CITY OF STOCKTON
Presentation to the City Council
For the Fiscal Year Ended June 30, 2021
Presented by:
Gary M. Caporicci, CPA, CGFM, CFF
Partner
March 22, 2022
City Council Meeting
Agenda Item 15.4
2 AUDITOR’S ANNUAL COMMUNICATION
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3 AUDITOR’S ANNUAL COMMUNICATION
On March 14, 2022, The Pun Group presented to the City’s Audit Committee our detailed annual communication on our audits on the City’s Annual Comprehensive Financial Report and other funds.
Attached is a summary of that presentation
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22 4
Scope Of Work
Financial Audit
• Annual Comprehensive Financial Report
• Measure M Strong Communities Fund Financial Report
• Measure W Public Safety Tax Fund Financial Report
• Agreed-Upon Procedures
• GANN Limit Compliance
• Core Revenues
• Measure A Transaction and Use Tax
• Single Audit (To be performed in March 2022)
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5 Auditors’ Required Communication
• Audit Responsibilities
• Accounting Policies, Significant Estimates and Disclosures • Implementation of New GASB Statements
• GASB 84 – Fiduciary Activities
• GASB 98 – Annual Comprehensive Financial Report
• Management’s estimates of the investment fair value, depreciation on capital assets and net pension liabilities
• Sensitive Disclosures
• Note 1 – Summary of Significant Accounting Policies
• Note 11 – Retirement Plans
• Note 15 – Commitments and Contingencies
• No Significant Difficulties Encountered During Audit
• No Disagreements with Management
• No Consultations with Other Accountants
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6 Management’s Responsibilities
• Responsible for the Financial Statements
• Present the Financial Statements in accordance with Accounting Principles Generally Accepted in the United States of America
• Financial Statements Free of Material Misstatements
• Adopt sound accounting policies
• Establish and maintain internal controls over financial reporting and compliance
• Provide evidence supporting the amounts and disclosures in the financial statements
• Prevent and detect fraud
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7 Auditors’ Responsibilities
• Perform the audit in conformity with Auditing Standards Generally Accepted in the United States of America and Standards applicable to Financial Audits contained in Government Auditing Standards
• Communication with “Those Charged with Governance”
• Assess audit risk of internal control over financial reporting and compliance • Determine fairness presentation of the financial statements • Render an audit opinion
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8 FINANCIAL OVERVIEW OF THE
CITY OF STOCKTON
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City of Stockton
Government-Wide Financial Statements
Summary Statement of Net Position
As of June 30, 2021 and 2020
(Amounts in Thousands)
2021 2020
Assets 2,713,407$ 2,520,974 $
Deferred Outflows of Resources 93,591 102,784
Liabilities 1,230,234 1,157,882
Deferred Inflows of Resources 13,094 17,147
Net Position
Net investment in capital assets 1,098,093 1,025,598 Restricted 504,890 365,006
Unrestricted (39,313) 58,125
Total Net Position 1,563,670$ 1,448,729 $
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City of Stockton
Government-Wide Financial Statements
Summary Statement of Activities
For the Years Ended June 30, 2021 and 2020
(Amounts in Thousands)
2021 2020
Expenses 504,856$ 474,736 $
Program Revenues
Charges for Services 214,659 168,833
Operating Grants and Contributions 51,328 28,823 Capital Grants and Contributions 52,328 37,485 Total Program Revenues 318,315 235,141
Net cost of service (186,541) (239,595)
General Revenues
Taxes 183,128 166,571
Others 118,353 146,273
Total general revenues 301,481 312,844
Changes in Net Position 114,940$ 73,249 $
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City of Stockton
General Fund
Condensed Balance Sheets
As of June 30, 2021 and 2020
(Amounts in Thousands)
2021 2020
Assets 153,529$ 141,219 $
Liabilities 15,739 17,996
Deferred Inflows of Resources 6,933 8,612
Fund Balance:
Nonspendable 2,215 5,796
Restricted 5,385 3,998
Committed 77,638 59,672
Assigned 4,526 4,017
Unassigned 41,093 41,128
Total Fund Balance 130,857 114,611
Total liabilities, deferred inflows of
resources, and fund balance 153,529$ 141,219 $
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City of Stockton
General Fund
Condensed Statements of Revenues, Expenditures
and Changes in Fund Balance
For the Years Ended June 30, 2021 and 2020
(Amounts in Thousands)
2021 2020
Revenues 286,396$ 268,227 $
Expenditures:
Current:
General government 26,236 16,369
Public Safety 180,932 177,246
Public Works 15,934 8,407
Library 10,558 11,906
Parks and recreation 3,907 18,722
Capital Outlay 612 935
Interest and fiscal charges 16 - Total expenditures 238,195 233,585
Excess of revenues over expenditures 48,201 34,642 Other Financing Sources (Uses)
Tranfers, net (31,961) (24,456)
Processed from sale of capital assets 6 393
Total other financing sources (uses) (31,955) (24,063) Net changes in fund balance 16,246$ 10,579 $ 13 AUDIT RESULTS
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14 Audit Results
• Unmodified Opinion
• 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 3/15/2022
15 Audit Findings
• During the fiscal year 2020-2021, the City implemented the new Enterprise Resource Planning (ERP) System. We noted the following deficiencies:
• Bank reconciliation – The City did not reconcile its bank in a timely fashion and was unable to reconcile its operating account. As a result, there was a discrepancies in the amount of $785,277.
• Capital Assets – Instruction was not clear on the data input and as a result, the depreciation was miscalculated.
• Reporting – There are less options for reporting and providing details. During the year end phase of the audit, the accounting team was still resolving the implementation issues and reconciling the differences between the subsidiary ledgers and the general ledger. 2021-001 Internal Control Over Financial Reporting
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