CITY OF PATTERSON
Presentation to the City Council
For the Fiscal Year Ended June 30, 2023
May 7, 2024
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 – FY23/24
• Other Non-Audit Services
• Assistance in Preparing Financial Statements
5 Required Communications (AU-C 260)
6 Required Communications (AU-C 260)
• Significant Accounting Policies
• The City disclosed the summary of significant accounting policies in Note 1 to the financial statements.
• The City implemented GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs)
• 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 3 – Leases Receivable
• Note 13 – Pension Plans
• Note 14 – Other Postemployment Benefits
• Note 16 – Other Required Disclosures
• Note 19 – Prior Period Adjustments
• Note 20 – Commitments and Contingencies
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 2023 2022 Change
Assets $ 180,598,431 $ 170,525,706 $ 10,072,725
Deferred Outflows of Resources 6,266,891 4,046,216 2,220,675 Liabilities 91,598,089 87,323,747 4,274,342
Deferred Inflows of Resources 6,115,310 4,029,847 2,085,463 Net Position:
Net investments in capital assets 67,681,454 61,241,920 6,439,534 Restricted 14,864,418 13,416,337 1,448,081
Unrestricted 6,606,051 8,560,071 (1,954,020)
Total Net Position $ 89,151,923 $ 83,218,328 $ 5,933,595 Net Position @ June 30
(Governmental Activities)
15 2023 2022 Total
Program Revenues
Charges for services $ 7,150,547 $ 6,952,335 $ 198,212
Operating grants and contributions 3,200,329 3,023,697 176,632 Capital grants and contributions 9,699,274 3,640,327 6,058,947 Total program revenues 20,050,150 13,616,359 6,433,791
Expenses $ 41,609,496 $ 30,045,527 $ 11,563,969
Net Cost of Services (21,559,346) (16,429,168) (5,130,178) General Revenues 26,137,673 23,671,605 2,466,068
Transfers 2,939,075 1,077,774 1,861,301
Change in Net Position $ 7,517,402 $ 8,320,211 $ (802,809) Change in Net Position
(Governmental Activities)
16 2023 2022 Change
Assets $ 79,218,139 $ 74,510,734 $ 4,707,405
Deferred Outflows of Resources 2,879,905 2,285,454 594,451 Liabilities 30,179,059 29,859,947 319,112
Deferred Inflows of Resources 3,443,738 1,968,829 1,474,909 Net Position:
Net investments in capital assets 48,865,099 36,458,905 12,406,194 Restricted 3,137,525 3,133,590 3,935
Unrestricted (3,527,377) 5,374,917 (8,902,294)
Total Net Position $ 48,475,247 $ 44,967,412 $ 3,507,835 Net Position @ June 30
(Business-Type Activities)
17 2023 2022 Total
Program Revenues
Charges for services $ 16,829,284 $ 15,350,376 $ 1,478,908 Operating grants and contributions - 7,449 (7,449)
Capital grants and contributions 6,156,519 81,253 6,075,266 Total program revenues 22,985,803 15,439,078 7,546,725
Expenses $ 18,523,159 $ 12,515,310 $ 6,007,849
Net Cost of Services 4,462,644 2,923,768 1,538,876
General Revenues 1,984,266 1,926,946 57,320
Transfers (2,939,075) (1,077,774) (1,861,301)
Change in Net Position $ 3,507,835 $ 3,772,940 $ (265,105) Change in Net Position
(Business-Type Activities)
18 2023 2022 Change
Assets $ 27,882,858 $ 24,696,515 $ 3,186,343
Liabilities $ 9,470,771 $ 6,052,072 $ 3,418,699
Deferred Inflows of Resources $ 248,924 $ 218,608 $ 30,316 Fund Balance
Nonspendable 138,149 138,586 (437)
Restricted 560,761 487,546 73,215
Committed 9,838,576 8,116,966 1,721,610
Assigned 6,236,338 5,098,499 1,137,839
Unassigned 1,389,339 4,584,238 (3,194,899)
Total Fund Balance 18,163,163 18,425,835 (262,672)
Total Liabilities, Deferred Inflows
of Resources, and Fund Balance $ 27,882,858 $ 24,696,515 $ 3,186,343 General Fund – Fund Balance @ June 30
19 2023 2022 Change
Revenues $ 25,000,791 $ 23,070,623 $ 1,930,168
Expenditures (26,748,476) (21,196,662) (5,551,814)
Revenues over Expenditures (1,747,685) 1,873,961 (3,621,646) Other Financing Sources and Uses 3,072,274 2,836,612 235,662 Change in Fund Balance $ 1,324,589 $ 4,710,573 $ (3,385,984) General Fund – Change in Fund Balance
20 Financial Indicators and
Key Pension/OPEB Information
21 2023 2022
Net Cost of Services $ 21,559,346 $ 16,429,168
Less: Interest Expenses (3,962,077) (4,090,033)
17,597,269 12,339,135
Tax Revenues 20,779,758 19,254,942
Ratio 84.68% 64.08%
Net Cost of Services to Tax Revenues
(Governmental Activities)
22 2023 2022
Unassigned Fund Balance $ 1,389,339 $ 4,584,238
Committed for Contingencies 9,838,576 8,116,966
Available Fund Balance 11,227,915 12,701,204
Annual Expenditures 26,748,476 21,196,662
Ratio 41.98% 59.92%
Available Fund Balance to Annual Expenditures
(General Fund)
23 Miscellaneous Safety
Plan Plan Total
Net Pension Liabilities/(Assets) @ 5.90% $ 13,385,200 $ 6,081,782 $ 19,466,982 Net Pension Liabilities/(Assets) @ 6.90% $ 8,013,797 $ 3,885,700 $ 11,899,497 Net Pension Liabilities/(Assets) @ 7.90% $ 3,594,466 $ 2,090,900 $ 5,685,366 Plan's Proportionate Share of the
Fiduciary Net Position as a Percentage
of the Total Pension Liability 79.66% 75.57%
Prior year 92.00% 87.45%
Net Pension Liability Sensitivity Analysis
24 OPEB
Net OPEB Liabilities @ 4.50% $ 8,651,477
Net OPEB Liabilities @ 5.50% $ 7,614,614
Net OPEB Liabilities @ 6.50% $ 6,737,498
Fiduciary Net Position as a Percentage
of the Total OPEB Liability 8.73%
Net OPEB Liability Sensitivity Analysis
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(s) • 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 (FY23/24) – Procedures performed without exception 27 Audit Results – City Audit
• Other Results
• No disagreement with Management
• No material weaknesses and/or significant deficiencies were identified in internal control over financial reporting
• No accounting issues
• No inappropriate activities were noted
28 Audit Results – Patterson Public Financing
Authority
29 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 identified in internal control over financial reporting
• No accounting issues
• No inappropriate activities were noted
30 Audit Results – West Patterson Financing
Authority
31 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 identified in internal control over financial reporting
• No accounting issues
• No inappropriate activities were noted
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Engagement Partner:
Andrew Roth, CPA
Direct: 858-242-5102
[email protected]