for proper implementation by management:
Fiscal Year 2023-2024
GASB Statement No. 99, Omnibus 2022.
Fiscal Year 2024-2025
GASB Statement No. 101, Compensated Absences.
Future Projects
Comprehensive Project, Financial Reporting Model.
Comprehensive Project, Revenue and Expense Recognition.
Major Project, Going Concern Uncertainties and Severe Financial Stress.
Major Project, Infrastructure Assets.
Practice Issue, Classification of Nonfinancial Assets.
Practice Issue, Risks and Uncertainties Disclosures.
Pre-Agenda Research Activities, Subsequent Events.
Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
Brea, California