City of Union City
Presentation to the Audit Committee
December 23, 2025
1 2024 Audit of the
City of Union City
2 Agenda
Our Firm and the Engagement Team
Deliverables and Scope of the Audit
Audit Methodology
Areas of Primary Audit Risk
Auditor’s Report and Financial Statements
Required Communications
New Accounting Standards
3 Our Firm and the
Engagement Team
4 Years of Experience
Government Audit Clients
City Audit Clients
Employees
Lawsuits, Legal or Disciplinary Actions
25 44
30 0
65 Our Firm – By the Numbers
5 Engagement Team
Quality Control
Reviewer
Ahmed Badawi, CPA
Engagement
Partner
Mitesh Desai, CPA
IT Specialist
Omar Rahman, CPA,
CISA
Audit Staff
Cheng Yang
Audit Staff
Zeyad Mostafa
Audit Staff
Joyce Zhou
6 Deliverables and
Scope of the Audit
7 Deliverables and Scope of the Audit
Report of Independent Auditors on City of Union City Basic Financial Statements (BFS)
Report on Internal Control Over Financial Reporting and on Compliance
Agreed-upon Procedures on Appropriation Limit Schedule (GANN) Reports of Independent Auditors on the BFS of Transportation Development Act, Measure B Funds, Measure BB Funds, Vehicle Registration Fee Fund, and Utility Users Tax
Communications With Those Charged With Governance
8 Audit Methodology
9 Gather information and
Finalize Timing.
Review Systems, Processes
and Assess Risk.
Test and Validate Significant
Account Balances.
Prepare Necessary
Reports.
Planning Interim Year-End Reporting
Audit Methodology
10 Areas of Primary
Audit Risk
11 Areas of Primary Audit Risk
• Assigned staff based on consideration of audit risk.
• Incorporated an element of unpredictability in the audit. • Considered the selection and application of significant accounting principles. • Examined journal entries prepared by management.
• Reviewed accounting estimates for bias.
• Evaluated the business rationale for unusual transactions. • Evaluated the appropriateness of fraud-related inquiries.
Risk of Management Override of Controls – The risk of management override of controls was addressed by the following procedures:
12 Areas of Primary Audit Risk
• Governmental Funds: Confirmed and validated property taxes, sales taxes, and other significant revenues and receivables
• Proprietary Funds: Performed substantive analytics on revenues and receivables
Revenue and Receivables (Taxes, Grants, Notes, etc.) – Improper Revenue Recognitions:
• Investment fair value estimates
• Pension estimates
• Other Post-Employment Benefits (OPEB) estimates
Estimates – Review of Significant Accounting Estimates:
13 Auditor’s Report
and Financial
Statements
14 Auditor’s Report
• Audit performed in accordance with Generally Accepted Auditing Standards
• Audit performed in accordance with Government Auditing Standards
Auditing Standards
• 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 Unmodified Opinions
15 General Fund Financial Statements
Cash &
Investments Receivables Interfund
receivables Loan Receivable Property Held for
Resale Other
2022 $38,955,059 $6,641,271 $4,125,159 $234,445 $86,184,000 $6,457 2023 $47,728,454 $8,381,185 $5,872,127 $- $86,184,000 $9,181 2024 $43,391,250 $12,951,469 $6,636,801 $- $86,184,000 $127,622 $0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Millions
Assets and Deferred Outflows of Resources
16 General Fund Financial Statements
Accounts
Payable & Accrued
Payroll
Interfund Payables Deposits Payable Other Liabilities Deferred inflows of Resources
2022 $3,868,737 $- $5,856,020 $1,432,551 $136,894
2023 $3,592,989 $- $6,387,112 $667,726 $2,039,854
2024 $4,775,039 $- $7,251,380 $655,184 $1,766,806
$0
$1
$2
$3
$4
$5
$6
$7
$8
Millions
Liabilities and Deferred Inflows of Resources
17 General Fund
2022 2023 2024
Unrestricted Fund Balance $38,400,778 $49,267,576 $48,632,224 Total Expenditures $68,004,170 $73,769,937 $81,056,373
As % of Total Expenditures 56% 67% 60%
Number of Months* 7 8 7
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
Millions
Expenditure Coverage
* Measure of the City's ability to operate with no revenues using available fund balance. GFOA recommendation no less than 2 months. 18 Pension Plans
Miscellaneous Safety Total
1% Decrease $68,098,807 $110,228,271 $178,327,078
Current Rate $44,662,485 $74,242,115 $118,904,600
1% Increase $25,470,016 $44,820,871 $70,290,887
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Millions
Total Net Pension Liability
Sensitivity to Discount Rate
19 Other Postemployment Benefits Plans
Fiduciary Net Position Total OPEB Liability Net OPEB Liability as of 6/30/21 $16,187,395 $17,329,013 $1,141,618
as of 6/30/22 $14,303,195 $17,029,064 $2,725,869
as of 6/30/23 $15,210,326 $19,749,479 $4,539,153
$-
$5
$10
$15
$20
$25
Millions
Net OPEB Liability
Funded Status
20 Required
Communications
21 Required Communications
Auditor’s Responsibilities
Provide an opinion on whether financial statements
are fairly stated in accordance with U.S. GAAP
Evaluate internal control over financial reporting
including tone at the top
Evaluate compliance with laws, contracts, and grants.
Ensure financial statements are clear and transparent
Communicate with the governing body
Management’s Responsibilities
Take responsibility for the financial statements
Establish and maintain internal control over
financial reporting
Make all financial records available to us
Establish internal control to prevent and detect fraud
Inform us of all known and suspected fraud
Comply with laws and regulations
Take corrective action on audit findings
22 Required Communications
• It is our responsibility to maintain independence.
• We maintained our independence by strict adherence to the AICPA and the Board of Accountancy rules and regulations.
• Other than preparing the financial statements, no services performed that could affect our independence.
Independence
• Not within the time frame originally communicated to the City in our engagement letters.
Timing of the Audit
• The City adopted the following new pronouncements during the year:
• GASB Statement No. 100 – Accounting Changes and Error Corrections Significant Accounting Policies and Unusual Transactions 23 Required Communications
• No difficulties encountered.
Difficulties Encountered in Performing the Audit
• There were adjustments and reclassifying entries during the course of the audit. Management has posted all proposed audit adjustments.
Significant Audit Adjustments and Unadjusted Differences • No material weaknesses were identified.
• Significant deficiency – Timely Financial Reporting and Year-End Closing Process (in progress).
Deficiencies in Internal Control over Financial Reporting 24 New Accounting Standards
• GASB Statement No. 101 – Compensated Absences
• GASB Statement No. 102 – Certain Risk Disclosures
2025
• GASB Statement No. 103 – Financial Reporting Model
Improvements
• GASB Statement No. 104 – Disclosure of Certain Capital Assets 2026
• GASB Statement No. 105 – Subsequent Events
2027
25 Thank You for Allowing
us to Provide Audit
Services to the City.
26