CITY OF NATIONAL CITY
Presentation to the City Council
For the Fiscal Year Ended June 30, 2024
December 2, 2025
CONTENTS
• Audit Scope
• Required Communications (AU-C 260)
• Audit Responsibilities
• Audit Results
2 3
AUDIT SCOPE
4 Audit Scope
• Annual Comprehensive Financial Report (ACFR)
• Federal Single Audit
• 2025 Gann Appropriations Limit AUP
• HUD Financial Data Schedules Audit
• HUD REAC AUP
4 5
REQUIRED COMMUNICATIONS
(AU-C 260)
6 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. 100, Accounting Changes and Error Corrections • Significant Estimates
• Fair value on investments
• Depreciation/amortization on capital assets
• Net pension liability actuarial inputs
• Net other postemployment benefit liability actuarial inputs 6 7
Required Communications (AU-C 260)
• Sensitive Disclosures
• Note 1 – Reporting Entity and Summary of Significant Accounting Policies • 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.
7 8
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.
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AUDIT RESPONSIBILITIES
10 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
10 11
OUR RESPONSIBILITY IN ACCORDANCE
WITH PROFESSIONAL STANDARDS
• Form and express an opinion about whether the financial statements 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.
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AUDIT RESULTS
13 Audit Results
• Unmodified Opinions issued to all Opinion Units in the ACFR:
• 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 13 14
Audit Results - Continued
• No compliance findings on internal control over compliance or on compliance under the Federal Single Audit.
• No findings on the 2025 Gann Appropriations Limit AUP • No findings on the HUD Financial Data Schedules audit • No findings on the HUD REAC AUP
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Audit Findings
• Condition: The City did not complete year-end closing procedures before presenting the trial balance to auditors, resulting in journal entries being presented to correct or to reclassify balances in financial statements in order to conform with accounting principles generally accepted in the United States. Changing enterprise resource management systems during the fiscal year also was a contributing factor. • Effect: Delays in processing transactions timely and closing accounting periods can create accounting errors that could go undetected and may lead the financial statements to be materially misstated and create further delays in the release of audited financial statements. Significant audit journal entries and client journal entries were necessary in order to get financial statements that were materially fairly stated in accordance with U.S. GAAP.
2024-001 – Accounting Close and Accuracy in Financial Reporting (Material Weakness) 15 16
Audit Findings - Continued
• Condition: The City experienced delays in the issuance of the 2024 ACFR and Single Audit required under Uniform Guidance. Changing enterprise resource management systems during the fiscal year also was a contributing factor. • 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. 2024-002 – Delay in Financial Reporting (Significant Deficiency) – Repeat Finding 16 17
Other Results
• No disagreements with management
• No consultations with other accountants about auditing and accounting matters • No inappropriate activities or fraud, waste, or abuse were noted 17 18
HQ - ORANGE
COUNTY
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Santa Ana, CA 92707
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Suite 100
San Diego CA 92122
BAY AREA
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Walnut Creek, CA 94596
LAS VEGAS
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Las Vegas, NV 89135
SACRAMENTO
1511 Corporate Way
Suite 220
Sacramento, CA 95831
PHOENIX
2 N. Central Avenue
Suite 1800
Phoenix, AZ 85004
Thank you!