CITY OF SAN PABLO
REQUIRED COMMUNICATIONS
FOR THE YEAR ENDED
JUNE 30, 2023
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CITY OF SAN PABLO
REQUIRED COMMUNICATIONS
For the Year Ended June 30, 2023
Table of Contents
Page
Required Communications .................................................................................................................. 1
Significant Audit Matters:
Qualitative Aspects of Accounting Practices ..................................................................... 1
Difficulties Encountered in Performing the Audit ............................................................. 2
Corrected and Uncorrected Misstatements ........................................................................ 2
Disagreements with Management ...................................................................................... 2
Management Representations .............................................................................................. 3
Management Consultations with Other Independent Accountants ................................... 3
Other Audit Findings or Issues ............................................................................................ 3
Other Ma tters .............................................................................................................................. 3
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REQUIRED COMMUNICATIONS
To the City Council of
the City of San Pablo, California
We have audited the basic financial statements of th e City of San Pablo (City) , California, for the year ended June 30, 2023. Professional standards requir e that we provide you with information about our responsibilities under generally
accepted auditing standards and 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 orally during ou r discussion with City Council on July 18, 2023.
Professional standards also require that we communi cate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Accounting Policies - Management is responsible for the selec tion and use of appropriate accounting
policies. The significant accounting policies used by the City are desc ribed in Note 1 to the financial statements. No new accounting policies were adopt ed, and the application of existing policies was not changed during the year, except as follows. The following pronounceme nts became effective, but did not have a material effect on the financial statements:
GASB 91 – Conduit Debt Obligations
GASB 94 – Public-Private and Public-Public Pa rtnerships and Availability Payment Arrangements
GASB 96 – Subscription-Based Information Technology Arrangements GASB 99 – Omnibus 2022, paragraphs 11-25
Unusual Transactions, Controversial or Emerging Areas - We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidan ce or consensus. All significant transactions have been recognized in the financial statements in the pr oper period. However, there was a transaction that was made during the year ended June 30, 2023 to reimburse th e General Fund from the 2015 JPFA Lease Revenue Bonds Capital Projects Fund in the amount of $2,260,050 for costs incurred on the City Hall project from prior to fiscal year 2023. Therefore, the City reported a transfer of $2,260,050 to the General Fund from the 2015 JPFA Lease Revenue Bonds Capital Projects Fund, as discussed in Note
4. The City consulted with bond counsel to obtain approval from counsel to transfer these funds.
Accounting Estimates - 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 es timates 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 se
nsitive estimates affecting the City’s financial
statements were:
1 Estimated Net Pension Liabilities and Pensi on-Related Deferred Outflows and Inflows of Resources: Management’s estimate of the net pension liabilities and deferred outflows/inflows of resources are disclosed in Note 9 to the financial statements and are based on accounting valuations determined by the California Public Employees Retirement System, which are based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimates and determined that they are reasonable in relati on to the basic financial statements taken as a whole.
Estimated Net OPEB Liabilities (Asset) and OPEB– Related Deferred Outflows and Inflows of Resources: Management’s estimate of the net OPEB liabilities (asset) and deferred outflows/inflows of resources are disclosed in Note 10 to the financial statements and are based on actuarial studies determined by a consultant, whic h are based on the experience of the City. We evaluated the key factors and assumptions used to develop the estim ate and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Liability for Claims Payable: Management’s estimate of the liability for claims payable is disclosed in Note 12 to the financial statements and is based on actuarial studies determined by a consultant, which is based on the claims experience of the City. We evaluated the key factors and assumptions used to develop the estimate and determ ined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimate of Depreciation: Management’s estimate of the depreci ation is based on useful lives determined by management. These lives have be en determined by management based on the expected useful life of assets as disclosed in No te 6 to the financial stat ements. We evaluated the key factors and assumptions used to develop the depreciation estima te and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Disclosures - 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 mi sstatements. The following material misstatements detected as a result of audit procedures were corrected by management: fair market value of investments, transactions between the City and EDC, and long-term debt transactions.
Professional standards require us to accumulate all known and likely uncorrected misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the City Council.
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.
2 Management Representations
We have requested certain representations from ma nagement that are incl uded in a management representation letter dated December 12, 2023.
Management Consultations with Other Independent Accountants
In some cases, management may d ecide to consult with other account ants 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 determ ination 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 re levant 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 re lationship and our response s were not a condition to our retention.
Other Matters
We applied certain limited procedures to the requir ed supplementary information that accompanies and 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 required supplementary information and do not express an opinion or provide any assurance on the required supplementary information.
We were engaged to report on the supplementary information that accompanies the financial statements, but is not required supplementary in formation. 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 accounting principles generally accepted in the United States of America, 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.
We were not engaged to report on the Introductory and Statistical Sections which accompany the financial statements, but are not required supplementary information. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
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This information is intended solely for the use of City Council and management and is not intended to be, and should not be, used by anyone other than these specified parties.
Pleasant Hill, California
December 12, 2023
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