City Council Agenda Report
Meeting Date: January 21, 2025
From: Gigi Decavalles-Hughes, Director of Finance
Department: Finance
Submitted by: Jessica Alcaraz, Financial Services Administrator Subject
Fiscal Year 2023-24 Audited Financial Reports
Recommendation
A. Receive and file the Fiscal Year 2023-24 Annual Financial Statements; and B. Extend submission of the Fiscal Year 2024-25 Annual Financial Statements and Report to Council to January 20, 2026.
Background
City Charter Article VIII, Chapter 8.11 requires City Council to appoint a California certified public accounting firm to provide an independent, annual audit of all City accounts, including the accounts of all departments, officers and employees who receive, handle or disburse public funds. Audits are to be performed in accordance with the generally accepted auditing standards (GAAS) set forth for financial audits by the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board (ASB) and the U.S. Government Accountability Office’s (GAO) Government Auditing Standards. Additionally, the Charter requires the final audit to be submitted to Council 120 days after the end of the fiscal year but allows Council to extend the deadline. Accordingly, on February 20, 2024 the City Council extended the deadline for the Fiscal Year (FY) 2023-24 Final Audit and Report to Council to January 21, 2025.
The FY 2023-24 financial audit was conducted by the City’s independent auditors, The Pun Group LLP, Certified Public Accountants and Business Advisors, which issued an unmodified opinion, otherwise known as a “clean opinion” finding nothing of material concern in the City’s internal controls, financial condition, or operations. Over the months preceding the issuance of the financial statements, staff worked closely with the auditors to provide them access to all financial records requested, including the City’s accounting software, to form the basis for their clean opinion. The independent auditors’ unmodified opinion provides assurance that the financial statements, and the audited information within, present the City’s financial position fairly to Council, residents, current and future businesses, grant entities, creditors, bond investors, rating agencies and other interested parties for the fiscal year ending June 30, 2024.
A representative from The Pun Group LLP will provide a presentation on the results of the FY 2023-24 audit.
As noted above, Charter 8.11 requires that the final audit to be submitted to Council within 120 days after the end of the fiscal year. With the City’s fiscal year ending on June 30, FY 2024-25 audited financial statements would need to be submitted to Council by late October 2025. However, 120 days after the end of the fiscal year (June 30) is not feasible as it can take several months to receive all documents from outside contractors and vendors to accrue all expenditures related to the prior year, finalize journal entries, reconciliations and for the auditors to complete their audit and produce the final audited financial reports. Additionally, industry best practice is 18 months after a budget is adopted, which places finalization of the audited financial reports by end of the calendar year and presentation to Council soon after. As such, staff is seeking an extension for submission of the final audit and report to Council for FY 2024-25 Annual Financial Statements to January 20, 2026. Pursuant to Charter Chapter 8.11, the City Council may extend the deadline for submission of audited financial statements beyond 120 days after the end of the fiscal year.
Fiscal Impact
There is no fiscal impact associated with this report.
Attachments
1. FY 2023-24 Audited City-wide Financial Statements
2. FY 2023-24 Audited VPU Financial Statements
3. FY 2023-24 Audited Electric Financial Statements
4. FY 2023-24 Audited Water Statements