City of Barstow Presentation to Provide Professional Auditing
ServicesFebruary 16, 2021
Agenda Item No. 5.C.
City of El Cerrito
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Agenda Engagement Team Deliverables and Scope of the Audit Areas of
Primary Emphasis Auditors Report and Financial Statements Required
Communications New Accounting Standards Conclusion &
Discussion/Questions
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Staff Wael Tantawy
Staff Jingyi Long
Deliverables and Scope of the Audit Report of Independent Auditors
on City of El Cerrito Basic Financial Statements Independent
Auditors’ Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Report of Independent Auditors on
City of El Cerrito Employees’ Pension Plan Basic Financial
Statements Agreed-Upon Procedures Report on City of El Cerrito
Master Installment Sale Agreement Compliance with Bond Covenants
for the 2008 Sales Tax Revenue Bonds Agreed-Upon Procedures Report
on Appropriation Limit Schedule Communications With Those Charged
With Governance
Letter used to summarize communication of various significant
matters to those charged with governance.
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Areas of Primary Audit Emphasis Revenues & Receivables (Tax,
Grants, Notes and Others): Improper revenue recognitions
Governmental Funds: Confirmed/validated property taxes, sales
taxes, franchise taxes & other significant
revenues/receivables.
Proprietary Funds: Performed analytical procedures and trends
analysis.
Pension & OPEB: Complex accounting standards Reviewed
management’s journal entries for pension and OPEB. Agreed amounts
recorded to reports provided by CalPERS and CalPERS’ Auditors and
performed testing of census information used by CalPERS. Tested the
census information used by CalPERS Obtained reports from CalPERS
auditors regarding plan assets and census data
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Areas of Primary Audit Emphasis The risk of management override of
controls is addressed by the following procedures:
Assignment of audit staff based on consideration of audit risk.
Procedures to incorporate an element of unpredictability in the
audit from period to period. Consideration of the selection and
application of significant accounting principles. Examination of
journal entries. Review of accounting estimates for bias.
Evaluation of business rationale for unusual transactions.
Evaluation of the appropriateness of fraud-related inquiries
performed
Impact of the shelter in place and remote work on the control
environment
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Auditors Report Unmodified opinion Audit performed in accordance
with Generally Accepted Auditing Standards, and Government Auditing
Standards Financial statements are fairly presented in all material
respects Emphasis of matter regarding going concern Significant
accounting policies have been consistently applied Estimates are
reasonable Disclosures are properly reflected in the financial
statements
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Receivable
ent
Deferred outflows of resources
$-
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Deferred Inflows of Resources
2018 $1,366 $6,000 $2,230 $61,775 $2,846 $24,015 $1,076 2019 $1,232
$6,000 $2,567 $61,856 $2,995 $22,640 $2,923 2020 $1,554 $9,000
$3,679 $65,833 $3,906 $21,651 $2,954
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000
Liabilities and Deferred Inflows of Resources (in thousands)
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Net Investment in Capital Assets Restricted Unrestricted
2018 60,049 17,042 (51,000) 2019 57,238 14,226 (54,936) 2020 56,115
15,241 (59,291)
(80,000) (60,000) (40,000) (20,000)
- 20,000 40,000 60,000 80,000
Net Position (in thousands)
Government-Wide Financial Statements
$-
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Total Expenditures 36,252,189$ 40,202,753$ 39,686,283$
Unassigned Fund Balance as
Number of months 0 0 0
GFOA recommendation 2 - 4
Measure of City's ability to operate with no revenues using
available net position.
Sheet1
2018
2019
2020
GFOA recommendation
2 - 4
Measure of City's ability to operate with no revenues using
available net position.
City’s Annual Pension Contributions
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$-
$-
Other Financial Information
$-
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$- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000
$60,000,000 $70,000,000 $80,000,000 $90,000,000
$100,000,000
City’s Net Pension Liability Sensitivity to Discount Rate (2019
Measurement Date)
Other Financial Information City’s Annual OPEB Contributions
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$95,000
$100,000
$105,000
$110,000
$115,000
$120,000
$125,000
$130,000
Plan Fiduciary Net Position Total OPEB Liability Net OPEB
Liability
as of MD 6/30/17 $- $2,845,887 $2,845,887 as of MD 6/30/18 $-
$2,994,539 $2,994,539 as of MD 6/30/19 $- $3,906,161
$3,906,161
$- $500,000
City’s OPEB Funded Status
Other Financial Information
$- $500,000
$1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000
$4,000,000 $4,500,000 $5,000,000
City’s Net OPEB Liability Sensitivity to Discount Rate (2019
Measurement Date)
Other Financial Information
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$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
City’s Net OPEB Liability Sensitivity to Health Care Cost Trend
Rate
(2019 Measurement Date)
Required Communications Our Responsibility Under U.S GAAS
• 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, contract and grants
• Ensure financial statements are clear and transparent
• Communicate with the governing body
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financial statements • Establish and maintain internal
control over financial reporting • Making all financial
records
available to us • Adjust the financial statements to
correct material misstatements • 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
• It is our responsibility to maintain independence
• We will maintain our independence by strict adherence to the
AICPA and the Board of Accountancy rules and regulations
• Other than compiling the financial statements, no other services
performed that could affect our independence
• Audit was performed within the time frame communicated to the
City in our engagement letters
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Management Judgment and Accounting Estimates
The City adopted the following new pronouncements during the year:
• GASB Statement No. 95,
Postponement of the Effective Dates of Certain Authoritative
Guidance
• Useful lives of Capital Assets
• Pension Plan (actuarial assumptions
• OPEB Plan (actuarial assumptions
• Summary of Significant Accounting Policies
• Cash and Investments • Long Term Debt • Capital Assets • Net
Position and Fund Balances • Pension Plans and Other Post
Employment Benefit (OPEB) Plans • Commitments and Contingencies •
Redevelopment Agency Dissolution
and Successor Agency Activities • Going Concern
None
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Required Communications Significant Audit Adjustments and
Unadjusted Differences Considered by Management to be
Immaterial
Potential Effect on the Financial Statements of Any Significant
Risks and Exposures
Disagreement with Management
There were adjustments and reclassifying entries during the course
of the audit. Management has posted all proposed audit
adjustments.
No significant risks or exposures were identified. Legal matters
and potential liabilities are disclosed in the financial
statements
We are pleased to report that there were no disagreements with
management
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Representations Requested of Management
Material weaknesses: • Ability of the City to continue
as a going concern
We have requested certain representations from management that are
included in the management representation letters.
We are not aware of any significant accounting or auditing matters
for which management consulted with other accountants
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Material Uncertainties Related to Events and Conditions
Fraud and Illegal Acts
Other than the engagement letter and management representation
letter, there have been no other significant communications
Certain conditions raise substantial doubt about the City’s ability
to continue as a going concern
We have not become aware of any instances of fraud or illegal
acts
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modifications) 2021
• Statement 87 – Leases • Statement 89 – Construction-period
interest • Statement 92 – Omnibus (multiple effective date) •
Statement 93 – LIBOR removal and lease modifications • Statement 97
– Certain component unit criteria, and accounting and
financial reporting for Internal Revenue Code Section 457 Deferred
Compensation Plans
2022
• Statement 91 – Conduit debt • Statement 94 – Public-private
partnerships • Statement 96 – Subscription-based information
technology
arrangements 2023
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Thank You For Allowing Us to Provide Audit Services to the City of
El Cerrito
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Slide Number 2
Areas of Primary Audit Emphasis
Areas of Primary Audit Emphasis
Slide Number 9