City Council Memorandum
TO: HONORABLE MAYO R AND CITY COUNCIL DATE: JANUARY 18, 2022 FROM: FINANCE DEPARTMENT WARDS: ALL
SUBJECT: ANNUAL AUDIT REPORTS FROM EXTERNAL INDEPENDENT AUDITOR,
LANCE, SOLL & LUNGHARD, LLP ON CITY OF RIVERSIDE FINANCIAL RESULTS FOR FISCAL YEAR 2020/21
ISSUES:
Receive the annual audit reports from external independent auditor, Lance, Soll & Lunghard, LLP on the City of Riverside financial results for Fi scal Year 2020/21 and reappoint Lance, Soll & Lunghard, LLP, to serve as the City’s independent auditor to conduct the annual audit of Fiscal Year 2021-2022.
RECOMMENDATIONS:
That the City Council:
1. Receive the annual audit repor ts from external independent auditor, Lance, Soll & Lunghard, LLP on the City of Riverside financial results for Fiscal Year 2020/21 as required by the Riverside City Charter; and
2. Reappoint Lance, Soll & Lunghard, LLP, to serve as the City’s independent auditor to conduct the annual audit for Fiscal Year 2021/22.
COMMITTEE RECOMMENDATION:
This report is published on December 24, 2021, for the January 18, 2022, City Council meeting.
On January 14, 2022, the Financial Performanc e and Budget Committee will hear this item for consideration to recommend to City Council to receive the reports outlined below and reappoint Lance, Soll & Lunghard, LLP for y ear four of the five -year contract to serve as the City’s independent auditor to conduct the annual audit of Fiscal Year 2021/22.
BACKGROUND:
On April 10, 2019, the Finance Committee conducte d interviews for the appointment of a new independent external auditor. The Committee interviewed the top two accounting firms, Vavrinek, Trine, Day & Co., LLP (VTD) and Lance, Soll & Lunghard, LLP (LSL), identified through a formal 2021 Audit Reports ● Page 2
Request for Proposal process. Following interviews and discussion, the Committee recommended that the City Council appoint Lance, Soll & Lunghard, LLP to serve as the City’s independent auditors in accordance with its annual audit requirements for a five-year period, subject to annual reappointments, beginning with the fiscal year ending June 30, 2019.
On June 4, 2019, City Council awarded a Professi onal Consultant Services Agreement for Certified Public Accountant Services to Lanc e, Soll & Lunghard, LLP to serve as the City’s independent auditor for a five-year term, subject to annual renew als, and appointed Lance, Soll & Lunghard, LLP as the City’s independent external auditor for a five-year term, subject to annual renewals.
DISCUSSION:
The City’s external independent auditor Lance, Soll & Lunghard, LLP has completed the annual audit of the City’s financial statements and other financial reports subject to audit, as follows:
1. Annual Comprehensive Financial Report (ACFR)
2. Electric and Water Financial Reports
3. Successor Agency Financial Report
4. Riverside Public Financing Authority Financial Report
5. Single Audit Report on Federal Awards
6. AQMD Report on Internal Controls
7. Appropriations Limit (Gann) Ca lculation Agreed-Upon Procedures.
The auditors provided an unmodified, or clean, opini on that the City’s financial statements are presented fairly and in conformity with generally accepted accounting principles. This clean audit opinion supports the fact that the City observed compliance with generally accepted accounting principles and statutory requirements. As par t of the financial audit, the auditors provided a management letter and there were no misstatements detected as a result of the audit procedures and corrected by management which were material, either individually or in the aggregate, to the financial statements taken as a whole. This is a remarkable achievement given the size and complexity of the City.
The City’s financial statements are distributed to the City Council, feder al and state government agencies per contract requirements, bond holders, rating and financial institutions, and are made available in libraries for interested citizens.
For the fifth time, the City has produced a P opular Annual Financial Report (PAFR). The Government Finance Officers Association (GFO A) established the PAFR in 1991 to encourage and assist state and local governm ents to extract information from their ACFR to produce high quality popular annual financial reports specifically designed to be readily accessible and easily understandable to the general public and other interested parties without a background in public finance and who may be overwhelmed by the volume of information in the traditional ACFR.
For the fourth time, the City received an award from GFOA for the 2019 submission of the PAFR.
The current report continues to meet the Award for Outstanding Achievement in Popular Financial Reporting program requirements and is being submitted to GFOA to determine its eligibility for 2021 Audit Reports ● Page 3
another certificate.
Lance, Soll & Lunghard, LLP has comp leted its third year of a five-year contract, consistent with the City’s charter which allows the City’s independent auditor to serve for no more than five years before mandatory rotation is required. This practice is consistent with industry best practices as promulgated by the national org anization of municipal financia l professionals, the GFOA. The Finance department is satisfied with the curr ent year’s audit and recommends Lance, Soll & Lunghard, LLP be reappointed for the fourth year of their contract.
Lance, Soll & Lunghard, LLP will pr ovide the attached presentatio n of required communication with the Financial Performance and Budget Committee and answer any questions.
STRATEGIC PLAN ALIGNMENT:
This item contributes to Strategic Priority 5 – High Performing Government and Goal No. 5.2, Utilize technology, data, and proce ss improvement strategies to increase efficiencies, guide decision making, and ensure services are accessible and distributed equitably throughout all geographic areas of the City.
The item aligns with each of the five Cross-Cutting Threads as follows:
1. Community Trust – The financial reports attached enhances transparency regarding the financial situation of the City and closely related agencies.
2. Equity – This report is neutral towards this cross-cutting thread.
3. Fiscal Responsibility – The financial reports provide fiscal responsibility and accountability to show the current financia l situation of the Cit y and closely related agencies.
4. Innovation – This report is neutral towards this cross-cutting thread.
5. Sustainability & Resiliency – These financial reports communicate and help ensure City funds are used in a sustainable way without compromising future needs.
FISCAL IMPACT:
There is no fiscal impact asso ciated with this report. Funding for the annual audit of Fiscal Year 2021/22 will be included in the FY 2022/23 budget.
Prepared by: Nancy Garcia, Controller
Certified as to
availability of funds: Edward Enriquez, Chief Financial Officer / City Treasurer Approved by: Kris Martinez, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
2021 Audit Reports ● Page 4
Concurs with:
________________________________
Steve Hemenway, Chair
Financial Performance and Budget Committee
Attachments:
1. Annual Comprehensive Financial Report (ACFR)
2. Electric and Water Financial Reports
3. Successor Agency Financial Report
4. Riverside Public Financi ng Authority Financial Report
5. Single Audit Report on Federal Awards
6. Appropriations Limit (Gann) Calc ulation Agreed-Upon Procedures Report
7. Independent Auditors’ Report on Internal Control over Financial Reporting
8. AQMD Report in Internal Controls
9. Required Auditor Communication Letter
10. Popular Annual Financial Report (PAFR)
11. Presentation – Lance, Soll & Lunghard, LLP
12. Presentation – Finance Department