Administrative
Report
H.20., File # 23-6650 Meeting Date: 8/15/2023
To: MAYOR AND CITY COUNCIL
From: WENDY COLLAZO, FINANCE DIRECTOR
TITLE
APPROVE THE ANNUAL AUDITED FINANCIAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2022
EXECUTIVE SUMMARY
The City’s independent auditors, Lance, Soll and Lunghard, LLP (LSL), have completed their annual audit of the City’s fiscal activities for the Fiscal Year ended June 30, 2022. The resulting reports are listed below. We are pleased to report that the City received an unmodified opinion, which is the best opinion the City can receive. This means that the auditor believes the City’s financial statements are fairly presented in all material respects and in conformity with Generally Accepted Accounting Principles (GAAP) and Government Accounting Standards Board (GASB) requirements. The auditor identified two findings, which management has responded to in detail in the management response letter.
The annual audit reports are as follows:
· Annual Comprehensive Financial Report (ACFR)
· Inmate Trust Fund Financial Report
· Enterprise Funds Financial Statement
· Internal Service Funds Financial Statement
· Audit Communication Letter
· Report on Internal Controls Letter
· Management Representation Letter
The Single Audit report is regularly due to the federal government nine months from the organization’s fiscal year end date, which falls annually for the City of Redondo Beach on March 31.
The Single Audit was delayed this year due to the new GASB 87 requirements and the extraordinary number of applicable City leases. The City’s fiscal activities are discussed at length in the Letter of Transmittal and the Management’s Discussion and Analysis (MD&A) sections of the Annual Comprehensive Financial Report (ACFR).
Staff will be submitting the ACFR to the Government Finance Officers Association (GFOA) for consideration in the “Excellence in Financial Reporting” program, with an appeal for review based on the unique GASB 87 circumstances contributing to the delay in finalizing the report.
BACKGROUND
H.20., File # 23-6650 Meeting Date: 8/15/2023
The financial reports for FY 2021-2022 are briefly described below:
The ACFR is a comprehensive document reflecting the financial position of the City and its component units for the prior fiscal year. The primary purpose of this report, as defined by the City Charter, is to inform the Mayor and City Council of all financial and administrative activities of the previous fiscal year. An audit is also required to obtain the Certificate of Achievement for Excellence in Financial Reporting from the Government Financial Officers Association (GFOA) and is often a requirement for grants and federal awards.
The Inmate Trust Fund Financial Statement is prepared and submitted as required by the state penal code. This fund accounts for the money received by the City from the telephone company for providing pay telephone service to City jail inmates. Monies received are to be used solely for the benefit of the inmates.
The Enterprise Funds Financial Statement accounts for operations that are financed and operated in a manner similar to private business operations. There are five enterprise funds in the City as follows: Harbor Tidelands, Harbor Uplands, Wastewater, Solid Waste and Transit.
The Internal Service Funds Financial Statement accounts for the funds with interdepartmental operations where costs of providing services to City departments are recovered by charges to the user departments.
The Audit Communication Letter summarizes significant changes in accounting practices required by newly applicable accounting standards, describes sensitive accounting estimates which the auditors found reasonable, lists the corrected misstatements identified during the audit, and makes other similar disclosures.
The Single Audit Report is required for all federal and state funded programs. These programs are audited in conformity with the provisions of the Single Audit Act of 1984 and the OMB Circular A-133, Audits of State and Local Governments.
On November 12, 2021, the City Council approved assignments of General Fund balance, which are included in the ACFR. On August 15, 2023, staff will present the ACFR and the resulting reports to the City’s Audit Committee. The ACFR and the resulting reports will also be discussed in detail on August 10, 2023 with the City’s Budget and Finance Commission. At both meetings, LSL will present the findings and answer member questions. The annual audited financial reports for the fiscal year ended June 30, 2022 are now being recommended for City Council approval.
COORDINATION
The reports have been coordinated with the City’s independent auditors and all City Departments.
The ACFR will be reviewed by the Budget and Finance Commission on August 10 and the City’s Audit Committee on August 15.
FISCAL IMPACT
The total cost for this activity is included in the Financial Services Department’s portion of the Adopted Budget and is part of the Department’s annual work program.
H.20., File # 23-6650 Meeting Date: 8/15/2023
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Annual Comprehensive Financial Report (ACFR)
· Inmate Trust Fund Financial Report
· Enterprise Funds Financial Statement
· Internal Service Funds Financial Statement
· Audit Communication Letter
· Report on Internal Controls Letter
· Management Representation Letter