February 6, 2024
Finance Department
DATE: February 6, 2024
TO: Mayor Martinez and Members of the City Council
FROM:
Nickie Mastay, Deputy City Manager, Internal Services
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Chak, Accounting Manager
Subject:
City of Richmond Annual Comprehensive Financial Report
for the Fiscal Year Ended June 30, 2023
FINANCIAL IMPACT: There is no fiscal impact to receiving this report.
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
The City retains an independent auditor to annually
review and express an opinion regarding the accurate
representation of the City’s financial statements.
RECOMMENDED ACTION:
RECEIVE a report on the City’s Annual Comprehensive
Financial Report (ACFR) for Fiscal Year ended June 30,
2023 – Finance Department (Andrea Miller/Mubeen
Qader/Jerry Chak 510-620-6740).
DISCUSSION:
The Finance Department issued a Request for Proposals (RFP) to select certified public accountants to audit the City of Richmond’s (City) financial statements and financial statements of component entities, including the Richmond Housing Authority (RHA), for the fiscal years ending June 30, 2020 through June 30, 2022, with an option to extend the contract in one-year periods, not to exceed a total of two additional fiscal years.
AGENDA
REPORT
February 6, 2024
Based on the RFP and interview rating matrixes, Badawi & Associates scored the highest points and was selected as our external auditors. On March 17, 2020, City Council approved a contract with Badawi & Associates. City staff later exercised the option to extend the contract for the fiscal year ending June 30, 2023.
The Annual Comprehensive Financial Report (ACFR) contains the basic financial statements (including notes to the financial statements) and required supplementary information such as the management’s discussion and analysis of the City. The ACFR is prepared in accordance with generally accepted accounting principles (GAAP) for local governments as established by the Governmental Accounting Standards Board (GASB). The report is designed to highlight changes in the City’s financial condition and practices over time and to allow consistencies between all state, municipal, and other governmental agencies.
California Government Code section 53891 requires every local government agency to submit a report of all financial transactions to the State Controller’s Office based on data from the audited financial statements prepared in accordance with GAAP, and that the report is audited by an independent firm of certified public accountants. Since the ACFR is audited by an independent expert, the report provides additional assurance to the community that the City is being responsible stewards of the tax dollars.
Badawi & Associates has audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City for the fiscal year ended June 30, 2023, and the related notes to the financial statements.
For the fiscal year ended June 30, 2023, Badawi & Associates did not audit RHA. Maze and Associates, the external auditors for RHA, are completing the financial audit for the fiscal year ended June 30, 2019, with an anticipated completion by the end of the current fiscal year. Once that audit has been completed, Badawi & Associates will complete the RHA audit for the fiscal year ended June 30, 2020, and subsequent years.
The Independent Auditor’s Report begins on page 17 of 312 of Attachment 1 – Annual Comprehensive Financial Report, highlights as follows:
Disclaimer of Opinion on Business-Type Activities, Aggregated Discretely Presented Component Units and Richmond Housing Authority
“Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the business-type activities, Richmond Housing Authority Enterprise Fund, and the aggregate discretely presented component units of the City. Accordingly, we do not express an opinion on these financial statements.”
February 6, 2024
Basis for Disclaimer of Opinion
“The financial statements of the Richmond Housing Authority and RHA Properties, RHA Housing Corporation and RHA RAD LLC have not been audited for the year ended June 30, 2023. The Richmond Housing Authority’s financial activities are included in the City’s basic financial statements as a major enterprise fund and represent 8.11 percent,
18.66 percent, and 8.67 percent of the assets, net position, and revenues, respectively, of the City’s business-type activities. The financial activities of the RHA Properties, RHA Housing Corporation and RHA RAD LLC are included in the City’s financial activities as discretely presented component units and represent the City’s only discretely presented component units.”
Unmodified Opinions on Governmental Activities, Major Governmental Funds, Port of Richmond, Municipal Sewer Fund and Aggregate Remaining Fund Information
Badawi & Associates conducted their audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and has provided an unmodified opinion on the City’s financial statements for the fiscal year ended June 30, 2023. The financial statements in their opinion present fairly, in all material respects, the respective financial position of the governmental activities, the General Fund, the Community Development and Loan Programs Special Revenue Fund, the Port of Richmond Enterprise Fund, the Municipal Sewer Enterprise Fund, and the aggregate remaining fund information of the City as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
DOCUMENTS ATTACHED:
Attachment 1 – City of Richmond Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2023