34 City of Monte Sereno
Notes to Financial Statements
June 30, 2021
Description of WVSWMA
This program is a joint venture with the cities of Los Gatos, Campbell, Monte Sereno, and Saratoga to provide a coordinated Solid Waste Management Authority to their respective cities in order to meet State and Federal requirements, as well as local objectives regarding solid waste. Each city has a representative on the Rate Review Committee of the Program, which makes recommendations regarding budgets, policies, and procedures to the city managers of the member cities. WVSWMA is administered by a Board of Directors consisting of four Directors, one each appointed by the Legislative Body of the cities of Campbell, Los Gatos, Monte Sereno and Saratoga. Costs of the programs are allocated based on population with Monte Sereno’s portion of the budget equaling 3.5 percent for the year.
Description of SVACA
This program is a joint venture with the cities of Campbell, Santa Clara, Mountain View, and Monte Sereno to own, manage, operate and maintain the Animal Control Services in the area in order to provide the residents with more efficient and economical animal control services. SVACA is administered by a Board of Directors consisting of four Directors, one each appointed by the Legislative Body of the cities of Santa Clara, Campbell, Mountain View, and Monte Sereno. Costs of the program are allocated in proportions to the population of the member agency, the amount of licensed animals owned or kept by residents of the member agency, and the total number of days that an animal from each member agency is held at the current animal shelter facility.
During the current year Monte Sereno’s proportional share of those costs was 1.6% and is expected to be 1.5% for the fiscal year 2021-2022.
Audited financial statements are available from these entities.
Note 12 - New GASB Pronouncements
Effective this Fiscal Year
GASB Statement No. 84 – In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all State and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities.
The provisions of this Statement have been implemented as of June 30, 2021. The impact to the City resulted in a reclassification of the City’s Performance Surety Agency Fund from fiduciary to governmental. The effect of the implementation of this standard resulted in an increase of cash and investments, and accounts payable of $27,116 on the general fund and governmental activities and no change on beginning net position or fund balance as of July 1, 2020.
35 City of Monte Sereno
Notes to Financial Statements
June 30, 2021
Effective in Future Fiscal Year
The City is currently analyzing its accounting practices to determine the potential impact of the following pronouncements, with implementation dates as amended by Statement No. 95:
GASB Statement No. 87 – In June 2017, GASB issued Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The Statement is effective for the reporting periods beginning after December 15, 2020, or fiscal year 2021-22. The City is evaluating the impact of this Statement on the financial statements.
GASB Statement No. 89 – In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period. GASB Statement No. 89 requires that interest costs incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred and no longer included in the historical cost of capital assets. The new standard is effective for periods beginning after December 15, 2020. Application of this statement is effective for the City’s year ending June 30, 2022.
GASB Statement No. 91 – In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations. GASB Statement No. 91 clarifies the definition of conduit debt and establishes new recognition, measurement, and disclosure requirements. The new standard is effective for periods beginning after December 15, 2021.
Application of this statement is effective for the City’s year ending June 30, 2023.
36 City of Monte Sereno
Notes to Financial Statements
June 30, 2021
GASB Statement No. 92 – In January 2020, GASB issued Statement No. 92, Omnibus 2020. The objectives of this Statement are to establish accounting and financial reporting requirements for specific issues related to leases, intra-entity transfers of assets, postemployment benefits, government acquisitions, risk financing and insurancerelated activities of public entity risk pools, fair value measurements, and derivative instruments. The requirements of this Statement are effective for reporting periods beginning after June 15, 2021 or fiscal year 2021-22, except for Statement 87 and Implementation Guide 2019-3, reinsurance recoveries, and terminology used to refer to derivative instruments are effective upon issuance. The City is evaluating the impact of this Statement on the financial statements.
GASB Statement No. 94 – In March 2020, GASB issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. The objectives of this Statement improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). The requirements of this Statement are effective for reporting periods beginning after June 15, 2022 or fiscal year 2022-23. The City is evaluating the impact of this Statement on the financial statements.
GASB Statement No. 96 – In May 2020, GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements. The objectives of this Statement is to provide guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. The requirements of this Statement are effective for reporting periods beginning after June 15, 2022 or fiscal year 2022-23. The City is evaluating the impact of this Statement on the financial statements.
GASB Statement No. 97 – In June 2020, GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans—an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. The objective of this Statement is (1) to increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; (2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. The requirements of this Statement are effective for reporting periods beginning after June 15, 2021 or FY 2021/2022. The City is evaluating the impact of this Statement on the financial statements.
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Required Supplementary Information
June 30, 2021
City of Monte Sereno
37 City of Monte Sereno
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund Year Ended June 30, 2021
Variance with
Budgeted Budgeted Final Budget -
Amounts Amounts Actual Positive
Original Final Amounts (Negative)
Revenues
Property tax $ 2,014,900 $ 2,142,493 $ 2,201,139 $ 58,646 Sales tax 5,200 7,825 22,366 14,541
Franchise fee 310,700 310,700 351,638 40,938
Real property transfer tax 71,000 156,243 150,065 (6,178) Licenses and permits 566,100 1,014,850 1,022,364 7,514
Fines and penalties 6,500 2,291 3,018 727
Investment earnings 107,700 32,152 8,469 (23,683)
Intergovernmental \ Other agencies 111,000 53,464 57,060 3,596 Other revenue 100,200 210,592 491,340 280,748
Total revenues 3,293,300 3,930,610 4,307,459 376,849
Expenditures
Current
General government 3,493,297 2,997,615 3,081,434 (83,819) Public safety 10,000 10,000 25,621 (15,621)
Public works 23,600 23,600 22,751 849
Community development 42,035 49,035 43,287 5,748
Total expenditures 3,568,932 3,080,250 3,173,093 (92,843) Excess (Deficiency) of Revenues Over
Expenditures (275,632) 850,360 1,134,366 284,006
Other Financing Sources (Uses)
Transfers out (1,000,430) (1,000,430) (1,000,430) -
Total other financing sources (uses) (1,000,430) (1,000,430) (1,000,430) - Net Change in Fund Balance (1,276,062) (150,070) 133,936 284,006 Fund Balance, Beginning of Year 5,610,569 5,610,569 5,610,569 - Fund Balance, End of Year $ 4,334,507 $ 5,460,499 $ 5,744,505 $ 284,006 See note to budgetary information
38 City of Monte Sereno
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Law Enforcement Fund Year Ended June 30, 2021
Variance with
Budgeted Budgeted Final Budget -
Amounts Amounts Actual Positive
Original Final Amounts (Negative)
Revenues
Property tax and special assessment taxes $ 183,100 $ 105,787 $ 183,248 $ 77,461 Intergovernmental \ Other agencies 100,000 165,060 156,727 (8,333) Total revenues 283,100 270,847 339,975 69,128
Expenditures
Current
Public safety 1,020,157 1,168,550 1,195,235 (26,685)
Total expenditures 1,020,157 1,168,550 1,195,235 (26,685) Excess (Deficiency) of Revenues
Over Expenditures (737,057) (897,703) (855,260) 42,443
Other Financing Sources (Uses)
Transfers in 737,057 897,703 855,260 (42,443)
Total Other Financing Sources (Uses) 737,057 897,703 855,260 (42,443) Net Change in Fund Balance - - - -
Fund Balance, Beginning of Year - - - -
Fund Balance, End of Year $ - $ - $ - $ -
See note to budgetary information
39 City of Monte Sereno
Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Gas Tax Fund Year Ended June 30, 2021
Variance with
Budgeted Budgeted Final Budget -
Amounts Amounts Actual Positive
Original Final Amounts (Negative)
Revenues
Gas tax $ 171,500 $ 159,800 $ 143,333 $ (16,467)
Investment earnings 3,700 847 718 (129)
Total revenues 175,200 160,647 144,051 (16,596)
Expenditures
Current
General government 3,500 3,500 2,700 800
Public works 631,300 643,461 641,186 2,275
Total expenditures 634,800 646,961 643,886 3,075
Excess (Deficiency) of Revenues
Over Expenditures (459,600) (486,314) (499,835) (13,521) Other Financing Sources (Uses)
Transfers in - - 133,380 133,380
Total Other Financing Sources (Uses) - - 133,380 133,380 Net Change in Fund Balance (459,600) (486,314) (366,455) 119,859 Fund Balance, Beginning of Year 592,414 592,414 592,414 - Fund Balance, End of Year $ 132,814 $ 106,100 $ 225,959 $ 119,859 See note to budgetary information
40 City of Monte Sereno
Miscellaneous Plan – Cost-Sharing Multiple-Employer Defined Pension Plan – Schedule of the Proportionate Share of the Net Pension Liability As of June 30, for the Last Ten Fiscal Years **
2021 2020 2019 2018 2017 2016 2015
Proportion of the collective net pension liability 0.01579% 0.01321% 0.00424% 0.00518% 0.01124% 0.01091% 0.01204% Proportionate share of the collective net
pension liability $ 666,025 $ 528,780 $ 408,507 $ 513,753 $ 972,944 $ 748,563 $ 749,395 Covered payroll 841,740 903,345 774,294 672,548 673,336 723,056 713,447 Net pension liability as a percentage of
covered payroll 79.12% 58.54% 52.76% 76.39% 144.50% 103.53% 105.04% Plan fiduciary net position as a percentage of
the total pension liability 75.10% 75.26% 75.26% 73.31% 74.06% 78.40% 79.82% Discount rate 7.15% 7.15% 7.15% 7.15% 7.65% 7.65% 7.50% Measurement date 06/30/20 06/30/19 06/30/18 06/30/17 06/30/16 06/30/15 06/30/14 ** Fiscal year 2015 was the 1st year of implementation.
41 City of Monte Sereno
Miscellaneous Plan – Cost-Sharing Multiple-Employer Defined Pension Plan – Schedule of Pension Contributions As of June 30, for the Last Ten Fiscal Years **
2021 2020 2019 2018 2017 2016 2015
Contractually required contribution (actuarially
determined) $ 125,384 $ 93,864 $ 79,188 $ 59,622 $ 667,968 $ 121,561 $ 111,286 Contributions in relation to the actuarially
determined contributions (813,146) (93,864) (79,188) (59,622) (667,968) (121,561) (111,286) Contribution deficiency (excess) $ (687,762) $ - $ - $ - $ - $ - $ - Covered payroll $ 806,851 $ 841,740 $ 903,345 $ 774,294 $ 672,548 $ 673,336 $ 723,056 Contributions as a percentage of covered payroll 15.54% 11.15% 8.77% 7.70% 99.32% 18.05% 15.39% ** Fiscal year 2015 was the 1st year of implementation.
42 City of Monte Sereno
Schedule of Changes in Total Other Post-Employment Benefits Liability and Related Ratios As of June 30, for the Last Ten Fiscal Years **
2021 2020 2019 2018
Total OPEB Liability (TOL)
Service Cost $ 139,568 $ 105,142 $ 94,841 $ 97,527
Interest 29,175 33,454 30,267 25,244
Actual vs. expected experience (467,951) - - -
Assumption changes (102,474) 212,695 49,469 (33,667)
Benefit payments (28,152) (14,591) (7,732) (11,211)
Net changes (429,834) 336,700 166,845 77,893
Total OPEB Liability - Beginning of Year 1,194,671 857,971 691,126 613,233 Total OPEB Liability - Ending of Year $ 764,837 $ 1,194,671 $ 857,971 $ 691,126 Covered employee payroll $ 806,851 $ 841,740 $ 903,345 $ 774,294 TOL as a percentage of covered employee payroll 94.79% 141.93% 94.98% 89.26% Historical information is available only when the OPEB standards were applicable ** Fiscal year 2018 was the 1st year of implementation.
43 City of Monte Sereno
Note to Budgetary Information
For the Year Ended June 30, 2021
Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. An annual budget is adopted by the City Council no later than the first regular meeting in July for the fiscal year beginning July first. As part of the budget process, all City departments submit budget requests for the next fiscal year. These requests are reviewed, and a final City Manager recommended budget showing estimated revenues and expenditures of the City is prepared. This proposed budget is transmitted to the City Council and made available to the public for review. Any new appropriation or appropriation transfer between funds or department requires approval by the City Council. Several supplemental appropriations were necessary during the year and are reflected in the budget amounts in the financial statements. Expenditures may not legally exceed appropriations at the fund level. The Budgetary Comparison Schedules present both the original adopted and the final budget with all amendments. Budgets are adopted each year for all general and law enforcement funds.
The City had the following funds with expenditures in excess of appropriations for the year ended June 30, 2021:
Negative
Budgeted Amount Actual Variance with
Expenditure Final Amount Final Budget
General Fund
Administration General Government $ 2,997,615 $ 3,081,434 $ (83,819) Public safety 10,000 25,621 (15,621)
Law Enforcement Fund
Public Safety 1,168,550 1,195,235 (26,685)
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Supplementary Information
June 30, 2021
City of Monte Sereno
44 City of Monte Sereno
Non-Major Governmental Funds – Combining Balance Sheet
June 30, 2021
Total
Loma Serena Rose Andrews Storm Non-major
Street Lighting Street Lighting Drainage Governmental
Fund Fund Fund Funds
Assets
Cash and investments $ 8,541 $ 39 $ 92,775 $ 101,355
Receivables
Other 5 - - 5
Total assets $ 8,546 $ 39 $ 92,775 $ 101,360
Fund Balances
Restricted 8,546 39 92,775 101,360
Total Fund Balances 8,546 39 92,775 101,360
Total Liabilities and
Fund Balances $ 8,546 $ 39 $ 92,775 $ 101,360
45 City of Monte Sereno
Non-Major Governmental Funds – Combining Statement of Revenues, Expenditures and Changes in Fund Balances
For the Year Ended June 30, 2021
Total
Loma Serena Rose Andrews Storm Non-major
Street Lighting Street Lighting Drainage Governmental
Fund Fund Fund Funds
Revenues
Property tax $ 2,309 $ - $ - $ 2,309
Other revenue - - 51,280 51,280
Total revenues 2,309 - 51,280 53,589
Expenditures
Current
Public works and facilities 1,385 610 9,740 11,735
Capital outlay - - 5,406 5,406
Total expenditures 1,385 610 15,146 17,141
Excess (Deficiency) of Revenues Over
Expenditures 924 (610) 36,134 36,448
OTHER FINANCING SOURCES (USES)
Transfers in 1,383 649 9,758 11,790
Total Other Financing Sources (Uses) 1,383 649 9,758 11,790 Net Change in Fund Balances 2,307 39 45,892 48,238
Fund Balances, Beginning
of Year 6,239 - 46,883 53,122
Fund Balances, End of Year $ 8,546 $ 39 $ 92,775 $ 101,360
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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 46 Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
To the City Manager and
Members of the City Council
Monte Sereno, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Monte Sereno, California (City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 29, 2022, which contained an emphasis of matter paragraph regarding restatement of prior period net position in the governmental activities and fiduciary funds.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions 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.
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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section 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 have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
47 Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Menlo Park, California
March 29, 2022
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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 1 INDEPENDENT ACCOUNTANT’S REPORT ON APPLYING AGREED-UPON PROCEDURES RELATED TO THE
ARTICLE XIII-B APPROPRIATIONS LIMIT CALCULATION
The Members of the City Council City of
Monte Sereno, California
We have performed the procedures enumerated below, on the Appropriations Limit Calculation of the City of Monte Sereno (City) prepared in accordance with Article XIII-B of the California Constitution for the fiscal year ended June 30, 2021. The City’s management is responsible for the Appropriations Limit Calculation. The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting the City in evaluating its Appropriations Limit Calculation was performed as required by Article XIII-B of the California Constitution and we will report on findings based on the procedures performed. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures performed and our findings are as follows:
1. We obtained completed worksheets and compared the 2020-2021 limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by Resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of City Council.
Findings: No exceptions were noted as a result of our procedures.
2. We added last year’s limit to the total adjustments and compared the resulting amount to this year’s limit.
See the accompanying Gann Appropriations Limit Schedule.
Findings: No exceptions were noted as a result of our procedures.
3. We compared the current year information presented in the accompanying Gann Appropriations Limit Schedule to the worksheet described in No. 1 above.
Findings: No exceptions were noted as result of our procedures.
CITY OF MONTE SERENO
Gann Appropriations Limit Schedule
For the year ended June 30, 2021
2 4. We compared the prior year appropriations limit, presented in the accompanying Gann Appropriations Limit Schedule, to the prior year appropriations limit adopted by the City for the prior year.
Finding: No exceptions were noted as a result of our procedures.
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the City’s Appropriation Limit Calculation.
Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would
have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by Article XIII-B of the California Constitution.
This report 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 those specified parties.
Menlo Park, California
March 29, 2022
CITY OF MONTE SERENO
Gann Appropriations Limit Schedule
For the year ended June 30, 2021
3 Amount Source
A. Appropriations limit for the year ended June 30, 2020 $ 6,843,456 Prior year schedule B. Calculation Factors:
1. Population change % 1.0022 State Department of Finance
2. Per capita personal income change % 1.0373 State Department of Finance
3. Total adjustment factor 1.0396 B1*B2
C. Annual adjustment increase 271,001 (B3-1.0)*A1
D. Other adjustments NA
E. Total adjustments 271,001 (C+D)
F. Appropriations limit for the year ended June 30, 2021 $ 7,114,457 (A+E)
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4040 Campbell Ave., Ste. 200 | Menlo Park, CA 94025-1053 | T 650.522.3400 | F 650.645.7393 | EOE 1 March 29, 2022
To Honorable Mayor and Members
of the City Council of the City of Monte Sereno
Monte Sereno, California
We have audited the financial statements of the City of Monte Sereno, California (City) as of and for the year ended June 30, 2021, and have issued our report thereon dated March 29, 2022. Professional standards require that we advise you of the following matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit under Generally Accepted Auditing Standards
As communicated in our letter dated September 22, 2021, 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 with accounting principles generally accepted in the United States of America. Our audit of the financial statements and major program compliance does not relieve you or management of its 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 includes 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 over financial reporting.
Accordingly, as part of our audit, we considered the internal control of the City 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 for 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, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence.
2 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 is included in Note 2 to the financial statements. As described in Note 12, the City implemented during the current year GASB Statement No. 84, Fiduciary Activities. As a result of adopting GASB Statement No. 84, the City reclassed the City’s Performance Surety Agency Fund from fiduciary to governmental, which resulted in an increase of cash and investments, and accounts payable of $27,116 on the general fund and governmental activities and no change on beginning net position or fund balance as of July 1, 2020.
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 policies in controversial or emerging areas for which there is a lack 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 that future events affecting them may differ markedly from management’s current judgments.
The most sensitive accounting estimates affecting the financial statements are related to the City Pension, and Other Postemployment Benefits (OPEB) liabilities and related deferrals.
Management’s estimate of these is based on actuarial estimated performed by management specialists. We evaluated the key factors and assumptions used to develop these actuarial estimates and determined that it is reasonable in relation to the basic 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’s financial statements relate to: the Discount rates used in estimated pension and OPEB liabilities.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.
3 Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards 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 communicate 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. There were no uncorrected or corrected missstatements identified as a result of our audit procedures.
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 financial statements or the auditor’s report. No such disagreements arose during the course of the audit.Representations Requested from Management.
Representations Requested from Management
We have requested certain written representations from management which are included in the management representation letter dated March 29, 2022.
Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating conditions affecting the entity, and operating plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.
This report is intended solely for the information and use of the governing board, and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Menlo Park, California
18041 Saratoga-Los Gatos Road
. Monte Sereno, Califomia 95030-4299 City of Monte Sereno Telephone: 403.354.7535 Fax: 408.395.7653
ww\v.cityofmonleserenonrg
March 29, 2022
Eide BaillyLLP
Menlo Park, California
This representation letter is provided in connection with your audit of the financial statements of the City of Monte Sereno, California (City) as oflune 30, 2021, and for the year then ended, and the related notes to the financial statements, for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position and results of operations of the various opinion units of the City in accordance with accounting principles generally accepted for governments in the United States of America (u.s. GAAP).
Certain representations in this letter are described as being limited to matters that are material. items are considered material, regardless of size, ifthey involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement.
We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of March 29, 2022.
Financial Statements
0 We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated September 22, 2021, for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP.
0 We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
0 We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.
0 We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements.
c We have reviewed, approved, and taken responsibility forthe financial statements and related notes. 0 We have a process to track the status of audit findings and recommendations.
0 The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP.
0 Allcomponent units, as well asioint ventures with an equity interest, are included and otherjoint ventures and related organizations are properly disclosed.
0 Allfunds and activities are properly classified.
0 Allfunds that meet the quantitative criteria in GASBStatement No. 34, Basic Financial $tatements~—and Management's Discussion andAnalysis—for State and LocalGovernments, GASBStatement No. 37, Basic Financial5tatements—and Management's Discussion and AnaIysis—~forState and LocalGovernments:
Omnibus as amended, and GASBStatement No. 65, Items Previously Reported as Assets and Liabilities,for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users.
0 Allcomponents of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, ifapplicable, approved. 0 Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy. 0 Allrevenues within the statement of activities have been properly classified as program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal.
I Allexpenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, ifany, have been made on a reasonable basis. 0 Allinterfund and intra—entity transactions and balances have been properly classified and reported. 0 Special items and extraordinary items have been properly classified and reported. 0 Deposit and investment risks have been properly and fully disclosed. 0 Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated.
- Allrequired supplementary information is measured and presented within the prescribed guidelines. - With regard to investments and other instruments reported at fair value:
- The underlying assumptions are reasonable and they appropriately reflect management’s intent and ability to carry out its stated courses of action.
- The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied.
- The disclosures related to fair values are complete, adequate, and in accordance with U.S. GAAP. 0 There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements.
0 With respect to assistance in drafting the City's financial statements, we have performed the following:
0 Made all management decisions and performed all management functions; Assigned a competent individual to oversee the services; Evaluated the adequacy of the services performed;
Evaluated and accepted responsibility for the result of the service performed; and Established and maintained internal controls, including monitoring ongoing activities.
Alltransactions have been recorded in the accounting records and are reflected in the financial statements.
We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud.
We have provided to you our analysis of the entity's ability to continue as a going concern, including significant conditions and events present, and if necessary, our analysis of management’s plans, and our ability to achieve those plans.
We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
Management;
Employees who have significant roles in internal control; or Others where the fraud could have a material effect on the financial statements.
We have no knowledge of any allegations of fraud, or suspected fraud, affecting the entity's financial statements communicated by employees, former employees, vendors, regulators, or others.
We have disclosed to you all known actual or possible litigation, claims, and assessments whose effects should be considered when preparing the financial statements
We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware.
There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting, internal control, or financial reporting practices.
The City has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities.
We have disclosed to you all guarantees, whether written or oral, under which [Entity Name] is contingently liable.
We have disclosed to you all nonexchange financial guarantees, under which we are obligated and have declared liabilities and disclosed properly in accordance with GASBStatement No. 70, Accounting and Financial Reporting for Nonexchange FinancialGuarantees, for those guarantees where it is more likelythan not that the entity will make a payment on any guarantee.
For nonexchange financial guarantees where we have declared liabilities,the amount of the liability recognized is the discounted present value of the best estimate of the future outflows expected to be incurred as a result of the guarantee. Where there was no best estimate but a range of estimated future outflows has been established, we have recognized the minimum amount within the range.
We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASBStatement No.62 (GASB—62),Codification of Accounting and FinancialReporting Guidance Contained in Pre~November 30, 1989 FASBand AICPA Pronouncements. Significant estimates are estimates at the balance sheet date that could change materially within the next year.
Concentrations refer to volumes of business, revenues, available sources of supply, or markets or geographic areas for which events could occur that would significantly disrupt normal finances within the next year.
We have identified and disclosed to you the laws, regulations, and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds.
There are no:
Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements whose
- We have complied with all aspects of grant agreements and other contractual agreements that would have a material effect on the financial statements in the event of noncompliance.
Steve Leonardis, City Manager
STAFF REPORT
Meeting: City Council - Apr 05 2022
Agenda Heading: NEW BUSINESS
Staff Contact: Michelle Estabillo, City Clerk
Department: City Clerk
Title: Accept Status Update on the SeeClickFix Customer Relations Management Software Project and Provide Direction to Staff Recommendation(s):
Staff recommends that the City Council accept the status update on the SeeClickFix Customer Relations Management Software project and provide direction to staff.
Background Information:
At its November 16, 2021 meeting, the City Council authorized the purchase of additional licenses for the SeeClickFix application and purchasing a Monte Sereno branded application for resident use. The Council also authorized transferring the project management of the SeeClickFix software project from the City Manager to the City Clerk.
The City Clerk has been working with SeeClickFix to establish the project timeline, determine deliverables, and identify an application launch date. To date, the necessary steps to create a Monte Sereno branded application have began. This includes creating a Application Developer Account with Apple, providing graphics for the application, and providing an application name and description. In consultation with the City Manager, the Monte Sereno branded application is entitled Fix It Monte Sereno and is expected to go live on the Apple App Store and Google Play Store on April 13.
The City was provided mock-ups of proposed marketing materials for the launch of Fix It Monte Sereno (attached). Staff has provided minor edits to SeeClickFix and once those edits have been made, the materials will be included in the City's quarterly newsletter, social media accounts, NextDoor, postcards, and other mailings.
Fiscal Impact:
There are no unbudgeted fiscal impacts with this agenda item.
Public Noticing:
The City Council’s agenda was posted at City Hall and the agenda and this report appear on the City’s website.
Attachments:
Elected Officials Flyer
Postcard One-sided Print 3x5
Public-Facing Flyer