City of Richmond
Presentation to the City Council
March 3, 2026
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2025 Audit of the
City of Richmond
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Agenda
3 Our Firm and the Engagement Team
Deliverables and Scope of the Audit
Audit Methodology
Areas of Primary Audit Risk
Auditor’s Report and Financial Statements
Required Communications
New Accounting Standards
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Our Firm and the
Engagement Team
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5 Years of Experience
Government Audit Clients
City Audit Clients
Employees
Lawsuits, Legal or Disciplinary Actions
25 44
30 0
65 Our Firm – By the Numbers DRAFT
Engagement Team
6 Quality Control
Reviewer
Mitesh Desai, CPA
Engagement Partner
Ahmed Badawi, CPA
IT Specialist
Omar Rahman, CPA,
CISA
Audit Staff
Everly Feng
Audit Staff
Ahmed Elkateb
Audit Staff
Angel Lim-
Glasser
Senior
Tim Ko
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Deliverables and
Scope of the Audit
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Deliverables and Scope of the
Audit
8 Report on the Annual Comprehensive Financial Report (ACFR) Single Audit including Report on Internal Control and Compliance Report on Joint Powers Financing Authority
Report on Housing Authority
SCO Reports (City, Sewer District, JPFA and 2 Pension Plans) Agreed-Upon Procedures on Appropriation Limit Schedule (GANN) Communications With Those Charged With Governance
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Audit Methodology
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Gather information and
Finalize Timing.
Review Systems,
Processes and Assess
Risk.
Test and Validate
Significant Account
Balances.
Prepare Necessary
Reports.
Planning ReportingYear-EndInterim
10 Audit Methodology DRAFT
Areas of
Primary Audit
Risk
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Areas of Primary Audit Risk
12 •Assigned staff based on consideration of audit risk. •Incorporated an element of unpredictability in the
audit.
•Considered the selection and application of significant accounting principles.
•Examined journal entries prepared by management.
•Reviewed accounting estimates for bias.
•Evaluated the business rationale for unusual
transactions.
•Evaluated the appropriateness of fraud-related
inquiries.
Risk of Management Override of Controls – The risk of
management override of controls was addressed by the
following procedures:
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Areas of Primary Audit Risk
13 •Governmental Funds: Confirmed and validated property taxes, sales taxes, and other significant revenues and
receivables
•Proprietary Funds: Performed substantive analytics and performed testing on material operating revenue and
grant revenue items by reviewing backup.
Revenue and Receivables (Taxes, Grants, Notes, etc.) –
Improper Revenue Recognitions:
•Investment fair value estimates
•Capital Asset Useful Lives
•Pension estimates
•Other Post-Employment Benefits (OPEB) estimates
•Claim Liabilities Estimates
Estimates – Review of Significant Accounting
Estimates:
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Auditor’s
Report
and Financial
Statements
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Auditor’s Report
15 •Audit performed in accordance with Generally Accepted Auditing Standards •Audit performed in accordance with Government Auditing Standards Auditing Standards
•Financial statements are fairly presented in all material respects •Significant accounting policies have been consistently applied •Estimates are reasonable
•Disclosures are properly reflected in the financial statements Unmodified Opinions
• Business-Type Activities, Aggregate Discretely Presented Component Units (RHA Properties, RHA Housing Corporation, and RHA RAD LLC), and Richmond Housing Authority Enterprise Fund for which we disclaimed the opinions.
Disclaimer Opinions
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16 Cash and
Investments Receivables Capital
Assets Other Assets
Deferred
Outflows of
Resources
2023 $323,420,326 $163,966,805 $545,590,887 $910,091 $142,213,368 2024 $379,851,297 $170,411,335 $573,214,660 $1,410,349 $126,211,250 2025 $421,315,266 $175,399,232 $610,633,521 $1,125,154 $96,991,092 $-
$100
$200
$300
$400
$500
$600Millions
Assets and Deferred Outflows of Resources
Government-Wide Financial
Statements
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Government-Wide Financial
Statements
17 Accounts
Payable and
Accrued
Expenses
Unearned
Revenues
Compensated
Absences
Claims
Liability
Long-Term
Liabilities
Net Pension
Liability
Net OPEB
Liability
Deferred
Inflows of
Resources
2023 $29,331,789 $48,766,183 $11,881,418 $49,681,686 $430,164,55 $364,868,58 $74,720,798 $95,123,618 2024 $49,641,753 $46,056,862 $13,655,136 $52,171,564 $423,270,52 $377,759,46 $63,444,023 $86,214,631 2025 $40,198,207 $49,825,391 $19,126,354 $58,104,642 $438,309,96 $356,396,12 $53,208,987 $75,053,348 $-
$100
$200
$300
$400
$500Millions
Liabilities and Deferred Inflows of ResourcesDRAFT
Government-Wide Financial
Statements
18 Net Investment in
Capital Assets Restricted Unrestricted
2023 $301,531,372 $140,566,552 $(370,535,080)
2024 $333,839,204 $171,522,933 $(366,477,201)
2025 $331,322,893 $190,371,573 $(306,453,221)
$(500)
$(400)
$(300)
$(200)
$(100)
$-
$100
$200
$300
$400
Millions
Net Position DRAFT
Government-Wide Financial
Statements
19 2023 2024 2025
Net Cost of
Service $118,272,590 $189,406,431 $188,865,723
Tax Revenue $200,930,805 $213,450,483 $236,016,676
$-
$50
$100
$150
$200
$250Millions
Net Cost of Service to Tax Revenue - Governmental
Activities
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T
General Fund
20 2023 2024 2025
Unrestricted Fund Balance $68,447,884 $75,116,935 $76,775,100 Total Expenditures $180,085,786 $198,640,109 $248,102,399 As % of Total Expenditures 38% 38% 31%
Number of Months* 5 5 4
$-
$50
$100
$150
$200
$250
$300Millions
Expenditure Coverage
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* Measure of the City's ability to operate with no revenues using available fund balance. GFOA recommendation no less than 2 months.
Pension Plans
21 2023 2024 2025
1% Decrease $525,519,866 $539,310,385 $520,671,718
Current Rate $364,868,588 $377,759,466 $356,396,122
1% Increase $232,176,893 $244,270,059 $220,594,427
$-
$100
$200
$300
$400
$500
$600Millions
Total Net Pension Liability (Asset)
Sensitivity to Discount Rate
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Other Postemployment Benefits Plans
22 2023 2024 2025
1% Decrease $89,321,489 $77,385,958 $68,360,989
Current Rate $74,720,798 $63,444,023 $53,208,987
1% Increase $62,471,926 $51,693,207 $40,687,928
$-
$20
$40
$60
$80
$100Millions
Total Net OPEB Liability
Sensitivity to Discount Rate
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Required
Communications
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Required Communications
24 Auditor’s Responsibilities
Provide an opinion on whether financial
statements are fairly stated in
accordance with U.S. GAAP
Evaluate internal control over
financial reporting including tone at
the top
Evaluate compliance with laws,
contracts, and grants.
Ensure financial statements are clear
and transparent
Communicate with the governing body
Management’s Responsibilities
Take responsibility for the financial
statements
Establish and maintain internal
control over financial reporting
Make all financial records available
to us
Establish internal control to prevent
and detect fraud
Inform us of all known and suspected
fraud
Comply with laws and regulations
Take corrective action on audit
findings
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Required Communications
25 •It is our responsibility to maintain independence
•We maintained our independence by strict adherence to the AICPA and the Board of Accountancy rules and regulations •Other than preparing the financial statements, no services performed that could affect our independence.
Independence
•Not within the time frame originally communicated to the City in our engagement letters.
Timing of the Audit
•The City adopted the following new pronouncements during the year:
•GASB Statement No. 101 – Compensated Absences
•GASB Statement No. 102 – Certain Risk Disclosures
Significant Accounting Policies and Unusual
Transactions
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Required Communications
26 •No difficulties encountered.
Difficulties Encountered in Performing the
Audit
•There were adjustments and reclassifying entries
during the course of the audit. Management has
posted all proposed audit adjustments.
Significant Audit Adjustments and Unadjusted
Differences
•No material weaknesses were identified.
Deficiencies in Internal Control over
Financial Reporting
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New Accounting Standards
27 •GASB Statement No. 103 – Financial Reporting
Model
•GASB Statement No. 104 – Disclosure of
Certain Capital Assets
2026
•GASB Statement No. 105 – Subsequent Events
2027
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Thank You for Allowing
us to Provide Audit
Services to the
City of Richmond.
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