CITY OF PATTERSON
Presentation to the City Council
For the Fiscal Year Ended June 30, 2021
February 1, 2022
2 CONTENTS
• Scope of Work
• Required Communications (AU-C 260)
• Audit Responsibilities
• Approach to the Audit
• Overview of Financial Statements
• Financial Indicators and Key Pension/OPEB Information • Audit Results – City
• Audit Results – PPFA
• Audit Results - WPFA
• Thank You!
3 Scope of Work
4 Scope Of Work
• Financial Audit
• City of Patterson’s Annual Comprehensive Financial Report • Patterson Public Financing Authority Financial Statements • West Patterson Public Financing Authority Financial Statements • Single Audit (Uniform Guidance)
• Compliance Examination Engagement Reports
• Transportation Development Act Compliance
• Abandoned Vehicle Abatement Program Compliance
• Agreed-Upon Procedures Engagement Report
• GANN Limit – FY21/22
• Other Non-Audit Services
• Assistance in Preparing Financial Statements
5 Required Communications (AU-C 260)
6 Required Communications (AU-C 260)
• Ethics and Independence
• Significant Accounting Policies
• The City disclosed the summary of significant accounting policies in Note 1 to the financial statements.
• The City implemented GASB Statements No. 84, Fiduciary Activities; No. 90, Majority Equity Interests– an Amendment of GASB Statements No. 14 and No. 61; No. 98, The Annual Comprehensive Financial Report
• Significant Estimates
• Fair Value on Investments
• Depreciation on Capital Assets
• Net Pension Liability
• Net OPEB Liability
7 Required Communications (AU-C 260)
• Sensitive Disclosures
• Note 1 – Summary of Significant Accounting Policies
• Note 12 – Pension Plans
• Note 13 – Other Postemployment Benefits
• Note 18 – Commitments and Contingencies
• Note 19 – Prior Period Adjustments
• Note 20 – Subsequent Events – American Rescue Plan Act 8 Required Communications (AU-C 260)
• Misstatements
• There were no corrected or 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. • Significant Difficulties
• We encountered no significant difficulties in dealing with management. • Disagreement with Management
• We did not have any disagreement with management in terms of accounting treatments nor audit procedures performed.
9 Audit Responsibilities
10 Management Auditors
Responsible for preparation of the financial
statements
Perform the audit
Present the financial statements in accordance with
accounting principles generally accepted in the
United States of America
Ensure the audit is in conformity with Auditing
Standards Generally Accepted in the United States
of America and standards applicable to Financial
Audits contained in Government Auditing Standards
Adopt sound accounting policies Communicate with “Those Charged with Governance”
Establish and maintain internal controls over
financial reporting and compliance
Assess audit risk of internal control over financial
reporting and compliance
Provide evidence supporting the amounts and
disclosures in the financial statements
Determine fairness presentation of the financial
statements
Prevent and detect fraud Render opinions
Audit Responsibilities
11 Approach to the Audit
12 The Pun Group’s Approach to the Audit
• Phase I – Detailed Planning
• Phase II – Risk Based Review of Internal
Controls Over Systems and Compliance
(Interim)
• Phase III – Validation and Testing of
Account Balances (Year-End)
• Phase IV – Review Financial Statements
and Issue Audit Opinions
Initiation
&
Planning
Meeting
Risk
Assessment,
Controls &
Review Entity
/ Environment
Assess,
Analyze,
and
Transaction
Testing
Reporting
& Project
Closure
13 OVERVIEW OF THE FINANCIAL
STATEMENTS
14 2021 2020 Change
Assets $ 161,159,709 $ 154,035,173 $ 7,124,536
Deferred Outflows of Resources 2,968,951 2,220,438 748,513 Liabilities 87,535,388 88,501,463 (966,075)
Deferred Inflows of Resources 1,695,155 909,176 785,979 Net Position:
Net investments in capital assets 59,507,530 61,274,713 (1,767,183) Restricted 14,976,923 10,752,749 4,224,174
Unrestricted 413,664 (5,182,490) 5,596,154
Total Net Position $ 74,898,117 $ 66,844,972 $ 8,053,145 Net Position @ June 30
(Governmental Activities)
15 2021 2020 Total
Program Revenues
Charges for services $ 6,918,926 $ 5,872,870 $ 1,046,056 Operating grants and contributions 3,564,498 2,040,401 1,524,097 Capital grants and contributions 4,333,162 3,609,391 723,771 Total program revenues 14,816,586 11,522,662 3,293,924
Expenses $ 29,459,366 $ 30,970,188 $ (1,510,822)
Net Cost of Services (14,642,780) (19,447,526) 4,804,746 General Revenues 21,046,884 20,534,333 512,551
Transfers 1,649,041 1,642,806 6,235
Change in Net Position $ 8,053,145 $ 2,729,613 $ 5,323,532 Change in Net Position
(Governmental Activities)
16 2021 2020 Change
Assets $ 74,039,289 $ 74,665,612 $ (626,323)
Deferred Outflows of Resources 2,162,688 1,844,909 317,779 Liabilities 32,258,729 32,547,441 (288,712)
Deferred Inflows of Resources 887,475 513,396 374,079
Net Position:
Net investments in capital assets 36,978,338 37,930,411 (952,073) Restricted 3,133,810 983,202 2,150,608
Unrestricted 2,943,625 4,536,071 (1,592,446)
Total Net Position $ 43,055,773 $ 43,449,684 $ (393,911) Net Position @ June 30
(Business-Type Activities)
17 2021 2020 Total
Program Revenues
Charges for services $ 14,354,933 $ 13,649,198 $ 705,735 Capital grants and contributions - 8,493 (8,493)
Total program revenues 14,354,933 13,657,691 705,735
Expenses $ 13,363,297 $ 13,851,720 $ (488,423)
Net Cost of Services 991,636 (194,029) 1,185,665
General Revenues 263,494 4,502,898 (4,239,404)
Transfers (1,649,041) (1,642,806) (6,235)
Change in Net Position $ (393,911) $ 2,666,063 $ (3,059,974) Change in Net Position
(Business-Type Activities)
18 2021 2020 Change
Assets $ 16,932,625 $ 12,122,112 $ 4,810,513
Liabilities $ 3,001,725 $ 2,989,743 $ 11,982
Deferred Inflows of Resources $ 215,638 $ 56,041 $ 159,597 Fund Balance
Nonspendable 106,172 104,997 1,175
Restricted 360,498 344,809 15,689
Committed 3,762,470 3,751,813 10,657
Assigned 2,896,296 2,889,800 6,496
Unassigned 6,589,826 1,984,909 4,604,917
Total Fund Balance 13,715,262 9,076,328 4,638,934
Total Liabilities, Deferred Inflows
of Resources, and Fund Balance $ 16,932,625 $ 12,122,112 $ 4,810,513 General Fund – Fund Balance @ June 30
19 2021 2020 Change
Revenues $ 20,865,061 $ 18,211,866 $ 2,653,195
Expenditures (18,752,448) (19,404,380) 651,932
Revenues over Expenditures 2,112,613 (1,192,514) 3,305,127 Other Financing Sources and Uses 2,526,321 2,095,703 430,618 Change in Fund Balance $ 4,638,934 $ 903,189 $ 3,735,745 General Fund – Change in Fund Balance
20 Financial Indicators and
Key Pension/OPEB Information
21 2021 2020
Net Cost of Services $ 14,642,780 $ 19,447,526
Less: Interest Expenses (3,818,561) (3,942,429)
10,824,219 15,505,097
Tax Revenues 16,696,612 13,103,770
Ratio 64.83% 118.33%
Net Cost of Services to Tax Revenues
(Governmental Activities)
22 2021 2020
Unassigned Fund Balance $ 6,589,826 $ 1,984,909
Committed for Contingencies 3,762,470 3,751,813
Available Fund Balance 10,354,317 5,738,742
Annual Expenditures 18,752,448 19,404,380
Ratio 55.22% 29.57%
Available Fund Balance to Annual Expenditures
(General Fund)
23 Net Pension Liability Sensitivity Analysis
Discount Rate - 1% Current Discount Discount Rate + 1%
(6.15%) Rate (7.15%) (8.15%)
Miscellaneous $ 10,811,232 $ 6,665,091 $ 3,239,265
Safety 5,064,943 3,299,373 1,850,556
Total $ 15,876,175 $ 9,964,464 $ 5,089,821
Plan's Net Pension Liability
24 Net OPEB Liability Sensitivity Analysis
Discount Rate - 1% Current Discount Discount Rate + 1%
(1.44%) Rate (2.44%) (3.44%)
$ 15,394,055 $ 12,997,781 $ 11,112,317
Healthcare Cost
-1% Trend Rates 1%
$ 11,137,677 $ 12,997,781 $ 15,671,408
Plan's Net OPEB Liability
Plan's Net OPEB Liability
25 Audit Results - City
26 Audit Results – City Audit
• Unmodified Opinions – By Opinion Unit
• Financial Statements are fairly presented in all material respects • In conformity with GAAP
• Significant accounting policies have been consistently applied • Estimates are reasonable
• Disclosures are properly reflected in the financial statements • Transportation Development Act Report – In Compliance • Abandoned Vehicle Abatement Program Report – In Compliance • Single Audit – Unmodified Opinions are issued to all Major Program • The City complied, in all material respect, with the types of compliance requirements that could have a direct and material effect
• GANN Limit AUP Report (FY21/22) – Procedures performed without exception 27 Audit Results – Patterson Public Financing
Authority
28 Audit Results – PPFA Audit
• Opinion
• Unmodified Opinion
• Financial Statements are fairly presented in all material respect • Accounting policies have been consistently applied
• Estimates are reasonable
• Disclosures are properly reflected in the financial statements • Other Results
• No disagreement with Management
• No material weaknesses and/or significant deficiencies were not identified in internal control over financial reporting
• No accounting issues
• No inappropriate activities were noted
29 Audit Results – West Patterson Financing
Authority
30 Audit Results – WPFA Audit
• Opinion
• Unmodified Opinion
• Financial Statements are fairly presented in all material respect • Accounting policies have been consistently applied
• Estimates are reasonable
• Disclosures are properly reflected in the financial statements • Other Results
• No disagreement with Management
• No material weaknesses and/or significant deficiencies were not identified in internal control over financial reporting
• No accounting issues
• No inappropriate activities were noted
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Engagement Partner:
Vanessa Burke, CPA, CPFO
Direct 602-274-9966
[email protected]
Engagement Director:
Andrew Roth, CPA
Direct 602-274-9966
[email protected]