LSLCPAS.COM
January 30, 2025
To the Honorable Mayor and Members of the City Council
City of Napa
Napa, 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 Napa, (the “City”) for the year ended June 30, 2024. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communica ted such information in our letter to you dated May 3, 2024. Professional standards also require that we commun icate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
As described in Note 1 to the financial statements, the City ch anged accounting policies related to accounting changes and error corrections by adopting Statement of Governme ntal Accounting Standards (GASB Statement) No. 100, Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62, in 2024.
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 the pension, other postemployment ben efits, and self-insured claims liabilities are based on actuarial valuations. We evaluated the methods, assumptions, and data used to develop the pension, other postemployment benefits, and self-insured claims liabilities in determining that it is 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.
Corrected and Uncorrected Misstatements
Professional standards require us 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.
Management has corrected all such misstatements. The material m isstatement detected as a result of audit procedures was corrected by management and described in a separate letter.
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To the Honorable Mayor and Members of the City Council
City of Napa, California
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 satisfaction, 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 30, 2025.
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 schedules for the general fund and major special revenue funds, and the required pension and other postemployment benefits schedules, which are required supplemen tary information (“RSI”) that supplements the basic financial statements. Our procedures consisted of inquiri es of management regarding the methods of preparing the information and comparing the information for con sistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. 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 statements and schedules, which accompany the financial statements but are not RSI. With respect to this supp lementary information, we made certain inquiries of management and evaluated the form, content, and methods of prep aring the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior 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 prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory and statistical sections of the Annual Comprehensive Financial Report, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
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To the Honorable Mayor and Members of the City Council
City of Napa, California
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 2024-2025
GASB Statement No. 101, Compensated Absences.
GASB Statement No. 102, Certain Risk Disclosures.
Fiscal Year 2025-2026
GASB Statement No. 103, Financial Reporting Model Improvements.
GASB Statement No. 104, Disclosure of Certain Capital Assets.
Future Projects
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.
Practice Issue, 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,
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