Item# 06
Date: April 5, 2022
To: Mayor and City Council
From: Jennifer Styczynski, Finance Director
Jim Schaad, City Manager
Subject: Approval of the City of Marysville Audited Financial Statements and Supplemental Information for Fiscal Year ended June 30, 2021
Recommendation:
Pass a Motion to approve the City of Marysville Audited Financial Statements and Supplemental Information for Fiscal Year Ended June 30, 2021, as presented by Richardson & Company LLP, Certified Public Accountants.
Rationale for Recommendation:
The City is required to prepare and audit the financial statements for all financial transactions of all funds of the City for each fiscal year and on an annual basis. The audited financial statements are prepared to communicate the financial health of the agency with those charged with governance, state/federal oversight agencies, investors and the general public.
Background:
On November 6, 2018, Richardson & Company, LLP (Certified Public Accountant (CPA)) was hired by the City of Marysville to perform the City’s audits covering Fiscal Years 2017-18, 2018-19, 2019-20 with options to extend for two additional years. The audit work for Fiscal Year 2020-21 began in October of 2021. There were several obstacles in completing the City’s audit in a timely manner which included a change in staffing levels within the Finance Department and a shortage of support staff and resources that could be dedicated to the year-end close-out during the audit process.
Discussion and Analysis
Richardson & Company, LLP completed the Audited Financial Statements and Supplemental Information for the City of Marysville for the year ending June 30, 2021, which included the following audit opinion:
“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Marysville, California, as of June 30, 2021, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America..”
Item# 06
However, their report identified two findings of internal control weaknesses related to financial closing and the year-end closing procedures and capital asset accounting. They also issued a Management Letter containing other areas where recommendations for improvement were made.
With the consolidation of government-wide net position into one statement and other changes such as the exclusion of fiduciary funds, net position may now serve as a useful indicator of a government’s financial position. For the City, assets exceeded liabilities by $11,649,579. The City reported positive balances in the investment in capital assets and restricted categories of net position, in both the governmental and business-type activities. The unrestricted net position were deficits in governmental and positive for business-type activities, due primarily to the net pension liability which continues to increase.
During the fiscal year, General Fund revenue was $2,812,988 higher than the amended budget estimate, which was primarily due to an increase in Measure C sales tax revenue and conservative property tax estimates due to potential Covid-19 impacts. The General Fund expenses were $160,108 higher than the amended budget estimate, which were primarily due to pass through grants not being added to budget when accepted.
These reports have been reviewed and approved by management. Upon acceptance and approval by the Council, copies of the Financial Statements will be sent to the State as required by law.
Alignment with City Council Goal(s):
Goal #1: Increase Financial Sustainability:
By creating the Audit, the City may more accurately build the following year’s budget, comply with State law, and provide a tool for investors to evaluate the City’s financial stability and investment-worthiness.
Fiscal Analysis:
There is no fiscal impact. For informational purposes only.
Attachments:
1) Audit PowerPoint Presentation
2) Audited Financial Statements
3) Appropriations Limit Testing Letter
4) Governance Letter
5) Management Letter