CITY OF NATIONAL CITY
Presentation to the City Council
For the Fiscal Year Ended June 30, 2023
November 19, 2024
Item 12.1
2 CONTENTS
• Required Communications (AU-C 260)
• Audit Responsibilities
• Overview of Financial Statements
• Audit Results
3 REQUIRED COMMUNICATIONS (AU-C 260)
4 Required Communications (AU-C 260)
• Independence
• We complied with ALL relevant requirements regarding independence • Significant Accounting Policies
• The City disclosed all significant accounting policies in Note 1 to the financial statements. • The City implemented GASB Statement No. 96, Subscription-Based IT Arrangements • Significant Estimates
• Fair value on investments
• Depreciation/amortization on capital assets
• Net pension liability actuarial inputs
• Net other postemployment benefit liability actuarial inputs 5 Required Communications (AU-C 260)
• Sensitive Disclosures
• Note 1 – Reporting Entity and Summary of Significant Accounting Policies • Note 3 – Leases Receivable
• Note 4 – Loans Receivable
• Note 11 – Pension Plans
• Note 12 – Other Postemployment Healthcare Benefits
• Note 13 – Commitments and Contingencies
• Note 14 – Classification of Fund Balances
• Misstatements
• There were no uncorrected misstatements reported.
• Consultation with Other Accountants
• Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and other matters.
6 Required Communications (AU-C 260)
• Significant Difficulties
• We encountered no significant difficulties in dealing with management. • Disagreements with Management
• We did not have any disagreements with management in terms of accounting treatments or audit procedures performed.
• Non-Authoritative Guidance
• We did not come across any instances where transactions occurred that did not have authoritative guidance.
7 AUDIT RESPONSIBILITIES
8 Management’s Responsibilities
• Responsible for the financial statements
• Present the financial statements in accordance with accounting principles generally accepted in the United States of America
• Adopt sound accounting policies
• Establish and maintain internal controls over financial reporting and compliance
• Provide evidence supporting the amounts and disclosures in the financial statements
• Prevent and detect fraud
9 OUR RESPONSIBILITY IN ACCORDANCE WITH
PROFESSIONAL STANDARDS
• Form and express an opinion about whether the financial statements that have been prepared by management with Board oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America
• Plan and perform the audit to obtain “reasonable” assurance (not “absolute” assurance) about whether the financial statements are free of material misstatements. • Consider internal control over financial reporting. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.
10 OVERVIEW OF THE FINANCIAL
STATEMENTS
11 City of National City
Government-Wide
Condensed Statement of Net Position
June 30, 2023 and 2022
2023 2022 $ Change % Change
Assets $ 387,302,222 $ 364,732,363 $ 22,569,859 6.19%
Deferred Outflows of Resources 36,158,165 98,478,194 (62,320,029) -63.28% Liabilities 178,426,419 209,383,827 (30,957,408) -14.79% Deferred Inflows of Resources 8,483,849 32,947,598 (24,463,749) -74.25% Net Position:
Net investment in capital assets 170,389,264 161,453,603 8,935,661 5.53% Restricted 106,369,320 100,825,314 5,544,006 5.50%
Unrestricted (deficit) (40,208,465) (41,399,785) 1,191,320 -2.88% Total Net Position $ 236,550,119 $ 220,879,132 $ 15,670,987 7.09% 12 City of National City
Government-Wide Summary
Statement of Activities
For the Years Ended June 30, 2023 and 2022
2023 2022 $ Change % Change
Expenses $ (111,669,488) $ (102,429,004) $ (9,240,484) 9.02% Program Revenues
Charges for services 38,087,351 28,356,650 9,730,701 34.32% Operating grants and contributions 18,456,518 18,533,739 (77,221) -0.42% Capital grants and contributions 7,090,261 3,514,394 3,575,867 101.75% Total program revenues 63,634,130 50,404,783 13,229,347 26.25% Net Cost of Services (48,035,358) (52,024,221) 3,988,863 -7.67% General Revenues - Taxes 62,152,849 62,318,372 (165,523) -0.27% Investment earnings (loss) 1,358,614 (3,007,949) 4,366,563 -145.17% Miscellaneous 194,882 97,010 97,872 100.89%
Change in Net Position $ 15,670,987 $ 7,383,212 $ 8,287,775 112.25% 13 City of National City
General Fund
Condensed Balance Sheet
June 30, 2022 and 2021
2023 2022 $ Change % Change
Assets $ 72,283,735 $ 67,687,041 $ 4,596,694 6.79%
Liabilities 6,879,016 7,131,452 (252,436) -3.54%
Deferred Inflows of Resources 3,029,498 3,491,986 (462,488) 100.00% Fund Balance
Nonspendable 4,094,518 3,966,629 127,889 3.22%
Restricted 9,956,427 9,546,733 409,694 4.29%
Committed 15,680,000 15,680,000 - 0.00%
Assigned 9,604,056 8,400,718 1,203,338 14.32%
Unassigned 23,040,220 19,469,523 3,570,697 18.34%
Total Fund Balance 62,375,221 57,063,603 5,311,618 9.31% Total Liabilities and Fund
Balance $ 72,283,735 $ 67,687,041 $ 4,596,694 6.79%
14 City of National City
General Fund
Condensed Statement of Revenues, Expenditures and Changes in Fund Balance For the Years Ended June 30, 2023 and 2022
2023 2022 $ Change % Change
Revenues $ 69,802,150 $ 65,556,521 $ 4,245,629 6.48%
Expenditures (63,928,822) (56,525,463) (7,403,359) 13.10% Revenues over Expenditures 5,873,328 9,031,058 (3,157,730) -34.97% Other Financing Sources and Uses
Transfers (Net) (561,710) (2,858,489) 2,296,779 -80.35% Pass-through payments to other agencies - (2,017) 2,017 -100.00% Total other financing sources/uses (561,710) (2,860,506) 2,298,796 -80.36% Change in Fund Balance $ 5,311,618 $ 6,170,552 $ (858,934) 13.92% 15 AUDIT RESULTS
16 Audit Results
• Opinions
• Unmodified Opinions issued to all Opinion Units
• Financial statements are fairly presented in all material respects • Accounting policies have been consistently applied
• Estimates used are reasonable
• Disclosures are properly reflected in the financial statements 17 Audit Findings
• Condition: The City experienced delays in the issuance of the 2023 Single Audit required under Uniform Guidance.
• Effect: Delays in processing year-end closing procedures caused the financial statements release to be delayed. In addition, the City is neither in compliance with Uniform Guidance nor is it meeting its current demands for external financial reporting. 2023-001 – Delay in Financial Reporting (Significant Deficiency) – Repeat Finding 18 Other Results
• No disagreements with management
• One material significant deficiency was identified in internal control over financial reporting and/or compliance (2023-001 Delay in Financial Reporting)
• No findings were noted as relate to compliance with the City’s federal grant activity
• No inappropriate activities or fraud, waste, or abuse were noted
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