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Brea, CA 92821
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Laguna Hills, CA 92653
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www.lslcpas.com
De
cember 28, 2023
To the Honorable Mayor and Members of the City Council
City of Pasad
ena, California
We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Pasadena, California (the “City”) for the year ended Ju ne 30, 2023. Professional standards require that we provide you with information a bout our respons ibilities under g enerally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information relat ed to the planned scope and timing of our audit. We have communicated such information in our letter to you dated August 29, 2023.
Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspe
cts of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financ ial statements. As described in Note 1 to the financial statements, the City changed accounting policies rela ted to subscription-based information technology arrangements and by adopting Statement of Governmental Accounti ng Standards (GASB Statement) No. 96, in fiscal year 2022-2023. We noted no transactions entered into by the City 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 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 net pension liability and net oth er postemployment benefits liability based on actuarial valuation estimates. We evaluated the methods, assump tions, and data used to develop the actuarial valuation estimates in determining that they are reasonable in relation to the financial statements taken as a whole.
Management’s estimate of the fair market value of its derivativ e instrument is based on third party valuation. We evaluated the key factors and assumptions used to develop the f air market value of the derivative instrument 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
Attachment L
To the Honorable Mayor and Members of the City Council
City of Pasadena, California
Professional standards require u s 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. The attached schedule summarizes uncorrected misstatements of the f inancial 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 misst atements or the matters underl ying them could potentially cause future period financial statements to be materially misstated, even though, in our judgment, such uncorrected misstatements are immaterial to the financial statements under audit. In addition , none of the misstatements detected as a result of audit procedures and corrected by management were material, eit her individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
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 s atisfaction, 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 December 28, 2023
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 the major special revenue fu nds, 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 financial statements and schedules which accompany the financial statements but are not RSI. With respec t to this supplementary information, we made certain inquiries of management and evaluated the form, co ntent, 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 financ ial 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.
To the Honorable Mayor and Members of the City Council
City of Pasadena, California
We were not engaged to report on other information included in the annual report which is comprised of the introductory and statistical sections, which accompany the fina ncial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in th e audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the information and use of 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,
Brea, California
ATTACHMENT
Summary of Unadjusted Audit Differences
Name of Governmental Unit: City of Pasadena
Date of Combined Balance Sheet: June 30, 2023
Opinion Unit, Fund Type or Fund: General Fund
Unadjusted Audit Differences Cause
LAIF fair market value adjustment - cash and investments Fair market value adjustment was not recorded for LAIF
investments at June 30, 2023 19,177 $
Cumulative effect (before effect of prior year differences) 19,177 Effect of unadjusted audit difference - prior year -
Cumulative effect (after effect of prior year differences) 19,177$ Current Year Over
(Under) Revenues and
Expenditures/Expenses
and Changes in Fund
Balance/Equity