CITY OF SUNNYVALE
REQUIRED COMMUNICATIONS
FOR THE YEAR ENDED JUNE 30, 2025
Attachment 7
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Attachment 7
CITY OF SUNNYVALE
REQUIRED COMMUNICATIONS
For the Year Ended June 30, 2025
Table of Contents
Page
Required Communications .................................................................................................................. 1
Significant Audit Matters ................................................................................................................. 1
Qualitative Aspects of Accounting Practices ............................................................................. 1
Difficulties Encountered in Performing the Audit ................................................................... 2
Corrected and Uncorrected Misstatements .............................................................................. 3
Disagreements with Management ............................................................................................. 3
Management Representations .................................................................................................... 3
Management Consultations with Other Independent Accountants ......................................... 3
Other Audit Findings or Issues .................................................................................................. 3
Other Matters .................................................................................................................................. 3
Attachment 7
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Attachment 7
REQUIRED COMMUNICATIONS
To the Honorable Mayor and Members of the City Council
City of Sunnyvale, California
We have audited the basic financial statements of the City of Sunnyvale for the year ended June 30, 2025.
Professional standards require that we provide yo u 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 scop e and timing of our audit. We have communicated such information in our le tter to you dated April 15, 2025. Professi onal standards also require that we communicate to you the following in
formation 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 polic ies used by the City are described 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 pronouncements became effective, but did not have a ma terial effect on the financial statements:
GASB 101 – Compensated Absences
GASB 102 – Certain Risk Disclosures
Unusual Transactions, Controversial or Emerging Areas – We noted no transactions entered into by the City during the year for which ther
e is a lack of authoritative guidan ce or consensus. All significant transactions have been recognized in the financial statements in the proper period.
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 estimates are particularly sensitive because of their significance to the financial statements and beca use of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
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 16 to the financial statements and are based on actuarial studies and accounting valuations determined by the Ca lifornia Public Employees Retirement System, which are based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate in de termining that it is reasonable in relation to the basic financial statements taken as a whole.
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Estimated Net OPEB Liability and OPEB-Related De ferred Outflows and Inflows of Resources:
Management’s estimate of the net OPEB liability and deferred outflows/inflows of resources is disclosed in Note 17 to the financial statements and is ba sed on actuarial study determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estimate in determ ining that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Fair Value of Investments: As of June 30, 2025, the City held approximately $1,139.4 million of cash and investments as meas ured by fair value as disclosed in Note 3 to the financial statements. Fair value is essentially market pric ing in effect as of June 30, 2025. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2025.
Estimate of Depreciation: Management’s estimate of the depreci ation is based on useful lives determined by management. These lives have been determined by management based on the expected useful life of assets as disclosed in Note 1 to the financial statements. We evaluated the key factors and assumptions used to develop the depreciation estimate in Note 11 to the financial statements in determining that it is reasonable in relation to the basic financial statements taken as a whole.
Estimate of Compensated Absences: Accrued compensated absences which are comprised of accrued paid time off, compensatory time and other paid leave, is estimated using accumulated unpaid leave hours and hourly pay rates in effect at the end of the fiscal year as disclosed in Note 1 and Note 12 to the financial statements. We evaluated the key factors and assumptions used to develop the accrued compensated absences in determining that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Landfill Postclosure Liability: Management’s estimate of the landfill closure liability is disclosed in Note 12 to the financial statements and is ba sed on the City’s estimate of future post-closure maintenance and corrective action cost s required by its agreement with CalRecycle.
We evaluated the key factors and assumptions used to develop the landfill closure liability in determining that it is reasonable in relation to the financial statements taken as a whole.
Estimated Claims Liabilities: Management’s estimate of th e claims liabilities payable is disclosed in Note 12 to the financial statements and is ba sed on actuarial studies determined by a consultant, which are based on the claims experien ce of the City. We evaluated the key factors and assumptions used to develop the estimate in determining 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.
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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 miss tatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole.
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 ma nagement is a financial acc ounting, 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 ma nagement that are incl uded in a management representation letter dated November 26, 2025.
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 the application of an accounting principle to the City’s fi nancial statements or a dete rmination of the type of auditor’s opinion that may be expr essed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant ha s 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 pr ofessional relationship and our responses 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 st atements. 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.
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We were engaged to report on the supplementary information that accompanies the financial statements, but is not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluated th e 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 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
November 26, 2025
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