City Council and Concurrent Authorities
March 19, 2024

CITY OF STOCKTONPresentation to the City CouncilFor the Fiscal Year Ended June 30, 2023City Council MeetingMarch 19, 2024Agenda Item 15.4 2 CONTENTS• Scope of Work • Required Communications (AU-C 260)• Overview of the Financial Statements and Financial Indicators• Key Pensions Information• Audit Results• Thank You!3/19/2024 3SCOPE OF WORK3/19/2024
4 SCOPE OF WORK• Audit of the Annual Comprehensive Financial Report • Report on internal control over financial reporting and on compliance in accordance with Government Auditing Standards3/19/2024 5Required Communications (AU-C 260)3/19/2024
6 OUR RESPONSIBITY IN ACCORDANCE WITH PROFESSIONAL STANDARDS• Form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America• Our responsibility is to plan and perform the audit to obtain “reasonable” assurance (not “absolute” assurance) about whether the financial statements are free of material misstatements.• Exercise professional judgment and maintain professional skepticism throughout the audit.• We considered internal control over financial reporting. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.• Communicate with those charged with governance3/19/2024 7 Required Communications (AU-C 260)
3/19/2024
•Ethics and Independence• Complied with ALL relevant ethical requirements regarding independence•Significant Accounting Policies• The City disclosed all significant accounting policies in Note 1 to the financial statements.• The City implemented GASB Statement No. 96, Subscription-Based Information Technology Arrangements•Significant Estimates• Investment Fair Market Value• Depreciation and Amortization on Capital Assets and Right-to-Use Asset • Lease receivable• Lease liability/Subscription liability• Net Pension Liability 8 Required Communications (AU-C 260)
3/19/2024
•Sensitive Disclosures• Note 1 – Summary of Significant Accounting Policies• Note 4 – Lease Receivable• Note 12 – Retirement Plans• Note 15 – Other Required Disclosures• Note 16 – Commitments and Contingencies• Note 18 – Subsequent Events• Note 19 – Prior Period Adjustments 9 Required Communications (AU-C 260)
3/19/2024
•Misstatements• There were no uncorrected misstatement reported.•Consultation with Other Accountants• Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and other matters.•Significant Difficulties• We encountered no significant difficulties in dealing with management.•Disagreement with Management• We did not have any disagreement with management in terms of accounting treatments nor audit procedures performed. 10OVERVIEW OF THE FINANCIAL STATEMENTS AND FINANCIAL INDICATORS3/19/2024 11 City of StocktonGovernment-Wide Statement of Net PositionJune 30, 2023 3/19/2024
Governmental Business-TypeActivities Activities TotalAssets1,867,815,000$ 1,097,758,000$ 2,965,573,000$ Deferred Outflows of Resources178,503,000 18,975,000 197,478,000 Liabilities853,759,000 415,678,000 1,269,437,000 Deferred Inflows of Resources11,403,000 511,000 11,914,000 Net Position:Net investment in capital assets 817,086,000 473,568,000 1,290,654,000 Restricted 495,695,000 25,366,000 521,061,000 Unrestricted (deficit) (131,625,000) 201,610,000 69,985,000 Total Net Position1,181,156,000$ 700,544,000$ 1,881,700,000$ 12 City of StocktonGovernment-Wide Statement of ActivitiesFor the Year Ended June 30, 2023 3/19/2024
Governmental Business-TypeActivities Activities TotalProgram Revenues:Charges for Services 68,006,000$ 156,442,000$ 224,448,000$ Operating Grants and Contributions42,072,000 1,653,000 43,725,000 Capital Grants and Contributions 26,667,000 12,363,000 39,030,000 Total Program Revenues136,745,000 170,458,000 307,203,000 Expenses379,942,000 134,622,000 514,564,000 Net Cost of Services(243,197,000) 35,836,000 (207,361,000) General Revenues341,241,000 235,000 341,476,000 Transfers416,000 (416,000) - Changes in Net Position98,460,000$ 35,655,000$ 134,115,000$ 13 City of StocktonGeneral Fund SummaryFund BalanceJune 30, 2023 and 2022 3/19/20242023 2022 ChangeFund Balance:Nonspendable 2,397,000$ 2,077,000$ 320,000$ Restricted 5,218,000 5,289,000 (71,000) Committed 150,811,000 123,754,000 27,057,000 Assigned 5,447,000 4,285,000 1,162,000 Unassigned 48,490,000 43,208,000 5,282,000 Total Fund Balance212,363,000$ 178,613,000$ 33,750,000$ 14 City of StocktonGeneral Fund SummaryRevenues, Expenditures and Changes in Fund BalanceFor the Years Ended June 30, 2023 and 2022 3/19/20242023 2022 ChangeRevenues335,478,000$ 303,970,000$ 31,508,000$ Expenditures(263,675,000) (244,157,000) (19,518,000) Revenues over Expenditures71,803,000 59,813,000 11,990,000 Other Financing Uses(38,053,000) (12,056,000) (25,997,000) Change in Fund Balance33,750,000$ 47,757,000$ (14,007,000)$ 15 City of StocktonGeneral FundUnassigned Fund Balance to Annual ExpendituresFor the Years Ended June 30, 2023 and 2022 3/19/20242023 2022 ChangeUnassigned Fund Balance48,490,000$ 43,208,000$ 5,282,000$ Annual Expenditures263,675,000 244,157,000 19,518,000 Ratio18.4% 17.7% 0.7%Committed/Assigned/UnassignedFund Balance204,748,000$ 171,247,000$ 33,501,000$ Ratio77.7% 70.1% 7.6% 16FINANCIAL AUDIT RESULTS3/19/2024
17 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•AU-C 265, Communicating Internal Control Related Matters Identified in an Audit• 2023-001 Internal Control Over Financial Reporting• Prior Period Adjustments• Slate Receivable and Payable3/19/2024 HQ - ORANGE COUNTY200 E. Sandpointe AvenueSuite 600Santa Ana, CA 92707SAN DIEGO4660 La Jolla Village. Dr.Suite 100San Diego, CA92122BA Y AREA2121 North California Blvd.Suite 290Walnut Creek, CA 94596LAS VEGAS1980 Festival Plaza DriveSuite 300Las Vegas, NV 89135PHOENIX2 North Central AvenueSuite 1800Phoenix, AZ 85004SACRAMENTO1511 Corporate WaySuite 220Sacramento, CA95831