December 4, 2023
To the City Council of the
City of Ripon, California
We have audited the modified‐cash basis financial statements of the governmental activities, the business‐type activities, each major fund, and the aggregate remaining fund information of the City of Ripon, California (the City) for the year ended June 30, 2023. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated March 3, 2023. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2023. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the City’s financial statements was:
Management’s estimate of the indirect cost allocation is based on actual costs incurred in each fund.
We evaluated the methods, assumptions, and data used to develop the indirect cost allocation in determining that it is reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. The attached schedule reflects all material misstatements detected as a result of audit procedures that were corrected by management.
2023.06.30 City of Ripon - Audit Communication Letter
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report.
We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter.
Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
In addition to those matters already communicated to you in our engagement letter, we have identified the following significant risks of misstatements as part of our audit planning:
1. Failure to record material advances between funds.
2. Fund balance is not properly classified in accordance with GASB 54.
3. Interfund payment activity is improperly recorded as a transfer or otherwise reported as revenue/expenses instead of a reduction of the inter‐fund balance.
4. Manual adjustments (journal entries) posted by the City’s cash accounts are not accurate, approved, or are potentially fraudulent.
5. Misclassification of transfers in/out (commingling of transfers in/out in same account).
6. Transfers between the City and the City’s fiduciary funds are not in compliance with relevant legal or other administrative requirements.
These risks were addressed within our audit procedures, and we have no findings to report related to these risks.
Other Matters
We applied certain limited procedures to management’s discussions and analysis which is required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual non‐major fund statements and additional information on the Successor Agency Trust Fund, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with the modified cash basis of accounting, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. 2023.06.30 City of Ripon - Audit Communication Letter
Restriction on Use
This information is intended solely for the information and use of the City Council and management of the City of Ripon and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
2023.06.30 City of Ripon - Audit Communication Letter
Client: RIPON, CITY OF
Engagement: 6-30-2023 Audit
Current Period: 06/30/2023
Workpaper: Attachment: Material Adjusting Journal Entries Account Description
Workpaper
Reference Debit Credit Net Income Effect
AJE02 D400
To accrue interfund payable/receivable for the
Mitigation Corp Yard Loan.
900-28000 INTERFUND PAYABLE - CORP YARD LOAN 0.00 5,687,300.00 900-40001 OPERATING TRANSFERS 5,687,300.00 0.00
100-17560 ADVANCES TO OTHER FUNDS - CORP YARD LOAN 5,687,300.00 0.00 100-99998 Transfers Out (PPC Account) 0.00 5,687,300.00 Total 11,374,600.00 11,374,600.00 0.00
AJE03 O200
To correct CRJE06 - eliminating transfer out
from recreation fund (RAGE Volleyball).
900-40001 OPERATING TRANSFERS 1,599,920.80 0.00
900-99999 Transfers Out (PPC Account) 0.00 1,599,920.80 Total 1,599,920.80 1,599,920.80 0.00
AJE05 O200
To reverse client reclassification journal entry
#4 (current year RAGE activity).
300-40001 OPERATING TRANSFERS 1,559,920.80 0.00
900-40001 OPERATING TRANSFERS 0.00 1,559,920.80
900-17560 DUE FROM OTHER FUNDS 1,559,920.80 0.00
300-28000 DUE TO OTHER FUNDS 0.00 1,559,920.80
Total 3,119,841.60 3,119,841.60 0.00
AJE06 D200
To correct current year RAGE loan activity.
300-28000 DUE TO OTHER FUNDS 1,200,000.00 0.00
300-5999 Debt Forgiveness - PPC CREATED 0.00 1,200,000.00 900-17560 DUE FROM OTHER FUNDS 0.00 1,200,000.00
900-5999 Debt Forgiveness - PPC CREATED 1,200,000.00 0.00 300-99999 Transfers Out (PPC Account) 0.00 113,249.97
900-40001 OPERATING TRANSFERS 113,249.97 0.00
300-28000 DUE TO OTHER FUNDS 113,249.97 0.00
900-17560 DUE FROM OTHER FUNDS 0.00 113,249.97
Total 2,626,499.94 2,626,499.94 0.00
AJE07 RE502
To reclassify the transfer of monies from the
Successor Agency to the Capital Project Fund as
an extraordinary item.
451-0000-6999 Payment to City - PPC ACCOUNT 1,741,000.00 0.00 451-99999 Transfers Out (PPC Account) 0.00 1,741,000.00 900-40001 OPERATING TRANSFERS 1,741,000.00 0.00
900-4444 Payment from Successor Agency - PPC ACCOUNT 0.00 1,741,000.00 Total 3,482,000.00 3,482,000.00 0.00
AJE08
To reclassify LTF Transit funds from the capital
project funds to the Streets Fund.
900-46000 LTF TRANSIT FUNDS 169,761.00 0.00
200-46000 LTF TRANSIT FUNDS 0.00 169,761.00
900-10100 CASH IN COMBINED FUND 0.00 169,761.00
200-10100 CASH IN COMBINED FUND 169,761.00 0.00
Total 339,522.00 339,522.00 0.00
2023.06.30 City of Ripon - Audit Communication Letter