Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control. Accordingly, no such opinion is expressed. 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 Authority’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit.
Required Supplementary Information
Management has omitted management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements.
Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. 2 To the Honorable Mayor and City Council
Of the City of Waterford
Waterford, California
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Program’s basic financial statements. The budgetary comparison information on pages 14 are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The budgetary comparison information on pages 14 are the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison information on pages 14 is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Program and do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2024, and the changes in its financial position, for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 15, 2024 on our consideration of the Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.
Badawi and Associates
Berkeley, California
November 15, 2024
3 This page intentionally left blank
4 FINANCIAL STATEMENTS
5 This page intentionally left blank
6 Special Revenue
Fund
ASSETS
Cash and investments $ 19,026
Intergovernmental receivable 11,558
Total Assets $ 30,584
LIABILITIES AND FUND BALANCES
Liabilities:
Due to City of Waterford $ -
Total liabilities -
Fund balances:
Restricted for police service: 30,584
Total fund balances 30,584
Total liabilities and fund balances $ 30,584
City of Waterford Abandoned Vehicle Abatement Program
Governmental Fund Balance Sheet
June 30, 2024
The accompanying notes are an integral part of these financial statements 7 Special Revenue
Fund
REVENUES:
Intergovernmental $ 42,089
Use of money and property 402
Total revenues 42,491
EXPENDITURES:
Police services 29,811
Total expenditures/expenses 29,811
REVENUES OVER (UNDER) EXPENDITURES 12,680
FUND BALANCE
Beginning of the year 17,904
End of the year $ 30,584
City of Waterford Abandoned Vehicle Abatement Program
Statement of Governmental Fund Revenues, Expenditures, and Changes in Fund Balance
For the year ended June 30, 2024
The accompanying notes are an integral part of these financial statements 8 NOTES TO FINANCIAL STATEMENTS
9 This page intentionally left blank
10 City of Waterford Abandoned Vehicle Abatement Program Notes to Financial Statements
For the year ended June 30, 2024
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Abandoned Vehicle Abatement Program (Program) is a statewide program administered by the California Highway Patrol (CHP). The City of Waterford (City) administers and operates the local vehicle abatement program pursuant to Section 22710 of the Vehicle Code, Waterford Municipal City Ordinance Chapter 10.54, and the Stanislaus Council of Governments (StanCOG) Abandoned Vehicle Program and Plan.
Section 9250.7 of the Vehicle Code establishes the funding source for the abatement of abandoned vehicles by a county-based Service Authority (Authority), pursuant to the provisions of Section 22710 of the Vehicle Code.
The Vehicle Code imposes a service fee of one dollar on vehicles registered to an owner with an address in the County that established the Authority. This fee is paid to the Department of Motor Vehicles (DMV) at the time of registration or renewal of registration. The DMV transmits the net amount collected to the State Controller’s Office (SCO) for deposit in the Abandoned Vehicle Trust Fund quarterly. All money in the fund is continuously appropriated to the SCO for allocation to an Authority that has an approved Program pursuant to Section 22710 of the Vehicle Code, and for payment of the administrative costs of the SCO. The Authority established pursuant to Vehicle Code Section 22710, distributes Program funds to participating entities based on the allocations determined in the Vehicle Abatement Services Agreement. The revenues and expenditures/expenses of the Program are included in the Abandoned Vehicle Abatement Special Revenue Fund of the City’s financial statements.
A. Basis of Accounting
Governmental Fund Financial Statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded in the accounting period in which the related liability is incurred.
Intergovernmental revenues and investment earnings are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal year.
B. Financial Statement Presentation
The financial statements present only the financial activities of the Program and are not intended to present fairly the financial position or changes in financial position of the City in accordance with accounting principles generally accepted in the United States of America. 11 City of Waterford Abandoned Vehicle Abatement Program Notes to Financial Statements, Continued
For the year ended June 30, 2024
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued C. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates and assumptions.
D. Budgets
Budgets are prepared on the modified accrual basis of accounting. The Program follows these procedures in establishing the budgetary data reflected in the financial statements:
By June 30, management recommends to the Council a proposed operating budget for the year commencing July 1. The operating budget includes proposed expenditures and the means of financing them.
The budget is legally enacted through passage of a motion during a City Council meeting prior to the commencement of the new fiscalyear.
Formal budgeting is employed as a management control device during theyear. Budgets for the Special Revenue Fund are adopted on a basis consistent with accounting principles generally accepted in the United States (GAAP).
Budgeted amounts are as originally adopted or as amended by the Board.
E. Cash and Investments
For the purposes of the Statement of Net Position, “cash and investments” includes all demand, savings accounts, and certificates of deposits, or short-term investments with an original maturity of three months or less.
The City of Waterford currently maintains a $19,026 of Program funds in the City’s pooled cash deposits.
The City/Program has oversight responsibility for all Program cash and investments.
2. CASH AND INVESTMENTS
A. Cash Deposits
At June 30, 2024, the Program had funds with the City in the amount of $19,026 as adjusted to fair value. 12 City of Waterford Abandoned Vehicle Abatement Program Notes to Financial Statements, Continued
For the year ended June 30, 2024
3. FUND BALANCE
Fund balance consists of restricted amounts. Restricted fund balance consists of resources that are subject to externally enforceable legal restrictions imposed by parties altogether outside the government. As of June 30, 2024 the Program had a restricted fund balance of $30,584 for police services. 13 This page intentionally left blank
14 SUPPLEMENTARY INFORMATION
15 This page intentionally left blank
16 City of Waterford Abandoned Vehicle Abatement Program Supplementary Information
For the year ended June 30, 2024
Budgetary Comparison Schedule Special Revenue Fund
For the Year Ended June 30, 2024
Original Final Actual
Budgetary fund balance, July 1, 2023 $ 17,904 $ 17,904 $ 17,904 $ - Resources (inflows):
Intergovernmental 48,000 48,000 42,089 (5,911)
Use of money and property 200 200 402 202
Amounts available for appropriation 66,104 66,104 60,395 (5,709) Charges to appropriations (outflows):
Police services 36,750 36,750 29,811 6,939
Total charges to appropriations 36,750 36,750 29,811 6,939 Budgetary fund balance, June 30, 2024 $ 29,354 $ 29,354 $ 30,584 $ 1,230 Budgeted Amounts
Variance
w/Final
Positive
(Negative)
17 This page intentionally left blank
18 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and City Council
of the City of Waterford
Waterford, California
We have audited, in accordance with the auditing standard generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the Abandoned Vehicle Abatement Program (Program) of the City of Waterford, California as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the Program’s financial statements, and have issued our report thereon dated November 15, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Program’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of internal control of the Program’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Program’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Program’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of the internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we considered to be material weaknesses. However, material weaknesses may exist that we have not identified.
19 To the Honorable Mayor and City Council
of the City of Waterford
Waterford, California
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Program’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the Program’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Program’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Badawi and Associates
Berkeley, California
November 15, 2024
20 City of
Waterford
Waterford, California
Independent Accountants’ Report
For the year ending June 30, 2025
City of Waterford
Appropriations Limit Schedule
For the year ending June 30, 2025
Table of Contents
Page
Independent Accountants’ Report .......................................................................................................................... 1 Appropriations Limit Schedule ............................................................................................................................... 3 Notes to Appropriations Limit Schedule .............................................................................................................. 4
INDEPENDENT ACCOUNTANTS’ REPORT
To the Honorable Mayor and City Council
of the City of Waterford
Waterford, California
We have performed the procedures enumerated below on the accompanying Appropriations Limit Schedule of the City of Waterford (City) for the fiscal year ending June 30, 2025. The City’s management is responsible for the accompanying Appropriations Limit Schedule.
The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of the requirements of Section 1.5 of Article XIII-B of the California Constitution. Additionally, the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution) has agreed to and acknowledged that the procedures performed are appropriate for their purposes. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.
The procedures performed and our findings are described below:
1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the fiscal year ending June 30, 2025, and determined that the limit and annual calculation factors were adopted by resolution of City Council. We also determined that the population and inflation options were selected by a recorded vote of City Council.
Finding: No exceptions were noted as a result of our procedures.
2. For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total adjustments, and agreed the resulting amount to the current year’s limit.
Finding: No exceptions were noted as a result of our procedures.
3. We agreed the current year information presented in the accompanying Appropriations Limit Schedule to corresponding information in worksheets used by the City.
Finding: No exceptions were noted as a result of our procedures.
4. We agreed the prior year appropriations limit presented in the accompanying Appropriations Limit Schedule to the prior year appropriations limit adopted by the City Council during the prior year.
Finding: No exceptions were noted as a result of our procedures. 1 To the Honorable Mayor and Members of City Council
of the City of Waterford
Waterford, California
We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the AICPA. We were not engaged to and did not conduct an examination or review, the objective of which would be the expression of an opinion or conclusion, respectively, on the accompanying Appropriation Limit Schedule. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.
This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record, and its distribution is not limited.
Badawi & Associates, CPAs
Berkeley, California
November 15, 2024
2 City of Waterford
Appropriations Limit Schedule
For the year ending June 30, 2025
Amount Source
A. Appropriations limit for the year ended June 30, 2024 $ 3,471,605 Prior year schedule B. Calculation factors:
1. Population increase % 1.0362 State Department of Finance
2. Inflation increase % 1.0055 State Department of Finance
3. Total adjustment factor % 1.0419 B1 * B2
C. Annual adjustment increase $ 145,457 [(B3-1)*A)]
D. Other adjustments:
Loss responsibility (-) - N/A
Transfers to private (-) - N/A
Transfers to fees (-) - N/A
Assumed responsibility (+) - N/A
E. Total adjustments 145,457 (C+D)
F. Appropriations limit for the year ending June 30, 2025 $ 3,617,062 (A+E) 3 City of Waterford
Notes to Appropriations Limit Schedule
For the year ending June 30, 2025
1. PURPOSE OF LIMITED PROCEDURES REVIEW
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes.
Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to this agreed upon procedures engagement.
2. METHOD OF CALCULATION
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-1987, adjusted for the inflation and population factors discussed in Notes 3 and 4 below.
3. INFLATION FACTORS
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the State Department of Finance), or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City of Waterford for the fiscal year 2024-2025 represents the change in per capita income in the State of California.
4. POPULATION FACTORS
A California governmental agency may use as its population factor either the annual percentage change of the jurisdiction’s own population, or the annual percentage change in population in the County where the jurisdiction is located. The factor adopted by the City of Waterford for fiscal year 2024-2025 represents the percentage change of the County’s population.
5. OTHER ADJUSTMENTS
A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the fiscal year ending June 30, 2025. 4 City of
Waterford
Waterford, California
Single Audit Reports
For the year ended June 30, 2024
City of Waterford
Single Audit Reports
For the year ended June 30, 2024
Table of Contents
Page
Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...........................................................1 Report on Compliance for Each Major Program and on
Internal Control over Compliance Required by the Uniform Guidance ..............................................3 Schedule of Expenditures of Federal Awards .....................................................................................................6 Notes to the Schedule of Expenditures of Federal Awards...............................................................................7 Schedule of Findings and Questioned Costs .......................................................................................................8
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
of the City of Waterford
Waterford, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, the aggregate discretely presented component units, and the aggregate remaining fund information of the City of Waterford, California (City), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated November 15, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
1 To the Honorable Mayor and Members of the City Council of the City of Waterford
Waterford, California
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Badawi & Associates, CPAs
Berkeley, California
November 15, 2024
2 REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Independent Auditor’s Report
To the Honorable Mayor and Members of the City Council
of the City of Waterford
Waterford, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Waterford, California (City)’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2024. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
In our opinion, the City, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S.
Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
3 To the Honorable Mayor and Members of the City Council of the City of Waterford
, California
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
• Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 4 To the Honorable Mayor and Members of the City Council of the City of Waterford
, California
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. Given these limitations, we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that have not been identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated November 15, 2024, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements.
The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
Badawi & Associates, CPAs
Berkeley, California
November 15, 2024
5 City of Waterford
Schedule of Expenditures of Federal Awards
For the year ended June 30, 2024
Assistance
Listing Pass-through Program Subrecipient
Grantor Agency and Grant Title Number Number Expenditures Payments U.S. Department of Housing and Urban Development:
CDBG-Entitlement/Special Purpose Grants Cluster
Passed through Stanislaus County Planning and Community Development Community Development Block Grant 14.218 n/a $ 571,385 $ - Total U.S. Department of Housing and Urban Development 571,385 - U.S. Department of Transportation:
Passed through State of California Department of Transportation (CalTrans) Highway Planning and Construction - Skyline 20.205 n/a 304,679 - Total U.S. Department of Transportation 304,679 -
U.S. Department of Treasury:
Direct Programs
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 n/a 1,817,738 - Passed through the California Department of Community Services and Development COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 n/a 18,862 - Subtotal ALN 21.027 1,836,600
Total U.S. Department of Treasury 1,836,600 -
U.S. Department of Homeland Security:
Passed through California Office of Emergency Services (CalOES) Disaster Grants - Public Assistance (Presidentially Declared Disasters) 97.036 n/a 72,610 - Total U.S. Department of Homeland Security 72,610 -
Total Expenditures of Federal Awards $ 2,785,274 $ -
See accompanying Notes to Schedule of Expenditures of Federal Awards. 6 City of Waterford
Notes to the Schedule of Expenditures of Federal Awards For the year ended June 30, 2024
A. Reporting Entity
The financial reporting entity consists of (a) the primary government, City of Waterford, California (City), (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The component units discussed below are included in the reporting entity because of its operational or financial relationships with the City.
Waterford Public Financing Authority
Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. In addition, component units can be other organizations for which the primary government’s exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.
B. Basis of Accounting
Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred.
C. Relationship of Schedule of Expenditures of Federal Awards to Financial Statements The accompanying Schedule presents the activity of all federal financial assistance programs of the City.
Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California is included in the Schedule.
The Schedule was prepared only from the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City.
D. Pass-Through Entities’ Identifying Number
When federal awards were received from a pass-through entity, the Schedule shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program or the City was unable to obtain an identifying number from the pass-through entity.
E. Indirect Costs
The City did not elect to use the 10% de minimis indirect cost rate. 7 City of Waterford
Schedule of Findings and Questioned Costs
For the year ended June 30, 2024
Section I – Summary of Auditor’s Results
Financial Statements
Types of auditors’ report issued on whether financial statements audited were prepared in accordance with GAAP Unmodified Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None noted
Any noncompliance material to the financial statements noted? No Federal Awards
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None noted
Type of auditor’s report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with section 200.516(a)? No
Identification of major programs:
Assistance Listing
Number(s) Name of Federal Program or Cluster Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $ 1,836,600 Total Expenditures of All Major Federal Programs $ 1,836,600 Total Expenditures of Federal Awards $ 2,785,274
Percentage of Total Expenditures of Federal Awards 66%
Dollar threshold used to distinguish between type A and type B program $750,000 Auditee qualified as low-risk auditee under
section 200.520? No
8 City of Waterford
Schedule of Findings and Questioned Costs, Continued
For the year ended June 30, 2024
Section II – Current Year Findings
A. Financial Statement Audit
No current year financial statement findings.
B. Federal Award Program Audit
No current year federal award program audit findings.
Section III- Prior Year Findings
A. Financial Statement Audit
No prior year financial statement findings.
B. Federal Award Program Audit
No prior year federal award program audit findings.
9 City of
Waterford
Waterford, California
Auditor’s Communication with
Those Charged with Governance
For the year ended June 30, 2024
November 15, 2024
To the Honorable Mayor and Members
of the City Council of the City of Waterford
Waterford, California
We have audited the financial statements of the City of Waterford (City) as of and for the year ended June 30, 2024, and have issued our report thereon dated November 15, 2024. Professional standards require that we advise you of the following matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit and the Single Audit As communicated in our engagement letter dated April 22, 2024, our responsibility, as described by professional standards, is to form and express an opinions 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 audit of the financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of the system of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the system of internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.
We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the Uniform Guidance.
We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.
To the Honorable Mayor and Members
of the City Council of the City of Waterford
Waterford, California
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.
Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence.
Significant Risks Identified
We have identified the following significant risks:
Risk of Management Override of Internal Controls – A risk of management override of internal controls exists at any entity where management can change or decide not to perform that entity’s internal controls.
Revenue Recognition Risk – Errors in revenue recognition can affect bond covenant ratios and the net position of the City.
Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during the year ended June 30, 2024. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates and Related Disclosures Accounting estimates and related disclosures are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on 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 because of the possibility that future events affecting them may differ markedly from management’s current judgments.
The most sensitive accounting estimates affecting the financial statements are capital asset depreciation and useful life and pension plan assumptions.
Management’s estimate of capital assets depreciation and useful life, and pension and OPEB plan assumptions are based on historical useful lives of such assets, and actuarial assumptions, respectively.
We evaluated the key factors and assumptions used to develop the estimate of capital assets depreciation To the Honorable Mayor and Members
of the City Council of the City of Waterford
Waterford, California
and useful life, and pension plan assumptions and determined that they are reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to:
Summary of Significant Accounting Policies
Cash and Investments
Long-term Debt
Capital Assets
Employee Retirement Plans
Commitments and Contingencies
Prior Period Adjustments
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Uncorrected misstatements or matters underlying those uncorrected misstatements could potentially cause future-period financial statements to be materially misstated, even though the uncorrected misstatements are immaterial to the financial statements currently under audit.
In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The following material misstatements that we identified as a result of our audit procedures were brought to the attention of, and corrected by, management:
Adjustment to interfund advances between the General Fund, Public Financing Authority, and the Wastewater Fund to account for interest accruing on interfund borrowings.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.
To the Honorable Mayor and Members
of the City Council of the City of Waterford
Waterford, California
Representations Requested from Management
We have requested certain written representations from management dated November 15, 2024.
Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.
Single Audit Compliance
In accordance with the Uniform Guidance, we examined, on a test basis, evidence about the City’s compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City’s compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City’s compliance with those requirements.
Required Supplementary Information
We applied certain limited procedures to the required supplementary information (RSI) that supplements the basic financial statements. 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 RSI and do not express an opinion or provide any assurance on the RSI.
Supplementary Information
We were engaged to report on the supplementary information which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the 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 To the Honorable Mayor and Members
of the City Council of the City of Waterford
Waterford, California
reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
This report is intended solely for the information and use of the City Council, and management of the City and is not intended to be and should not be used by anyone other than these specified parties.
Badawi and Associates
Berkeley, California
November 15, 2024
City of Waterford
Annual 2024 Financial Statement AuditNovember 21, 2024
The Process and Organization
• Citywide• Separate Reports
• Waterford Public Financing Authority• Abandoned Vehicle Abatement• Appropriation's Limit Schedule• Single Audit • Organization of Citywide Report
• Auditor’s Opinion• Management Discussion and Analysis• Government Wide versus Fund Financial Statements• Supplemental Information Governmental Funds
Governmental
Activities
Government Wide Statements Pages 19-23
Assets $30,266,166Liabilities $3,831,487Net Position
$20,602,854 Net Investment in Capital Assets
Restricted (Note 8. Page 66) $2,862,201Unrestricted $2,969,624Total Net Position $26,434,679 Activities included in Governmental Activities:
• General Government• Community Development• Assessment Districts• Impact Fees• Measure L• Other Special Revenue Sources that are not Enterprise Funds
The General Fund
General Fund Audited 2023-2024
$4,209,382 Beginning Fund Balance (as restated for $65,921) $6,354,727
Revenues & Transfers In
(and Proceeds from sale of
capital assets)
Expenditures & Transfers Out $6,582,712
Net Change ($227,985)Ending Fund Balance $3,981,397
Nonspendable Advances $368,489
Unassigned $3,612,908
General Fund
Taxes &AssessmentsTotal $3,179,552(PY $3,144,470) 23%
Sales and Use
Taxes
$750,405
33%
Motor Vehicle
In Lieu
$1,038,880
21%
Utility User
Taxes
$656,667
17%
Property
Taxes
$532,907
5%
Franchise Fees
$155,684
1%
Other Taxes
$45,009
Seven Year Major Revenue Trends
Sales TaxMotor VehicleIn LieuUtility User TaxProperty Tax $0
$200,000$400,000$600,000$800,000
$1,000,000$1,200,000$1,400,000
2020 2021 2022 2023 2024
General Fund Expenditures
(Excluding Police Services)
5 Year Trends
GeneralGovernmentPublic Ways &FacilitiesParks & RecreationCommunityDevelopmentCapital OutlayDebt Service Police Services – 6 Year Trend
$1,829,790 $1,829,940 $1,805,354 $1,966,764
$2,135,340 $2,204,855
2019 2020 2021 2022 2023 2024
Proprietary Funds (Pages 35-38)
Public Financing
Authority Wastewater Water
Cash $1,621,028 $1,874,451 $257,503
$636,985 $2,223,692 $0 Capital Expenditures
Net Position
$3,418,192 $9,161,636 $0 Net Investment in Capital Assets Restricted $0 $0 $413,039
Unrestricted $389,006 $622,049 $165,371
Total Net Position $3,807,198 $9,783,685 $578,410
Major Financial Events
• American Rescue Plan funded Tim Bell
Wastewater/Water Extension
• FEMA funded Wastewater Treatment Plant Road
Storm Repairs
• Remodel of the Community Center
• Pecan/Dorsey CDBG Project• F Street Overlay Project• Skyline Improvements Questions
Tina EnviaFinance Manager
Informational Items 8
November 21, 2024
Patricia Krause, City Clerk / Administrative Services Director City Council Staff Report
Informational Items.
SUMMARY:
Items included in this section provide City Council with updates on business not requiring a full report.
FISCAL IMPACT:
N/A
ANALYSIS:
All items under this category are considered for informational purpose only.
ENVIRONMENTAL REVIEW:
N/A
ALTERNATIVES:
N/A
ATTACHMENTS:
8a: City Project List
Streets
Name Owner Priority Estimated Cost Update
Yosemite Ave. Pedestrian Project (Caltrans) Michael Pitcock Lonnie Statzer High $6,000,000 (SHOPP) In Construction
F Street Overlay Michael Pitcock
Lonnie Statzer High $1,500,000 (Measure L) Complete
F Street Improvements at Western Michael Pitcock
Lonnie Statzer High $300,000 (STBG and CMAQ) Complete
Dorsey, Pecan and Western Pedestrian and Roadway Improvements Michael Pitcock Lonnie Statzer High $300,000 (CDBG) Complete
Yosemite Pedestrian Improvements Reinway to Eucalyptus Michael Pitcock Lonnie Statzer High $946,000 (ATP) In Design
Yosemite at Pasadena Signal Improvements Michael Pitcock Lonnie Statzer High $600,000 (CMAQ) Awarded by Council
Skyline Road Improvements Michael Pitcock
Lonnie Statzer High $450,000 (STBG) Complete
Tim Bell Pedestrian Improvements Michael Pitcock
Lonnie Statzer High $1,993,000 (ATP) Grant was approved/awarded to Waterford Housing Development
Name Owner Priority Estimated Cost Update
Bentley Estates Michael Pitcock High NA Property was listed for sale.
Reinway North of Moon School Annexation Michael Pitcock High NA Application received. The developer is looking at a potential 95 homes
Waterstone A Michael Pitcock High NA Tentative Map Approved. Thirty Single Family Homes. In construction.
Waterstone B Michael Pitcock High NA Application Received. Fifty plus Single Family Homes.
Economic Development
Name Owner Priority Estimated Cost Update
F St and Yosemite Fuel Station Michael Pitcock High N/A Open City Projects
E Street Public Storage Michael Pitcock High N/A In Construction Facilities / Property
Name Owner Priority Estimated Cost Update
ADA Transition Plan Implementation Lonnie Statzer Low Varies Ongoing Local Hazardous Mitigation Plan Update Lonnie Statzer Low N/A Complete Council Chambers Equipment Upgrade Patricia Krause High $52,000 Complete Public Safety
Name Owner Priority Estimated Cost Update
License Plate Reader Program Michael Pitcock High
$10,000 up front and $3,300
monthly for maintenance and
monitoring.
Complete
Utilities
Name Owner Priority Estimated Cost Update
Sewer Rate Study Michael Pitcock
Lonnie Statzer High $40,000 Completed
WWTP Biosolids Screening Upgrade - Self Help Enterprises Grant
Michael Pitcock
Lonnie Statzer High $500,000 Unfunded Grant Application submitted.
Water System Consolidation - Hickman Michael Pitcock
Lonnie Statzer High $3,000,000 Unfunded Grant Application submitted.
Biosolids Removal 2024 Michael Pitcock
Lonnie Statzer High $250,000 Awarded
Drying Bed Monitoring Well Michael Pitcock
Lonnie Statzer High $50,000 Awarded
Tim Bell Water and Sewer Extension to Vineyard Michael Pitcock Lonnie Statzer High $2,500,000 (ARPA) Complete
WWTP Road Repair Michael Pitcock
Lonnie Statzer High $1,100,000 (FEMA) Complete
Parks and Trails
Name Owner Priority Estimated Cost Update
Triangle Parcel - Neighborhood Park Lonnie Statzer Low $133,000 Park Impact Fees On hold (No Funding) S. Reinway Sports Complex Lonnie Statzer Low Unfunded On hold (No Funding) Dog Park (Prop 68 Per Capita Grant) Lonnie Statzer High $250,000 Grant and Park Impact Fees Complete
Beard Park Improvements (Prop 68 Competitive Grant) Lonnie Statzer Low $1,000,000 Million Unfunded Grant Denied. Waiting to see if another cycle to apply is available.
Community Center Remodel Michael Pitcock
Lonnie Statzer High $800,000 (General Fund) In Construction Other Projects
Name Owner Priority Estimated Cost Update
Adding Cameras at Community Center Lonnie Statzer High Undetermined at this time Complete