Agenda Item
City Council
Item #: 3.16. 1/11/2022 File #: 22-0009
TO: Honorable Mayor and Members of the City Council
THRU: Thomas R. Hatch, Interim City Manager
FROM: Will Kolbow, Assistant City Manager/Administrative Services Director
1. SUBJECT
Audited Financial Statements and Related Financial Reports for the fiscal year ended June 30, 2021.
2. SUMMARY
Financial Reports and Statements provided by independent auditors as a result of the annual financial audit for the fiscal year ended June 30, 2021.
3. RECOMMENDED ACTION
Receive and file the following documents for the fiscal year ended June 30, 2021:
1. Annual Comprehensive Financial Report
2. Audit Communication Letter
3. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheets
4. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Investment Portfolio
5. Air Pollution Reduction Fund Financial Statements and Independent Auditors’ Report
6. Independent Auditors’ Report on Internal Control Over Financial Reporting
7. Housing Successor Fund Financial Statements
8. Single Audit of Federally Assisted Grant Programs
4. FISCAL IMPACT
None.
5. STRATEGIC PLAN GOALS
Goal 2: Be a fiscally healthy community
a: Expend fiscal resources responsibly.
d: Effectively manage and develop City assets.
6. DISCUSSION AND BACKGROUND
Lance, Soll, and Lunghard, LLP provided audit services to the City for the fiscal year ended June 30, 2021. As an integral part of their audit, the firm considers the City’sinternal controls over our financial reporting and, while they did not express an opinion, their conclusion was they did not identify any deficiencies in internal control considered to be material weaknesses.
The City Finance staff includes three former auditors. Throughout the year, the Finance Department performs various internal audits to provide assurance both financial, and operational, controls and City of Orange Printed on 1/5/2022Page 1 of 3
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Item #: 3.16. 1/11/2022 File #: 22-0009
performs various internal audits to provide assurance both financial, and operational, controls and efficiencies are in place and are being followed. Staff believes oversight of our financial position and reporting requirements is being properly maintained.
The independent auditor’stesting resulted in a “clean”audit opinion. This provides assurance the City’s financial transactions are accurately recorded and can be relied upon not only for proper reporting of past financial results in the City’s FY 2021 Annual Comprehensive Financial Report (ACFR), but also on a go-forward basis as we craft the FY 2023 Budget. This is of utmost importance given the results reflected in the ACFR include fixed assets and restricted fund balances that are not readily available to staff for appropriation as budgeted expenditures for operating costs or Capital Improvement Projects.
In their report for the Single Audit of Federally Assisted Grant Programs, the independent auditor noted a finding for the Housing program’slate submission of the Annual Progress Report (APR) to the Department of Housing and Community Development. “Aspart of our audit procedures, we noted that the APR for the fiscal year ended June 30, 2020, was submitted to HCD on May 18, 2021.”Staff agrees with this finding and has implemented procedures to accumulate the required information and submit the report by the April 1 deadline, for the applicable year.
The following Reports, Letter and Statements are presented for fiscal year ended June 30, 2021:
1. Annual Comprehensive Financial Report (ACFR) - This report is divided into three major sections: the Introductory Section, the Financial Section and the Statistical Section. The Introductory Section includes a Letter of Transmittal. The Financial Section comprises the Audit Opinion, Management’s Discussion and Analysis, and the Basic Financial Statements. The Statistical Section provides important historical and trend information about the City. The Audit opinion is an “unqualified opinion”, which states that, in the auditor’sopinion, the basic financial statements of the City are presented fairly in all material respects and are in conformity with generally accepted accounting principles.
2. Audit Communication Letter - a report of recommendations made to management by the auditors to improve internal controls and/or operating efficiencies within the City.
3. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheets - procedures performed solely to assist the City in meeting the requirements of Section 1.5 of the Article XIIIB of the California Constitution.
4. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Investment Portfolio - independent review of investment operations and compliance with the City’s investment policy.
5. Air Pollution Reduction Fund Financial Statements and Independent Auditors’Report - audited financial statements in accordance with Generally Accepted Auditing Standards and the standards applicable to the financial audits contained in Government Auditing Standards.
6. Independent Auditors’Report on Internal Control Over Financial Reporting - a report to describe the scope of testing of the City’sinternal control over financial reporting and the results of that testing.
7. Housing Successor Fund Financial Statements- audited financial statements in City of Orange Printed on 1/5/2022Page 2 of 3
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Item #: 3.16. 1/11/2022 File #: 22-0009
7. Housing Successor Fund Financial Statements- audited financial statements in accordance with Generally Accepted Auditing Standards and the standards applicable to the financial audits contained in Government Auditing Standards.
8. Single Audit of Federally Assisted Grant Programs - audit of compliance requirements as described in the U.S. Office of Management and Budget (OMB) 2 CFR part 200, Uniform Grant Guidance.
7. ATTACHMENTS
· Annual Comprehensive Financial Report and Summary of Audit Results · Audit Communication Letter
· Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheets
· Independent Accountants’ Report on Agreed-Upon Procedures Applied to Investment Portfolio
· Air Pollution Reduction Fund Financial Statements and Independent Auditors’ Report · Independent Auditors’ Report on Internal Control Over Financial Reporting · Housing Successor Fund Financial Statements
· Single Audit of Federally Assisted Grant Programs
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