550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564-8727
FAX: (916) 564-8728
MANAGEMENT LETTER
City Council and Management
City of Marysville
Marysville, California
In planning and performing our audit of the financial statements of the governmental activities, businesstype activities, each major fund, and the aggregate remaining fund information of the City of Marysville (the City) for the year ended June 30, 2024, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.
The schedule of findings and responses in the financial statements discusses a material weakness and significant deficiency noted during our audit. We have also included the following additional matters for your consideration.
Current Year Comments
Internal Controls
The City should ensure its closing checklist includes all the items on our advance preparation list and any areas where adjustments were noted and document responsibility for updating each item as part of the closing process.
The City should consider recording the receivable for provided but unbilled Wastewater Fund services in a different account than the receivables billed. This would simplify the reconciliation of total receivables on the Aged Receivables – Condensed report to receivables recorded in the general ledger of the Wastewater Fund at year-end as part of the closing process. We recommend the City prepare a reconciliation of the receivable aging report year-end balance directly to the year-end balance of accounts receivable account number 50-1015 in addition to the rollforward currently prepared.
To the City Council
The City should consider having an employee that does not process accounts payable enter new vendors into the payable system to separate those duties to avoid a fictitious vendor being added and invoices to the fictitious vendor being processed.
We noted the City appears to have an allowance for uncollectible receivables for all delinquent Wastewater Fund receivables with a lien on the property. The City’s allowance is significantly higher than other clients with wastewater utility operations because other clients generally consider the receivables collectible once a lien is placed on the property if property values are increasing. The City should consider tracking chargeoffs of uncollectible receivables and using the historical charge-offs to back test whether the allowance recorded represent an appropriate allowance for uncollectible receivables.
We recommend the City add to grant revenue account names whether grants are federal, state or local grants to help identify federal grants for consideration of whether a single audit is necessary.
Capital Assets
We recommend the capital asset detail and rollforward be reorganized to be in the order of classification in the capital asset footnote to reduce the time it takes to reconcile the capital asset detail list to the financial statements. As noted in the schedule of findings and responses in the financial statements, there are certain assets not included on the list that should be added to make the list complete.
The following items noted in a prior year audit warrant further consideration.
Inventory 2023-01
We noted the City has not recorded inventory on its general ledger, although some spare parts are on-hand could be significant enough to track and reflect in the general ledger. The City needs to evaluate whether these items are significant enough to track and reflect in the general ledger.
Donated Infrastructure 2023-02
The City has a policy in place regarding the recording of donated assets but needs to ensure that procedures are in place for identifying and recording developer donated infrastructure.
Risk Assessment Process 2023-03
We recommend that the City develop a risk assessment process to identify those risks within the City that could result in fraud or material misstatement of the financial statements, and then to implement internal controls to mitigate those identified risks. This risk assessment process should involve discussing potential risk areas with the council and staff and then ensure controls or processes are in place to mitigate those risks. This risk assessment process should be performed on a periodic basis and can be incorporated into existing Council and staff meetings by adding them to the agenda to discuss these risks. * * * * *
We would like to take this opportunity to acknowledge the courtesy and assistance extended to us during the course of the audit. This report is intended solely for the information and use of the City Council, management, and others within the organization and does not affect our report dated November 14, 2025 on the financial statements of the City.
November 14, 2025