Planned Scope, Timing of the Audit, Significant Risks, and Other An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit involves judgment about the number of transactions to be examined and the areas to be tested.
Our audit included obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Material misstatements may result from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Internal control matters noted during our audit are discussed in a separate report.
We are required by the audit standards to identify potential risks of material misstatement during the audit process. We have identified the following significant risk of material misstatement as part of our audit planning: Management override of controls and revenue recognition. These are the areas that the audit standards require at a minimum to be identified as a significant risk. However, no such items were noted during our audit.
We performed the audit according to the planned scope previously communicated to you in our engagement letter date May 13, 2022.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the Town are described in Note A to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year.
We noted no transactions entered into by the Town during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statement 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 Town’s financial statements were determining the depreciable lives and methods used for capital assets, the collectability of receivables, qualifying expenses claimed under grants and the accrual of the unfunded pension and other postemployment benefit (OPEB) liabilities. We evaluated the key factors and assumptions used to develop the estimates in determining that they are reasonable in relation to the financial statements taken as a whole. The accrual for the unfunded pension liabilities was determined by an actuarial valuation performed by CalPERS. The accrual for postemployment benefits was determined by an actuarial valuation, which is required to be performed every two years.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were the following:
Pension Liability: Information on the Town’s pension plans, including the Town’s share of the unfunded pension liability, is shown in Note H. The Town’s share of the unfunded pension liability at June 30, 2023, the most recent measurement date, was $30,790,448, which is reflected as a liability in the Town’s financial statements as of June 30, 2024. The pension liability increased by $1,708,759 due to a decrease in investment earnings on the CalPERS plan assets and change in assumptions as of the June 30, 2023 valuation.
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To the Town Council
Other Postemployment Benefits Liability: The other postemployment benefits (OPEB) liability disclosure in Note I shows the Town’s OPEB liability had increased to $13,124,624 as of June 30, 2024 due to the actuaries decreasing the discount rate used to calculate the liability.
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. However, the audit was delayed due to delays in the Town completing certain account analysis and delays in receiving requested information to complete the audit, mostly due to a shortage of qualified staff.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely 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. Adjustments included 75 closing entries and audit adjustments needed to correct balances of the accounts and transactions. A list of these adjustments was provided to management. The large number of adjustments indicates the Town does not have adequate procedure in place to ensure accurate financial reporting. Refer to the schedule of findings for more information.
The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. The uncorrected misstatements or the matters underlying them could potentially cause future period statements to be materially misstated, even though, in our judgment, such uncorrected misstatements are immaterial to the financial statements under audit.
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 significant 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 December 2, 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 Town’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, 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 Town’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
231
To the Town Council
Other Matters
We applied certain limited procedures to required supplementary information (RSI) as reported in the table of contents of the financial statements that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency 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 statements, which accompany the financial statements but are not Required Supplementary Information. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing 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.
Restriction on Use
This information is intended solely for the information and use of the Town Council and management of the Town and is not intended to be, and should not be, used by anyone other than these specified parties.
December 2, 2025
232
Total Total Total Chan
g
e
Description (Nature) Total Deferred Total Deferred Net In Net of Audit Difference Assets Outflows Liabilities Inflows Position PositionRetentions payable not being trued up for FY202 4 $ - - $ (7,090) $ - $ $ 7,090 $ 7,090
Building permits not earned as of June 30 , 2024 - 25,174 (25,174) 25,174 Net Unadjusted Audit Differences- This Year - - (32,264) - 32,264 32,264 Financial Statement Caption Totals 340,598,211 $ 15,499,519 $ 70,730,957 $ 3,288,463 $ 282,078,310 $ 37,001,231 $ Net Audit Differences as % of F/S Captions 0.00% 0.00% (0.05%) 0.00% 0.01% 0.09%
TOWN OF PARADISE
SUMMARY OF UNADJUSTED DIFFERENCES - GOVERNMENTAL ACTIVITIES YEAR ENDED JUNE 30, 2024
Financial Statements Effect -
Amount of Overstatement (Understatement) of:
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TOWN OF PARADISE, CALIFORNIA
COMPLIANCE REPORTS
June 30, 2024
234
TOWN OF PARADISE, CALIFORNIA
COMPLIANCE REPORTS
June 30, 2024
TABLE OF CONTENTS
Independent Auditor’s 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 .................................................................................................................................................. 1 Independent Auditor’s Report on Compliance for Each Major Program, Internal Control Over Compliance and Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ................................................................................ 3 Schedule of Findings and Questioned Costs ................................................................................................. 6 Schedule of Expenditures of Federal Awards ............................................................................................. 14 Notes to Schedule of Expenditures of Federal Awards .............................................................................. 16 Corrective Action Plan ................................................................................................................................ 18 235
550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564-8727
FAX: (916) 564-8728
1 INDEPENDENT AUDITOR’S 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 Town Council
Paradise, California
We have audited, in accordance with 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 Town of Paradise, California (the Town) as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements, and have issued our report thereon dated December 2, 2025.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town’s internal control over financial reporting (internal control) as a basis for designing the 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 Town’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the Town’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 preceding paragraph 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 were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. We identified certain deficiencies, described in the accompanying schedule of findings and questioned costs as items 2024-001, 2024-002, 2024-003 and 2024-004 that we consider to be material weaknesses.
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To the Town Council
Town of Paradise, California
2 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town’s financial statements are free of 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 four instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of finding and questioned costs as item 2024-003 and 2024-004.
Town of Paradise’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the Town of Paradise’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. Town of Paradise’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
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 Town’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 Town’s internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
December 2, 2025
237
550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564-8727
FAX: (916) 564-8728
3 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR
EACH MAJOR PROGRAM, INTERNAL CONTROL OVER
COMPLIANCE AND SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
Town Council
Town of Paradise, California
Paradise, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the Town of Paradise, California’s (the Town) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Town’s major federal programs for the year ended June 30, 2024. The Town’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
In our opinion, the Town complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the Town and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the Town’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the Town’s federal programs.
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To the Board of Directors
Town of Paradise, California
4 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the Town’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the Town’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the Town’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the Town’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as items 2024-003 and 2024-004. Our opinion on each major federal program is not modified with respect to these matters.
Government Auditing Standards requires the auditors to perform limited procedures on the Town’s response to the noncompliance finding identified in our compliance audit and described in the accompanying schedule of findings and questioned costs. The Town’s response was not subjected to other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance and therefore, material weaknesses or significant 239
To the Board of Directors
Town of Paradise, California
5 deficiencies may exist that were not identified. However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.
A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2024-003 and 2024-004 to be a material weakness.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Town, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements. We issued our report thereon dated December 2, 2025, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
December 2, 2025
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TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended June 30, 2024
6 A. SUMMARY OF AUDITOR'S RESULTS
Financial Statements
1. Type of auditor’s report issued: Unmodified
2. Internal control over financial reporting:
a. Material weaknesses identified? Yes
b. Significant deficiencies identified not
considered to be material weaknesses? None noted
3. Noncompliance material to financial statements noted? No Federal Awards
1. Internal control over major programs:
a. Material weaknesses identified? Yes
b. Significant deficiencies identified not considered to be material weaknesses? None noted
2. Type of auditor’s report issued on compliance for major programs: Unmodified
3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR, Section 200.516(a)? Yes
4. Identification of major programs:
AL Number Name of Federal Program
14.228 Community Development Block Grants/State Program and Non-Entitlement Grants in Hawaii
5. Dollar Threshold used to distinguish between Type A and Type B programs? $750,000
6. Auditee qualified as a low-risk auditee under 2 CFR, Section 200.516(a)? No B. CURRENT YEAR FINDINGS – FINANCIAL STATEMENT AUDIT
INTERNAL CONTROL OVER FINANCIAL REPORTING FINDINGS
Finding 2024-001 – Material Weakness
Condition: There were 72 audit adjustments and closing entries posted during the audit to report the Town’s financial statements in accordance with Generally Accepted Accounting Principles (GAAP).
The large number of adjustments identified during the course of the audit indicates that the Town does not have internal controls in place to prevent or detect misstatements on a timely basis. Areas where accounts and transactions were not adequately reconciled and evaluated for proper recording prior to the start of the audit fieldwork and areas that require improvement included in the following:
Procedures to ensure beginning fund balance/net position roll-forward to prior year audited financial statements.
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TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
7 Procedures for ensuring revenue received in advance of qualifying expenditures are properly deferred.
Procedures to ensure retentions payable are properly accrued. Procedures to ensure accounts payable are properly accrued. Procedures to ensure compensated absences and payroll accruals are prepared accurately and on a timely basis.
Procedures to ensure that pension and other post-retirement entries are calculated and prepared accurately.
Procedures for tracking grant expenditures to ensure revenue is accrued to the extent of reimbursable expenditures incurred and evaluation of proper accounting treatment of transactions as earned, unearned, or unavailable revenue. Procedures to ensure capital outlay is properly reconciled to capital asset additions. Procedures to ensure all loans issued by the Town are properly recorded in the general ledger. Procedures for evaluating when entries should be posted to fund balance and whether fund balance/net position/restrictions and investment in capital assets are properly reflected. Procedures to ensure that Town Council approved assigned fund balance are properly recorded in the general ledger and that prior assigned fund balances are properly removed from the general ledger.
Procedures to ensure interfund transactions resulting from short-term interfund borrowings and interfund transfers, excluding those with agency funds, are in balance and properly reconciled, recorded and a supporting schedule is accurately prepared. Procedures to ensure that all grant billings are properly reconciled and are accurately reflected in the general ledger.
Criteria: Internal controls over financial reporting should exist to ensure the financial statements are prepared in accordance with GAAP and limit the opportunity for errors and fraud occurring.
Cause: The Town’s Finance Department did not have procedures in place to fully close the Town’s books before the start of the audit.
Effect: The adjustments and closing entries were required to report the financial statements in accordance with GAAP.
Recommendation: We recommend that management ensure all balance sheet accounts are reviewed for proper cut-off and income statement accounts are reviewed for proper classification during the closing process, including reviewing accounts receivable, grants receivable, loans receivable, accounts payable and related assets, fund balance and net position, government-wide revenue and expense adjustments and the classification of revenues and expenditures.
Views of Responsible Officials and Planned Corrective Action: We agree with the finding and are actively seeking additional consultants to support staff training, provide technical guidance, and assist with strengthening financial reporting procedures.
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TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
8 Finding 2024-002 – Material Weakness
Condition: During the audit of capital assets, it was noted that the Town did not establish a complete reconciliation process between (1) governmental fund capital outlay postings, (2) government-wide fixed-asset adjustments, and (3) the detailed construction in progress and capital assets tracking schedules.
Prior-year audit adjustments related to capital assets were not fully recorded in the Town’s books, which caused beginning balances and current-year additions not to agree to prior audited amounts.
Several governmental fund and government-wide adjustments were required during the current audit to correct these variances, including entries to recognize completed projects, true up construction in progress and capital asset balances, correct capital asset classifications and record depreciation expense.
Finance Department does not reconcile capital outlay expenditures to project tracking information from other departments and the amounts recorded as construction in progress on the capital assets schedule. The Town did not complete the capital asset reconciliation to the general ledger until fourteen months after the fiscal year-end.
Criteria: U.S. generally accepted accounting principles (GAAP) require that capital assets be recorded when acquired or constructed and depreciated once placed into service. Internal controls should ensure that additions, disposals, and depreciation are accurately captured in the general ledger and that detailed capital asset records reconcile to financial statement balances. Government-wide and fund-level reporting should be supported by timely and complete reconciliations between the general ledger, construction-in-progress schedules, and fixed-asset tracking reports maintained by departments.
Cause: The Town lacks a documented and coordinated reconciliation process between the fixed asset system and the general ledger. Current internal control structure does not require periodic reconciliation to ensure that construction in progress and capital assets schedules agree and capital assts adjustments are incorporated into current-year balances.
Effect: The absence of an effective reconciliation and monitoring process resulted in material misstatements of capital asset and construction in progress balances that required audit-proposed adjustments to conform to GAAP. This weakness increases the risk that capital assets, accumulated depreciation, and related expenses may be misstated in future financial statements without detection.
Recommendation: We recommend that the Town implement formal policies and procedures requiring regular (at least quarterly) reconciliations between the general ledger and the detailed fixedasset tracking schedules. Project information maintained by the Public Works Department should be used to ensure construction in process expenditures are properly recorded in the general ledger.
Management should ensure that prior-year audit adjustments are reviewed and incorporated at the start of each fiscal year and that all completed projects are timely transferred from construction in progress to capital assets in service.
Views of Responsible Officials and Planned Corrective Action: We agree with the finding and will implement a formalized, multi-layer reconciliation process that ensures capital activity is consistently captured, reviewed, and aligned across all reporting levels. 243
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
9 C. CURRENT YEAR FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD
PROGRAM
Finding 2024-003 – Material Weakness
Federal Grantor: Various
Passed-through: Various
Pass-through Grantor’s No.: Various
Compliance Requirement: Reporting
Condition: The Town submitted its Audited Financial Statements and Single Audit Report to the federal clearinghouse in December 2025, nine months after it was due, mostly the result of delays in reconciling grant activity to revenue recorded.
Criteria: The Town was required to submit its Audited Financial Statements and Single Audit Report to the federal audit clearinghouse no later than March 31, 2025, nine months after the fiscal year-end (2 Code of Federal Regulations §200.512).
Effect: Federal awarding agencies may deny future federal awards or subject the Town to additional cash monitoring requirements.
Cause: The Town did not prepare its Audited Financial Statements and Schedule of Expenditures of Federal Awards in a timely manner.
Context: The Town lacks a documented and reconciliation process to accurately prepare the Schedule of Expenditures of Federal Awards in a timely manner.
Recommendation: The Town should consider contracting with an external accounting firm so that it can close its books and submit its audited financial statements and single audit to the federal audit clearinghouse no later than the statutory reporting deadline.
Views of Responsible Officials and Planned Corrective Action: We agree with the finding and the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving processes, and strengthening internal controls to ensure the Town can prepare accurate financial statements and the SEFA in a timely manner and meet all federal reporting deadlines going forward.
Finding 2024-004 – Material Weakness
Award No.: Various
Federal Grantor: Various
Compliance Requirement: Other compliance requirements.
Condition: The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA were revised during the single audit. 244
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
10 Criteria: 2 CFR Part 200, Subpart F (Uniform Guidance) Section 200.502 states, “The auditee should prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee’s financial statements.” Internal controls over the SEFA should be in place to ensure accrual basis expenses incurred under the federal program are properly reported as expenses on the SEFA and are properly reported as revenue in the financial statements prior to the start of the single audit.
Cause: The SEFA was not fully reconciled and finalized until after the single audit began.
Effect: The expenses included on the SEFA were revised during the single audit, which could have resulted in the auditor not selecting the correct major program or expenses for testing and could have resulted in the single audit not satisfying the requirements of the Uniform Guidance.
Recommendation: We recommend additional review procedures be implemented to ensure the SEFA is complete and accurate when the single audit begins and that the schedule is reconciled to the revenue recorded in the general ledger.
Views of Responsible Officials and Planned Corrective Action: We agree with the finding and the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving processes, and strengthening internal controls to ensure the Town can prepare accurate financial statements and the SEFA in a timely manner and meet all federal reporting deadlines going forward.
D. PRIOR YEAR FINDINGS
INTERNAL CONTROL OVER FINANCIAL REPORTING FINDINGS
Finding 2023-001 – Material Weakness
Condition: There were 42 audit adjustments and closing entries posted during the audit to report the Town’s financial statements in accordance with Generally Accepted Accounting Principles (GAAP).
The large number of adjustments identified during the course of the audit indicates that the Town does not have internal controls in place to prevent or detect misstatements on a timely basis. Areas where accounts and transactions were not adequately reconciled and evaluated for proper recording prior to the start of the audit fieldwork and areas that require improvement included in the following:
Procedures to ensure beginning fund balance/net position roll-forward to prior year audited financial statements.
Procedures for ensuring revenue received in advance of qualifying expenditures are properly deferred.
Procedures to ensure retentions payable is properly accrued. Procedures for tracking grant expenditures to ensure revenue is accrued to the extent of reimbursable expenditures incurred and evaluation of proper accounting treatment of transactions as earned, unearned, or unavailable revenue. Procedures to ensure capital outlay is properly reconciled to capital asset additions. Procedures to ensure that building permit fees not earned are properly accounted for as unearned revenue.
Procedures to ensure all loans issued by the Town are properly recorded in the general ledger. 245
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
11 Procedures for evaluating when entries should be posted to fund balance and whether fund balance/net position/restrictions and investment in capital assets are properly reflected. Procedures to ensure interfund transactions, including due to and from other funds, advances to and from other funds and transfer in and out, excluding those with agency funds, are in balance.
Criteria: Internal controls over financial reporting should exist to ensure the financial statements are prepared in accordance with GAAP and limit the opportunity for errors and fraud occurring.
Cause: The Town’s staff did not have enough time to fully close the Town’s books before the start of the audit, including reconciling grant billings to the general ledger.
Effect: The adjustments and closing entries were required to report the financial statements in accordance with GAAP.
Recommendation: We recommend that management ensure all balance sheet accounts are reviewed for proper cut-off and income statement accounts are reviewed for proper classification during the closing process, including reviewing accounts receivable, grants receivable, loans receivable, accounts payable and related assets, fund balance and net position, government-wide revenue and expense adjustments and the classification of revenues and expenditures.
Current Status: This finding is not considered resolved. See Finding 2024-001 under CURRENT YEAR FINDINGS – FINANCIAL STATEMENT AUDIT for the continuation of this finding.
PRIOR YEAR FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD
PROGRAM
Finding 2023-002 – Material Weakness
Federal Grantor: Various
Passed-through: Various
Pass-through Grantor’s No.: Various
Compliance Requirement: Reporting
Condition: The Town submitted its Audited Financial Statements and Single Audit Report to the federal clearinghouse in September 2024, six months after it was due, mostly the result of delays in reconciling grant activity to revenue recorded.
Criteria: The Town was required to submit its Audited Financial Statements and Single Audit Report to the federal audit clearinghouse no later than March 31, 2024, nine months after the fiscal year-end (2 Code of Federal Regulations §200.512).
Effect: Federal awarding agencies may deny future federal awards or subject the Town to additional cash monitoring requirements.
Cause: The Town did not prepare its Audited Financial Statements and Schedule of Expenditures of Federal Awards in a timely manner due to the number of federal awards tested in the current year 246
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
12 compared to prior years. In addition, the Town lost its finance director during the financial and single audit process.
Context: The Town has had complete turnover of finance department personnel and has found difficulty in replacing key personnel for its finance department.
Recommendation: The Town should consider contracting with an external accounting firm so that it can close its books and submit its audited financial statements and single audit to the federal audit clearinghouse no later than the statutory reporting deadline.
Current Status: This finding is not considered resolved. See Finding 2024-003 under CURRENT YEAR FINDINGS – FINANCIAL STATEMENT AUDIT for the continuation of this finding.
Finding 2023-003 – Material Weakness
Award No.: Various
Federal Grantor: Various
Compliance Requirement: Other compliance requirements.
Condition: The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA were revised during the single audit.
Criteria: 2 CFR Part 200, Subpart F (Uniform Guidance) Section 200.502 states, “The auditee should prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee’s financial statements.” Internal controls over the SEFA should be in place to ensure accrual basis expenses incurred under the federal program are properly reported as expenses on the SEFA and are properly reported as revenue in the financial statements prior to the start of the single audit.
Cause: The SEFA was not fully reconciled and finalized until after the single audit began.
Effect: The expenses included on the SEFA were revised during the single audit, which could have resulted in the auditor not selecting the correct major program or expenses for testing and could have resulted in the single audit not satisfying the requirements of the Uniform Guidance.
Recommendation: We recommend additional review procedures be implemented to ensure the SEFA is complete and accurate when the single audit begins.
Current Status: This finding is not considered resolved. See Finding 2024-004 under CURRENT YEAR FINDINGS – FINANCIAL STATEMENT AUDIT for the continuation of this finding.
Finding 2023-004 – Significant Deficiency
Award No.: 16.710
Federal Grantor: U.S. Department of Justice
Compliance Requirement: Reporting
247
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
For the Year Ended June 30, 2024
13 Condition: The Federal Financial Reports (SF-425) final report for the reporting period and date of December 31, 2022 was submitted on September 19, 2023. Quarterly federal financial report for the period of January 1, 2023 to March 31, 2023 was submitted on May 8, 2023.
Criteria: According to 2 CFR Part 200.303, the Town is required to establish and maintain effective internal controls over Federal awards that provides reasonable assurance that the Town is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Police Safety Partnership and Community Policing Grant program resolutions require the Town to file financial reports throughout the year. Federal Financial Report (SF-425) final report shall be submitted no later than 120 days after the project or grant period end date. Also, quarterly federal financial reports shall be submitted no later than 30 days after the end of each reporting period.
Cause: The Town experienced turnover and vacancies in key positions responsible for reporting during fiscal year 2022-23.
Effect: The Town was not fully in compliance with reporting requirements.
Recommendation: The Town needs to ensure that reports are complete by the due date.
Current Status: We noted federal grant reports were filed timely during fiscal year 2024.
Findings 2023-005 – Significant Deficiency
Award No.: All
Federal Grantor: All
Compliance Requirement: Reporting
Condition: The expenditure information provided to report the amounts of the SEFA contained totals representing transfers from other funds instead of individual expenditure amounts.
Criteria: Section 202.302 states in part, “… the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause: The Town does not have a process in place to ensure separate identification of federal expenditures in the accounting system.
Effect: By not maintaining a separate accounting of individual expenditures of federal funds, it is difficult to determine that funds have been used according to Federal regulations.
Recommendation: The Town should ensure individual expenditure detail for federal award expenditures is prepared in the general ledger, or in supplemental listings.
Current Status: This finding is considered resolved. Expenditures were charged directly to the fund where grant award is located.
248
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended June 30, 2024
14 Federal
Assistance Pass-Through
Listing (AL) Grantors’
Federal Grantor/Pass-through Grantor/ Program Title Number Number Expenditures
MAJOR PROGRAMS
U.S. Department of Housing and Urban Development:
Direct programs:
Community Development Block Grants/State's program
and Non-Entitlement Grants in Hawaii 14.228 18-DRINFRA-18009 4,416,861 $ Community Development Block Grants/State's program
and Non-Entitlement Grants in Hawaii 14.228 18-DRINFRA-18006 1,237,028 Community Development Block Grants/State's program
and Non-Entitlement Grants in Hawaii 14.228 21-DRMHP-21004 11,808,006 Total Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 17,461,894 TOTAL MAJOR PROGRAMS 17,461,894
NON-MAJOR PROGRAMS
U.S. Department of Transporation:
Passed through California Department of Transportation
Highway Planning and Construction 20.205 ER-38YO-013/FHWA 1,202 Highway Planning and Construction 20.205 CML-5425 (038) 147,605 Highway Planning and Construction 20.205 ER-38YO-025/FHWA 6,954 Highway Planning and Construction 20.205 CML-5425 (044) 22,462 Highway Planning and Construction 20.205 HSIPL-5425 (041) 23,927 Highway Planning and Construction 20.205 ER-38YO-012/FHWA 3,354,946 Highway Planning and Construction 20.205 CML-5425 (043) 215,776 Highway Planning and Construction 20.205 ATP6-03-006S 41,154 Total U.S. Department of Transporation 3,814,026
U.S. Department of the Treasury
Direct programs:
Coronavirus State and Local Fiscal Recovory Funds 21.027 ARPA 153,658 Total U.S. Deparment of the Treasury 153,658
U.S. Economic Development Administration
Passed through California Department of Transportation
Economic Adjustment Assistance 11.307 07-79-07567 74,033 Total U.S. Economic Development Administration 74,033
249
TOWN OF PARADISE, CALIFORNIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED)
For the Year Ended June 30, 2024
15 Federal
Assistance Pass-Through
Listing (AL) Grantors’
Federal Grantor/Pass-through Grantor/ Program Title Number Number Expenditures U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA):
Direct programs:
Disaster Grants - Public Assistance (Presidentially
Declared Disasters) 97.036 FEMA PJ0359-130763 40,645 $
Disaster Grants - Public Assistance (Presidentially
Declared Disasters) 97.036 FEMA PJ0363-132422 5,334,476 Disaster Grants - Public Assistance (Presidentially
Declared Disasters) 97.036 FEMA PJ0363-132422 1,069,136 Hazard Mitigation Grant 97.039 HMGP #4407-157-046R 366,200 Hazard Mitigation Grant 97.039 PJ0305/HMGP 75,121
Hazard Mitigation Grant 97.039 HMPG #4407 0511 13,757
Hazard Mitigation Grant 97.039 PJ0189/HMGP 56,100
Total U.S. Department of Homeland Security 6,955,435
U.S. Department of Agriculture
Direct programs:
Community Facilities Loans and Grants 10.766 USDA 175,670 Community Facilities Loans and Grants 10.766 USDA 60,000 Community Facilities Loans and Grants 10.766 USDA 4,303 Total U.S. Deparment of Agriculture 239,973
U.S. Department of Housing and Urban Development:
Direct programs:
Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 14.218 B-20-MC-06-051 94 Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 14.218 B-21-MC-06-051 24,815 Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 14.218 B-23-MC-06-051 40,633 Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 14.218 B-20-MW-06-051 4,728 Total Community Development Block Grants/State's
program and Non-Entitlement Grants in Hawaii 70,270
TOTAL NON-MAJOR PROGRAMS 11,307,396
TOTAL FEDERAL AWARDS $ 28,769,290
See accompanying notes to schedule of expenditures of federal awards. 250
TOWN OF PARADISE, CALIFORNIA
NOTES TO SCHEDULE OF EXPENDIRTURES OF FEDERAL AWARDS
For the Year Ended June 30, 2024
16 NOTE A – BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant activity of the Town of Paradise, California (the Town) under programs of the federal government for year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the Town’s operations, it is not intended to be and does not present the financial position, changes in financial position, or cash flows of the Town.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenses reported on the Schedule are reported on the modified accrual basis of accounting. Such expenses/expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenses are not allowable or are limited as to reimbursement.
NOTE C – PROGRAM COSTS/MATCHING CONTRIBUTIONS
The amounts shown as current year expenses represent only the federal grant portion of the program costs. Entire program costs, including the Town’s portion, may be more than shown.
NOTE D – INDIRECT COST ALLOCATION PLAN
The Town elected to use the 10% de minimis indirect cost rate during the year ended June 30, 2024.
NOTE E – LOAN PROGRAMS
The outstanding balances of loan programs were as follows:
Federal Program
Federal AL
Number
Outstanding Loan
Balances
Community Development Block Grants/Entitlement Grants 14.228 12,509,586 $ NOTE F – SUBRECIPIENTS
There were no subrecipients of the Town’s federal programs during the year ended June 30, 2024.
NOTE G – CLUSTERS OF PROGRAMS
There were no clusters of the Town’s federal programs during the year ended June 30, 2024. 251
TOWN OF PARADISE, CALIFORNIA
NOTES TO SCHEDULE OF EXPENDIRTURES OF FEDERAL AWARDS (CONTINUED) For the Year Ended June 30, 2024
17 NOTE H – PRIOR YEAR EXPENSES INCLUDED ON 2024 SEFA
The 2024 SEFA includes the following prior year expenses obligated during the year ended June 30, 2024.
Federal Pass-Through
Federal Grantor/Pass-through Grantor/ Assistance List Grantors’ Program Title Number Number Expenses
U.S Department of Homeland Security,
Federal Emergency Management Agency FEMA PJ0363-132422 97.036 1,069,136 $ Total Prior Year Expenses on SEFA 1,069,136 $
252
Town of Paradise
Finance Department
5555 Skyway
Paradise, CA 95969
(530) 872-6291
18 December 2, 2025
Town of Paradise
State Single Audit Corrective Action Plan
For the Fiscal Year Ended 2024
AUDIT FINDINGS
Finding Reference Number: 2024‐001
Description of Finding: There were 72 audit adjustments and closing entries posted during the audit to report the Town’s financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The large number of adjustments identified during the course of the audit indicates that the Town does not have internal controls in place to prevent or detect misstatements on a timely basis. Areas where accounts and transactions were not adequately reconciled and evaluated for proper recording prior to the start of the audit fieldwork and areas that require improvement included in the following:
Procedures to ensure beginning fund balance/net position roll-forward to prior year audited financial statements.
Procedures for ensuring revenue received in advance of qualifying expenditures are properly deferred.
Procedures to ensure retentions payable are properly accrued. Procedures to ensure accounts payable are properly accrued. Procedures to ensure compensated absences and payroll accruals are prepared accurately and on a timely basis.
Procedures to ensure that pension and other post-retirement entries are calculated and prepared accurately.
Procedures for tracking grant expenditures to ensure revenue is accrued to the extent of reimbursable expenditures incurred and evaluation of proper accounting treatment of transactions as earned, unearned, or unavailable revenue. Procedures to ensure capital outlay is properly reconciled to capital asset additions. Procedures to ensure all loans issued by the Town are properly recorded in the general ledger.
Corrective Action:
The audit period occurred during a significant organizational transition. Much of the Finance team was newly hired, and the department was operating without full historical knowledge of certain complex, multi-year projects. During this same period, the Town was implementing a new account structure and adapting to revised financial coding practices, changes that naturally created temporary gaps in continuity and processing. 253
Town of Paradise
Finance Department
5555 Skyway
Paradise, CA 95969
(530) 872-6291
19 These combined circumstances contributed to delays in reconciliations, and a higher number of audit adjustments. As staff continue to gain experience, workflows are stabilizing, and historical project information is aligning within the new structure, we expect these issues to diminish significantly.
To accelerate this progress, the Town is actively seeking additional consultants to support staff training, provide technical guidance, and assist with strengthening financial reporting procedures. This investment will help ensure internal controls are reinforced and future financial statements are prepared accurately and timely, with fewer adjustments required during the audit process.
Name of Contact Person: Aimee Beleu, Finance Director, (530) 872-6291, [email protected]
Projected Completion Date: March 1, 2026
254
Town of Paradise
Finance Department
5555 Skyway
Paradise, CA 95969
(530) 872-6291
20 Finding Reference Number: 2024‐002
Description of Finding: During the audit of capital assets, it was noted that the Town did not establish a complete reconciliation process between (1) governmental fund capital outlay postings, (2) government-wide fixed-asset adjustments, and (3) the detailed construction in progress and capital assets tracking schedules.
Statement of Concurrence or Nonconcurrence:
Capital Assets had adjustments.
Corrective Action:
The audit period occurred during a significant organizational transition. Much of the Finance team was newly hired, and the department was operating without full historical knowledge of several complex, multi-year capital projects. At the same time, the Town was implementing a new account structure and adapting to revised financial coding practices.
These overlapping changes created temporary gaps in continuity, processing, and reconciliation workflows as staff worked to integrate new systems while learning inherited project histories.
The Town will implement a formalized, multi-layer reconciliation process that ensures capital activity is consistently captured, reviewed, and aligned across all reporting levels.
Actions include:
• Establishing standardized quarterly and year-end reconciliation procedures linking capital outlay expenditures, fixed-asset journal entries, and construction-in-progress schedules. • Updating internal workflows to ensure all capital project costs are reviewed, reconciled, and recorded in the asset management system in a timely manner. • Developing crosswalk worksheets that map fund-level postings to government-wide adjustments and detailed project schedules.
• Reconciling Finance’s capital activity and CIP summaries with Public Works’ projecttracking reports as a required secondary review to validate accuracy, confirm project status, and ensure costs are aligned across departments.
• Providing additional training to staff responsible for capital asset accounting to strengthen understanding of GASB reporting requirements and reconciliation expectations. • Engaging outside consultants, as needed, to assist with initial setup, staff training, and quality-assurance reviews during the transition.
Name of Contact Person: Aimee Beleu, Finance Director, (530) 872-6291, [email protected]
Projected Completion Date: March 1, 2026
255
Town of Paradise
Finance Department
5555 Skyway
Paradise, CA 95969
(530) 872-6291
21 Finding Reference Number: 2024‐003
Description of Finding: The Town submitted its Audited Financial Statements and Single Audit Report to the federal clearinghouse in November 2025, eight months after it was due, mostly the result of delays in reconciling grant activity to revenue recorded.
Statement of Concurrence or Nonconcurrence:
The audit was not submitted on time.
Corrective Action:
The delay in submitting the Town’s Audited Financial Statements and Single Audit Report was primarily caused by significant organizational transitions within the Finance Department during the audit period. Much of the team, including senior staff was newly hired, resulting in limited historical knowledge of several complex, multi-year capital projects and grant activities. At the same time, the Town was implementing a new account structure and adapting to revised financial coding practices. These overlapping system, staffing, and project-knowledge challenges created temporary gaps in continuity, processing, and reconciliation workflows, particularly in reconciling grant activity to revenue recorded, which ultimately contributed to the eight-month delay in submitting required federal reports.
To prevent future delays, the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving processes, and strengthening internal controls. Actions include establishing consistent grant billing and reconciliation cycles; developing documented procedures for grant tracking, revenue recognition, SEFA preparation, and year-end close; and enhancing financial coding accuracy under the new account structure. Ongoing staff training will build institutional knowledge, while external support may be utilized as needed for complex reconciliations and transitional needs. These measures will ensure the Town can prepare accurate financial statements and the SEFA in a timely manner and meet all federal reporting deadlines going forward.
Name of Contact Person: Aimee Beleu, Finance Director, (530) 872-6291, [email protected]
Projected Completion Date: March 1, 2026
256
Town of Paradise
Finance Department
5555 Skyway
Paradise, CA 95969
(530) 872-6291
22 Finding Reference Number: 2024‐004
Description of Finding: The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA were revised during the single audit.
Statement of Concurrence or Nonconcurrence:
The SEFA required adjustments.
Corrective Action:
The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA required revision during the single audit due to significant organizational transitions within the Finance Department during the audit period. Much of the team including senior staff was newly hired, resulting in limited historical knowledge of several complex, multi-year capital projects and grant activities. At the same time, the Town was implementing a new account structure and adapting to revised financial coding practices. These overlapping changes created temporary gaps in continuity, processing, and reconciliation workflows, which affected the Town’s ability to accurately reconcile grant activity to the general ledger and compile a complete and accurate SEFA prior to the start of the single audit.
To address these issues and ensure accurate SEFA reporting going forward, the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving reconciliation processes, and strengthening internal controls. Key actions include establishing consistent grant billing and reconciliation cycles; developing documented procedures for grant tracking, revenue recognition, and SEFA preparation; and improving financial coding accuracy under the new account structure. Ongoing staff training will reinforce institutional knowledge, and external support may be used as needed for complex reconciliations or project-specific cleanup. These measures will ensure the Town can prepare a complete and accurate SEFA on a timely basis and fully meet federal reporting requirements.
Name of Contact Person: Aimee Beleu, Finance Director, (530) 872-6291, [email protected]
Projected Completion Date: 10/1/25
Any questions regarding this Plan, please call Aimee Beleu at (530) 872-6291.
Sincerely yours,
Aimee Beleu
Finance Director/ Town Treasurer
257
550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564-8727
FAX: (916) 564-8728
INDEPENDENT ACCOUNTANTS’ REPORT ON AGREED-UPON PROCEDURES
APPLIED TO APPROPRIATIONS LIMIT TESTING
To the Town Council
Town of Paradise, California
We have performed the procedures enumerated below to the accompanying calculation of the Appropriations Limit of the Town of Paradise (the Town) for the year ended June 30, 2024. The Town’s management is responsible for complying with the Appropriations Limit Calculation. The Town and the League of California Cities (as presented in the publication entitled Agreed-Upon Procedures applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) have agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose to assist the Town in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. 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 and associated findings are as follows:
1. We obtained the Town’s calculation of the 2023/2024 appropriations limit and compared the limit and annual adjustment factors included in the calculation to the limit and annual adjustment factors that were adopted by resolution of the Town Council.
Finding: No exceptions were noted as a result of our procedures.
2. We compared the methodology used to determine the cost of living adjustment component to Article XIIIB which states that the Town may annually adjust the component for either the change in California per capita personal income or, the percentage change in the Town’s assessed valuation which is attributable to non-residential new construction. We recalculated the factor based on the above information.
Finding: No exceptions were noted as a result of our procedures.
3. We compared the methodology used to determine the population adjustment component to Article XIIIB which states that the Town may annually choose to adjust the component for either the change in population in the County in which the Town is located, or the change in population within the unincorporated area of the County in which the Town is located. We recalculated the factor based on the above information.
Finding: No exceptions were noted as a result of our procedures.
4. We compared the prior year appropriations limit presented in the accompanying Appropriations Limit Calculation to the prior year appropriations limit adopted by the Town Council for the prior year.
Finding: The prior year appropriation limit used in the calculation did not match the amount adopted by the Town Council in the prior year.
258
Town Council
Town of Paradise
5. We recalculated the 2023/2024 appropriation limit by multiplying the product of the two above factors by the 2022/2023 appropriation limit.
Finding: We were able to recalculate the appropriation limit; however, because of the issue identified in item 4, the amount of the appropriation limit was incorrect.
6. We compared the Town’s actual revenues to the computed appropriation limit for fiscal year 2023/2024.
Finding: For the 2023/2024 fiscal year, the Town’s actual revenues subject to the appropriations limit properly did not exceed the appropriation limit adopted by resolution of the Town Council, after revisions were made to use the correct amounts subject to appropriation.
We were engaged by the Town 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 engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on accompanying calculation of the Appropriation Limit. Accordingly, we do not express such an opinion or conclusion. No procedures have been performed with respect to the determination of the Appropriations Limit for the base year, as defined by Article XIII-B of the California Constitution.
We are required to be independent of the Town and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the use of the Town Council and management of the Town and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. However, this report is a matter of public record and its distribution is not limited.
December 2, 2025
259
APPENDIX A
TOWN OF PARADISE
APPROPRIATION LIMIT CALCULATION
Year Ended June 30, 2024
APPROPRIATION LIMIT
ADOPTED BY TOWN:
Recorded in Final 2023/2024 Budget 21,718,780 $
APPROPRIATION LIMIT
COMPUTATION PER REVIEW:
2022/2023 Appropriation Limit 21,373,397 $
Cost of living factor:
Change in California per capita income 1.0444
Population Adjustment Factor:
Population change in County of Butte 0.9952
Auditor computed limitation 22,215,228
Variance $ (496,448)
260