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GOOD EVENING, EVERYONE, I'M CALLING THIS MEETING TO ORDER AT THIS TIME.
[1) CALL TO ORDER: Mayor Reyna]
MADAM CLERK, WILL YOU CALL THE ROLL?.COUNCIL MEMBER CORTEZ, PRESENT.
COUNCIL MEMBER GARCIA, PRESENT.
ALL MEMBERS PRESENT. THANK YOU, MADAM CLERK.
IF YOU'RE ABLE TO PLEASE STAND FOR A FLAG SALUTE AND REMAIN STANDING FOR AN INVOCATION, PLEASE SALUTE.
TO THE REPUBLIC FOR WHICH IT STANDS ONE NATION UNDER GOD, INDIVISIBLE WITH LIBERTY AND JUSTICE FOR ALL. IS THERE SOMEONE HERE THAT CAN GIVE AN INVOCATION YOU? NO ONE WILL JUST OBSERVE A MOMENT OF SILENCE.
THANK YOU. YOU MAY ALL BE SEATED.
ITEM FOR PUBLIC COMMENTS, THIS PORTION OF THE MEETING IS RESERVED FOR PERSONS DESIRING TO ADDRESS THE COUNCIL AND INCLUDING THE COUNCIL ACTING AS THE GOVERNING BOARD FOR THE SUCCESSOR AGENCY ON ANY MATTER NOT ON THIS AGENDA.
EXCUSE ME, MATTER ON THIS AGENDA AND OVER WHICH THE COUNCIL AND SUCCESSOR AGENCY HAVE JURISDICTION. SPEAKERS ARE LIMITED TO A MAXIMUM OF 30 MINUTES.
BE ALLOWED FOR ANY ONE SUBJECT.
PLEASE STATE YOUR NAME FOR THE RECORD BEFORE MAKING YOUR PRESENTATION.
THE BROWN ACT DOES NOT ALLOW ACTION OR DISCUSSION AND ITEMS NOT ON THIS AGENDA, SUBJECT TO NARROW EXCEPTIONS.
THIS WILL LIMIT THE COUNCIL MEMBERS RESPONSE TO QUESTIONS AND REQUESTS MADE DURING THIS COMMENT PERIOD. ARE THERE ANY PUBLIC COMMENTS? SURE.
OK. ARE THERE ANY PUBLIC COMMENTS VIA EMAIL, CLERK? GIVE ME ONE MINUTE MAYOR. SURE.
ITEM FIVE NEW BUSINESS RECEIVING FILE THE CITY OF WASCO FINANCIAL STATEMENTS FOR THE YEAR
[5) NEW BUSINESS]
ENDED JUNE 30TH TWENTY TWENTY ONE IN THE CITY OF WASCO MR. X FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2021.OK. GOOD EVENING, HONORABLE MAYOR AND COUNCIL MEMBERS, THOUGH, THIS EVENING WILL BE PRESENTING TO YOU THE AUDITED AND SIGNED FINANCIAL STATEMENTS FOR THE FISCAL YEAR 2020-2021.
WE'LL TAKE A DIFFERENT APPROACH THIS YEAR WHERE IT'S GOING TO BE IN A POWERPOINT PRESENTATION FORMAT, WHERE WE WILL COVER THE CITY WIDE ALL THE FUNDS PUT TOGETHER.
THEN WE'LL THEN WE'LL BREAK DOWN INTO THE GENERAL FUND AND THEN ALSO TO THE ENTERPRISE AND OUR PENSION, BECAUSE THAT'S THAT'S A COMPONENT THAT WE SHOULD BE LOOKING INTO.
ALSO, IF THERE'S AT ANY POINT, ANY SLIDE THAT IS JUST SECTION IS A LITTLE ODD OR JUST WE WANT TO ASK ADDITIONAL QUESTIONS.
OUR AUDITOR, AHMED BADAWI, IS HERE THIS EVENING TO HAVE THAT PRESENTATION, BUT IF THERE
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ARE GENERAL QUESTIONS WE CAN HOLD US TO, THE END IS THAT PRESENTATION IS PRETTY THOROUGH AND WE CAN COVER A LOT OF THOSE QUESTIONS.AND WITH THAT BEING SAID, I'LL BE TURNING IT OVER TO BADAWI FROM BADAWI AND ASSOCIATES.
WELCOME, MR. BADAWI, IF YOU COULD JUST STATE YOUR NAME FOR THE RECORD, PLEASE.
YES, GOOD EVENING. MY NAME IS AHMED BADAWI.
I WAS THE AUDIT PARTNER ON THE CITY OF WASCO AUDIT FOR THIS YEAR, AND I WILL PRESENT TO YOU TODAY THE RESULTS OF THE AUDIT.
THANK YOU. AND IF MAYBE WE CAN JUST START THE SLIDESHOW? MADAME CLERK, YOU NEED US TO STOP FOR A MOMENT.
LET ME CHECK THE LIGHT, MICHAEL, BE SURE TO HAVE THE TEST MR. BADAWI, IF YOU COULD JUST HOLD IT FOR JUST A LITTLE BIT.
THANK YOU. WHEN YOU SPEAK INTO THE MICROPHONE? YES. CAN YOU HEAR ME? YOU. YES.
ALL RIGHT. THANK YOU, MADAM CLERK MR. BADAWI, THE FLOOR IS YOURS.
ALL RIGHT. WELL, THANK YOU FOR INVITING ME TO YOUR MEETING TODAY.
I PRESENT TO YOU THE RESULT OF THE 2021 AUDIT OUR SLIDE ON.
NUMBER TWO, THIS IS AN AGENDA OF WHAT I'M GOING TO COVER TODAY.
I'LL LET YOU KNOW WHO THE ENGAGEMENT TEAM WAS.
WHAT ARE DELIVERABLES AND THE SCOPE OF OUR AUDIT AREAS WE EMPHASIS ON DURING OUR AUDIT PROCESS THE TYPE OF AUDIT OPINION WE ISSUED PROVIDING SOME OF THE REQUIRED COMMUNICATIONS AS YOUR INDEPENDENT AUDITORS.
JUST A BRIEF OVERVIEW OF THE NEW ACCOUNTING STANDARDS COMING YOUR WAY.
AND THEN FINALLY, SEE IF YOU HAVE ANY QUESTIONS FOR ME.
I KNOW I'M SHORT ON TIME, SO I'M GOING TO GO A LITTLE FAST, BUT PLEASE INTERRUPT ME IF YOU FEEL LIKE I NEED TO REPEAT ANYTHING.
MR. BADAWI. YOU HAVE 30 MINUTES.
THANK YOU. IN TERMS OF THE COMPOSITION OF THE ENGAGEMENT TEAM, THIS IS A COMPOSITION OF OUR ENGAGEMENT TEAM. I WAS THE ENGAGEMENT PARTNER.
WE ALWAYS HAVE A QUALITY CONTROL REVIEWER.
THIS INDIVIDUAL IS IN THE BACKGROUND.
THE ROLE IS TO REVIEW MY WORK, MY WORK, MAKING SURE THAT I ADHERE TO PROFESSIONAL STANDARDS. THEY ALSO PROVIDE A SECOND SET OF EYES ON REVIEWING THE FINANCIAL STATEMENTS.
WE HAD ONE SENIOR, ONE AUDIT MANAGER AND TWO PROFESSIONAL STAFF ASSIGNED TO THE AUDIT.
IN TERMS OF OUR DELIVERABLES, WE WERE MERELY ENGAGED TO PROVIDE AN OPINION ON THE CITY'S BASIC FINANCIAL STATEMENTS.
THE CITY IS ALSO SUBJECT TO GOVERNMENT AUDITING STANDARDS, WHICH REQUIRE US TO ISSUE AN OPINION ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE.
THE CITY THIS YEAR IS A RECIPIENT OF FEDERAL FUNDS AND HAVE EXPENDED SUFFICIENT AMOUNT TO TRIGGER A COMPLIANCE AUDIT ON THE FEDERAL AWARDS.
IT'S WHAT WE CALL THE SINGLE AUDIT, SO WE ARE CONDUCTING THAT AS WELL.
WE PROVIDE AN OPINION ON THE FINANCIAL STATEMENTS OF THE MEASURE.
X AGREED UPON PROCEDURE ON THE GANN LIMIT, THE APPROPRIATION LIMIT AND THEN FINALLY COMMUNICATION WITH THE GOVERNING BODY, WHICH IS WHAT I'M DOING TODAY.
AND NORMALLY WE ISSUE A LETTER SUMMARIZING OUR COMMUNICATION TODAY.
AREAS OF PRIMARY AUDIT EMPHASIS, I HAVE TO SAY THAT MOST OF THOSE AREAS ARE KIND OF DEFAULT, WE HAVE THEM IN MOST OF OUR AUDITS, SO IT'S NOTHING UNIQUE TO WASCO NECESSARILY.
THE FIRST ONE IS THE RISK OF MANAGEMENT OVERRIDING CONTROLS.
SO MANAGEMENT ARE THE ONES RESPONSIBLE FOR DESIGNING CONTROLS.
THEY ARE ALSO THE ONE MONITORING THOSE CONTROLS, AND THEY CAN DECIDE TO OVERRIDE THEM IF THEY CHOOSE TO. SO WE HAVE TO DESIGN THAT AUDIT PROCESS TO TRY TO MITIGATE THAT RISK, AND WE WE TRY TO INCORPORATE AN ELEMENT OF UNPREDICTABILITY IN THE AUDIT PROCESS SO WE DON'T LET THE CITY KNOW AHEAD OF TIME EVERYTHING WE'RE GOING TO BE LOOKING AT.
TRY TO REVIEW MANAGEMENT ESTIMATES FOR ANY BIAS TEST JOURNAL ENTRIES PREPARED BY MANAGEMENT, MAKING SURE THAT WE ASSIGN EXPERIENCED STAFF TO MORE COMPLEX AREAS AND SO ON.
A REVENUE AND RECEIVABLES, ANOTHER AREA OF A HIGHER RISK.
AGAIN, THAT'S AUDITING STANDARDS REQUIRED US TO ASSESS REVENUES AS A HIGHER RISK AND UNLESS WE CAN JUSTIFY OTHERWISE.
AND WE REALLY TRY NOT TO JUSTIFY IT.
WE JUST CONSIDER IT TO BE HIGHER RISK AND WE WE DEVELOP OUR AUDIT PROCEDURES BASED ON THAT. WE RELY HEAVILY ON CONFIRMATIONS.
SO WE SAID, CAN WE SEND CONFIRMATIONS TO THE COUNTY, TO THE STATE, TO GRANTING AGENCIES CONFIRMING AMOUNTS SUBMITTED OR REMITTED TO THE CITY? WE RECONCILE THOSE WITH THE CITY'S ACCOUNTING RECORDS TO MAKE SURE THAT THEY DO RECONCILE. WE ALSO PERFORM A LOT OF ANALYTICS AND RATIO ANALYSIS ON THE PROPRIETARY ACTIVITIES. AND THEN THE LAST AREA OF FOCUS IS PENSION AND PENSION INVOLVES SOME COMPLEX
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ACCOUNTING TREATMENT, YOU HAVE TO OBTAIN ACTUARIAL STUDIES, EXTRACT INFORMATION FROM THOSE ACTUARIAL STUDIES AND RECORD THAT INFORMATION INTO YOUR ACCOUNTING RECORDS.AND USUALLY THE DOLLAR AMOUNT IS QUITE SIGNIFICANT.
SO IT DOES REQUIRE US TO GIVE IT SOME SPECIAL FOCUS.
WE COMMUNICATE DIRECTLY WITH THE AUDITORS OF THE PLAN AUDITORS OF CALPERS.
WE OBTAIN AUDIT OPINIONS FROM THEM ON HOW MUCH THE CITY HAVE INVESTED IN THE PLAN.
WE ALSO REVIEW THE ACTUARIAL ASSUMPTIONS AND MAKE SURE THAT THEY ARE REASONABLE UNDER THE CIRCUMSTANCES. AND THEN OBVIOUSLY, WE REVIEW THE CITY'S ENTRIES TO RECORD THE PENSION ACTIVITIES DURING. SO THOSE WERE THE MAIN FOCUS AREAS, HOWEVER, WE LOOK AT EVERY ACCOUNT BALANCE THAT THE CITY HAVE IN ITS ACCOUNTING RECORDS, SO IT'S NOT THAT WE JUST LOOKED AT THOSE ACCOUNTS, BUT THOSE REQUIRED SOME ADDITIONAL PROCEDURE OTHER THAN THE STANDARD PROCEDURES. IN TERMS OF OUR AUDITORS REPORT, WE HAVE ISSUED AN UNMODIFIED OPINION ON THE FINANCIAL STATEMENTS, OUR OPINIONS TO THE AUDITING STANDARDS THAT WE FOLLOWED.
WE FOLLOWED THE GENERALLY ACCEPTED AUDITING STANDARDS AND GOVERNMENT AUDITING STANDARDS AND UNMODIFIED OPINION MEANS THAT WE BELIEVE THE FINANCIAL STATEMENTS ARE FAIRLY STATED IN ALL MATERIAL RESPECTS.
THAT ALL ESTIMATES ARE REASONABLE WITH ALL ACCOUNTING POLICIES HAVE BEEN CONSISTENTLY APPLIED AND THAT ALL DISCLOSURES ARE PROPERLY REFLECTED IN THE FINANCIAL STATEMENTS.
WANTED TO GIVE YOU A 30000 FOOT VIEW OF YOUR FINANCIAL STATEMENTS AND YOUR FINANCIAL POSITION ON THIS SLIDE.
SUMMARY OF THE CITY'S ASSETS OVER THE LAST THREE YEARS, I SAW MY GLASSES ARE NOT GETTING ALL THE WAY THERE, SO I'M ALSO SQUINTING TO SEE, BUT THIS IS A SUMMARY OF THE CITY'S ASSETS OVER THE LAST THREE YEARS.
AND YOU CAN SEE, LIKE MOST OF OUR CITIES, THAT WE ARE.
THE TWO LARGEST ASSETS ARE YOUR CASH AND INVESTMENTS AND YOUR CAPITAL ASSETS.
THAT'S TYPICAL WITH MOST CITIES.
YOU INVEST MOST OF YOUR RESOURCES.
STREETS AND ROADS AND BUILDINGS.
AND YOU ENSURE YOU HAVE LIQUIDITY.
NO MAJOR FLUCTUATION YEAR OVER YEAR BESIDES JUST THE REGULAR OPERATIONS ON SLIDE NUMBER 12. SUMMARY OF THE CITY'S LIABILITIES OVER THE LAST THREE YEARS BESIDES THE REGULAR ACCOUNTS PAYABLE AND AND COMPENSATED ABSENCES LIKE VACATION PAYABLE, OBVIOUSLY THE BIGGEST LIABILITY IS THE CITY'S PENSION LIABILITY.
AND IT IS AS OF THE MOST RECENT VALUATION, AT SEVEN MILLION DOLLARS.
THAT'S THE LARGEST, AND IT'S BEEN FAIRLY CONSISTENT OVER THE LAST FEW YEARS.
THIS SLIDE HERE SUMMARIZES THE CITY'S EQUITY OVER THE LAST THREE YEARS THAT'S TAKING YOUR ASSETS MINUS YOUR LIABILITIES, AND WE DIVIDE THEM INTO THREE MAIN CATEGORIES.
THE FIRST ONE, THE NET INVESTMENT IN CAPITAL ASSETS.
THIS IS TYPICALLY THE LARGEST CATEGORY, BUT UNFORTUNATELY IT'S THE CATEGORY THAT WILL NEVER BE. IT WILL NEVER BE IN A SPENDABLE FORM.
THIS IS HOW MUCH THE CITY INVESTED IN BUILDINGS AND INFRASTRUCTURE AND ROADS AND SO ON.
SO UNLESS YOU DECIDE TO SELL THEM AND FIND A BUYER TO BUY THEM, THOSE FUNDS WOULD PROBABLY NEVER BECOME AVAILABLE TO SPEND.
THE NEXT CATEGORY IS A RESTRICTIVE CATEGORY, AND THOSE HAVE LEGAL RESTRICTION ON THEM THIRD PARTY LEGAL RESTRICTION SO THEY CAN BE YOUR YOUR GAS TAX MONEY THAT WAS SPENT OR CAN BE GRANT FUNDS OR ANYTHING THAT ARE REALLY RESTRICTED FOR A SPECIFIED PURPOSE.
AND THEN FINALLY, THE UNRESTRICTED CATEGORY, THIS IS THE AMOUNT THAT HAVE NO LEGAL RESTRICTION. THIS IS THE AMOUNT THAT IS UNDER THE CITY COUNCIL CONTROL.
I'M NOT SAYING THAT THEY'RE AVAILABLE RIGHT AWAY, BUT THERE ARE NO LEGAL RESTRICTIONS ON IT, SO THE CITY CAN DECIDE HOW THOSE FUNDS WILL BE SPENT.
I WANT TO REMIND YOU THAT THIS IS TAKING ALL FUNDS TOGETHER FOR THE ACCRUAL BASIS, SO IT'S A LITTLE DIFFERENT THAN LOOKING AT THE GENERAL FUND, WHICH WE'RE GOING TO LOOK AT IN THE NEXT COUPLE OF SLIDES.
AND THIS SLIDE HERE IS JUST LOOKING AT TRUSTEE REVENUES OVER EXPENSES OVER THE LAST THREE YEARS, AND THE CITY HAD POSITIVE RESULTS OVER THE LAST THREE YEARS.
JUST SOME MINOR FLUCTUATIONS HERE AND THERE, BUT FOR THE MOST PART, FAIRLY CONSISTENT.
THIS NEXT SLIDE HERE IS ACTUALLY AN IMPORTANT SLIDE.
WHEN WE LOOK AT THE NET COST OF SERVICE AND WE COMPARE IT TO TAX REVENUE.
SO NET COST OF SERVICE IS THE COST OF RUNNING CITY DEPARTMENTS MINUS ANY REVENUE THAT THOSE DEPARTMENTS ARE ABLE TO BRING IN ON THEIR OWN.
SO ANY SERVICE, ANY FEES FOR USERS, ANY PERMIT FEES, ANY GRANTS, ANYTHING THAT OFFSET THE COST OF THOSE DEPARTMENTS.
AND THE IDEA IS TO SEE WHETHER THE CITY HAVE SUFFICIENT TAX REVENUES TO COVER THAT NET
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COST OF SERVICE. AND YOU CAN SEE OVER THE LAST THREE YEARS OF THE CITY CONSISTENTLY HAD A TAX BASE THAT IT'S ABOUT THE NET COST OF SERVICE, AND THAT'S DEFINITELY A POSITIVE SIGN.THAT'S NOT TAKEN INTO CONSIDERATION, ALSO INVESTMENT EARNINGS AND THINGS LIKE THAT.
SO. SO AGAIN, THAT'S A GOOD RATIO TO HAVE NET COST OF SERVICE BELOW TAX REVENUE.
IF WE WERE TO JUST FOCUS ON THE GENERAL FUND, THE GENERAL FUND IS OBVIOUSLY THE THE THE MOST UNRESTRICTED RESOURCES RESIDE.
SO IT IS A MEASUREMENT OF THE CITY'S LIQUIDITY.
WE NORMALLY LOOK AT YOUR, UH, UNRESTRICTED FUND BALANCE AND WE COMPARE THAT YOUR ANNUAL EXPENDITURES. AND THE IDEA IS TO SEE IN THE VERY UNLIKELY SCENARIO THAT ALL THE CITY'S REVENUE SOURCES STOP COMING IN.
HOW LONG CAN YOU CONTINUE TO PAY YOUR BILLS JUST USING YOUR FUND BALANCE? AND WE HAVE DETERMINED THAT YOU PROBABLY CAN PAY YOUR BILLS FOR MAYBE TWENTY TWO MONTHS, WHICH IS QUITE SIGNIFICANT.
THE MINIMUM RECOMMENDED RATIO BY THE GOVERNMENT FINANCE OFFICERS ASSOCIATION IS TWO TO FOUR MONTHS. I DEFINITELY WOULD NOT RECOMMEND YOU TO BRING IT DOWN TO TWO TO FOUR MONTHS, BUT ANY TIME YOU GO BELOW THAT TWO MONTHS, IT TRIGGERS ASSESSMENT ON OUR SIDE, WHETHER YOU CAN CONTINUE TO PAY YOUR BILLS AND WE MAY HAVE A MODIFICATION OF OPINION FOR THAT WEAK FINANCIAL POSITION.
SO AGAIN, VERY STRONG GENERAL FUND FUND BALANCE.
IF WE WERE TO JUST FOCUS ON PENSION, PENSION IS THE LARGEST LIABILITY OF THE CITY HERE.
SO THIS IS A SUMMARY OF THE CITY'S CONTRIBUTION TO THE CALPERS PLAN OVER THE LAST THREE YEARS AND LOOKING AT THIS SLIDE IS THE FUNDED STATUS OF THE PLAN OVER THE LAST THREE YEARS. FIRST COLUMN IS HOW MUCH ASSETS THE CITY HAVE INVESTED IN THE PLAN.
THE MIDDLE ONE IS THE TOTAL LIABILITY AND THE DIFFERENCE IS THE UNFUNDED PORTION OF THE LIABILITY.
AS OF THE MOST RECENT RECENT VALUATION.
THIS IS ABOUT SEVEN POINT ONE MILLION DOLLARS.
I WANTED TO ALSO BRING TO YOUR ATTENTION THAT THIS PENSION LIABILITY IS AN ESTIMATED NUMBER AND A LOT OF ASSUMPTIONS GOES INTO ESTIMATING THAT NUMBER ONE OF THE MOST SIGNIFICANT ASSUMPTIONS IS THE DISCOUNT RATE.
SO ACCOUNTING STANDARDS REQUIRE US TO DISCLOSE TO YOU WHAT WOULD YOUR LIABILITY LOOK LIKE IF THE DISCOUNT RATE IS EITHER INCREASED OR DECREASED BY ONE PERCENT? SO CURRENTLY, YOUR LIABILITY IS THAT MIDDLE COLUMN AT SEVEN POINT ONE FIVE PERCENT.
SO YOU CAN SEE THAT IF THE DISCOUNT RATE GOES UP TO EIGHT POINT ONE, YOUR LIABILITY GOES DOWN FOR THREE POINT SEVEN.
AND OBVIOUSLY, YOU CAN SEE WHEN IT WHEN THE DISCOUNT RATE GOES DOWN.
UNFORTUNATELY, I WISH I CAN TELL YOU THAT THE DISCOUNT RATE CAN GO UP.
IT'S JUST NO INDICATIONS THAT IT WILL EVER GO UP, AT LEAST FOR THE FOR THE SHORT PERIOD OF TIME. IF ANYTHING, CALPERS IS DEFINITELY DISCUSSING MAYBE DECREASING THE DISCOUNT RATE EVEN FURTHER. SO PROBABLY SOMEWHERE BETWEEN THE SEVEN POINT ONE FIVE AND THE SIX POINT ONE FIVE IS WHERE YOU'RE GOING TO BE IN THE FUTURE, BUT NOT THE OTHER WAY AROUND.
THE LAST PART OF THE EXCUSE ME OF THE PRESENTATION ARE THE REQUIRED COMMUNICATIONS.
SO ON THIS SLIDE, HERE ARE DIFFERENT RESPONSIBILITIES BETWEEN THE AUDIT FIRM AND CITY MANAGEMENT. SO WE ARE MAINLY RESPONSIBLE FOR PROVIDING AN OPINION ON THE CITY'S FINANCIAL STATEMENTS. WE'RE ALSO RESPONSIBLE FOR EVALUATING INTERNAL CONTROL OVER FINANCIAL REPORTING, INCLUDING THE TONE AT THE TOP.
WHAT MESSAGE THE COUNCIL SENT TO THE REST OF THE ORGANIZATION.
WHAT MESSAGE MANAGEMENT SENT TO THE REST OF THE ORGANIZATION.
ABOUT CONSEQUENCES OF COMMITTING FRAUD, ABOUT HAVING AUDIT FINDINGS BUT NOT FOLLOWING UP ON AUDIT ISSUES AND SO ON.
WE ARE RESPONSIBLE FOR EVALUATING COMPLIANCE WITH LAWS AND REGULATIONS FOR MAKING SURE THAT THE CITY'S FINANCIAL STATEMENTS ARE CLEAR AND TRANSPARENT AND FOR COMMUNICATING WITH THE GOVERNING BODY. AND ON THE RIGHT SIDE OF THE SLIDE, THOSE ARE MANAGEMENT RESPONSIBILITIES. MANAGEMENT IS ULTIMATELY RESPONSIBLE FOR THE FINANCIAL STATEMENTS.
AND EVEN THOUGH YOU'VE HIRED OUR FIRST CERTIFIED, THE NUMBERS, OUR AUDIT IS ONLY ON A TEST BASIS, IT ONLY PROVIDES REASONABLE BUT NOT ABSOLUTE ASSURANCE AND DEFINITELY DOES NOT RELIEVE MANAGEMENT FROM ITS RESPONSIBILITY FOR THE COMPLETENESS AND ACCURACY OF THOSE FINANCIAL STATEMENTS. MANAGEMENT IS ALSO RESPONSIBLE FOR ESTABLISHING AND MAINTAINING INTERNAL CONTROL OVER FINANCIAL REPORTING, MAKING ALL FINANCIAL RECORDS AVAILABLE TO US DURING THE AUDIT PROCESS.
SO THEY CAN'T TELL US, SORRY, WE CAN'T SUPPORT THIS BECAUSE WE SENT IT TO STORY.
IT IS REALLY THE BURDEN OF PROOF IS ON MANAGEMENT TO SUPPORT THE DOCUMENT, THE ACCOUNT BALANCES. MANAGEMENT IS ALSO RESPONSIBLE FOR ESTABLISHING INTERNAL CONTROL THAT WILL PREVENT AND DETECT FRAUD.
INFORM US OF ALL KNOWN AND SUSPECTED FRAUD.
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COMPLY WITH LAWS AND REGULATIONS.AND TAKE CORRECTIVE ACTIONS AND AUDIT FINDINGS.
IN TERMS OF INDEPENDENCE, WE IT IS SOLELY OUR RESPONSIBILITY TO MAINTAIN OUR INDEPENDENCE. WE LOOK AT INDEPENDENCE IN TERMS OF RELATIONSHIPS BETWEEN OUR FIRM, OUR AUDIT TEAM AND CITY STAFF AND CITY MEMBERS.
WE CIRCULATE QUESTIONNAIRES ABOUT ASKING OUR STAFF TO IDENTIFY ANY RELATIONSHIPS TO IMMEDIATELY REMOVE THOSE INDIVIDUALS FROM THE AUDIT TEAM.
WE ALSO EVALUATE ANY ADDITIONAL SERVICE WE OFFER THE CITY, LIKE COMPILING THE FINANCIAL STATEMENTS ON BEHALF OF THE CITY, FOR EXAMPLE.
THOSE TYPES OF SERVICES WILL IMPAIR OUR INDEPENDENCE IF WE DID NOT PUT SAFEGUARDS IN PLACE. SO WE HAVE AN INDEPENDENT REVIEWER WHO IS NOT INVOLVED IN THE AUDIT, WHO REVIEWS THOSE FINANCIAL STATEMENTS AFTER WE PUT THEM TOGETHER TO ENSURE THAT WE HAVE A SECOND SET OF EYES ON THOSE FINANCIALS.
WE HAVE DETERMINED THAT WE ARE INDEPENDENT FROM THE CITY.
TIMING OF THE AUDIT WE BELIEVE THAT THE AUDIT WAS PERFORMED IN THE TIMEFRAME COMMUNICATED TO THE CITY. IN TERMS OF SIGNIFICANT ACCOUNTING POLICIES AND UNUSUAL TRANSACTIONS, SO THIS YEAR, THERE WERE SOME NEW ACCOUNTING STANDARDS THAT WE CONSIDERED DOESN'T MEAN THAT THEY IMPACTED THE CITY, BUT EVERY YEAR WE WILL DISCUSS WITH MANAGEMENT, WITH THE NEW STANDARDS OR AND DISCUSS THE IMPACT ON THE CITY'S FINANCIAL STATEMENTS.
ALSO, WE WANTED TO REMIND YOU THAT SOME OF THE NUMBERS IN THE FINANCIALS ARE ESTIMATED NUMBERS. SO JUST WANTED TO HIGHLIGHT FOR YOU SOME OF THOSE NUMBERS THE INVESTMENT VALUATION, THE USEFUL LIFE OF ASSETS AND THE PENSION PLAN.
SENSITIVE DISCLOSURES, FINANCIAL STATEMENTS HAVE IMPORTANT NOTES TO THE FINANCIALS.
SOME OF THEM ARE IMPORTANT TO ASSIST THE READER IN UNDERSTANDING THE COMPOSITION OF THE ACCOUNT BALANCE, THE DIFFERENT RISKS THAT THOSE BALANCES ARE EXPOSED TO.
SO JUST WANTED TO HIGHLIGHT TO YOU SOME OF THOSE IMPORTANT NOTES IN THE FINANCIAL STATEMENTS. WE'RE PLEASED TO SAY THAT WE HAD NO DIFFICULTIES ENCOUNTERED DURING OUR AUDIT. ACTUALLY, MANAGEMENT WAS VERY ACCOMMODATING.
THEY WERE READY WHEN WE STARTED THE AUDIT.
AND QUITE FRANKLY, THEY KIND OF KEPT THAT KEPT US ON TARGET.
LIKE ANY TIME WE THEY FELT THAT MAYBE WHERE WE MAY FALL BEHIND, THEY MADE SURE TO FOLLOW UP, KEEP US ON SCHEDULE.
DEFINITELY. THERE WERE SOME ADJUSTMENTS AND RECLASSIFYING ENTRIES, BUT MANAGEMENT HAS RECORDED ALL THOSE ADJUSTMENTS.
THERE WERE NO SIGNIFICANT RISK OR EXPOSURE.
WE NORMALLY COMMUNICATE WITH A CITY ATTORNEY, LEGAL COUNSEL TO JUST MAKE SURE WE UNDERSTAND WHAT THE ALLEGATIONS ARE OUT THERE AND WHETHER COVERED BY INSURANCE OR NOT, WHETHER THE FINANCIAL STATEMENTS REQUIRE ANY ADDITIONAL DISCLOSURE RELATING TO THOSE LITIGATIONS.
WE'RE PLEASED TO REPORT THAT WE HAD NO DISAGREEMENT WITH MANAGEMENT.
WE HAD NO MATERIAL WEAKNESSES IN INTERNAL CONTROL.
WE DID COMMUNICATE SOME HOUSEKEEPING ITEMS TO MANAGEMENT.
THEY'RE NOT VERY SIGNIFICANT, SO THEY'RE NOT THEY DON'T WARRANT THE ATTENTION OF COUNSEL, BUT WE DO COMMUNICATE WITH MANAGEMENT WHERE THIS IS, HOW WE CAN MAYBE IMPROVE THIS PROCESS OR THAT PROCESS.
AND WE OBTAINED THE REPRESENTATION LETTERS FROM MANAGEMENT BEFORE WE ISSUED THE FINANCIALS. THOSE REPRESENTATION LETTERS ARE SIGNED BY THE CITY MANAGER AND THE FINANCE DIRECTOR, AND CITY IS ACKNOWLEDGING THAT THEY HAVE DISCLOSED TO US ALL KNOWN FACTS THAT THEY ARE NOT AWARE OF ANY FRAUD AND THEY OWN ALL ASSETS AND A LONG LIST OF REPRESENTATIONS. UH, WE'RE NOT AWARE OF ANY SIGNIFICANT ACCOUNTING OR AUDITING MATTER THAT THAT THE CITY HAD TO GO TO ANOTHER CPA FIRM TO CONSULT WITH.
ALSO, OTHER THAN OUR ENGAGEMENT LETTER AND OUR REPRESENTATION LETTER, WE HAD NO OTHER COMMUNICATIONS WITH MANAGEMENT.
THERE WERE NO MATERIAL UNCERTAINTIES RELATING TO EVENTS AND CONDITIONS, AND WE HAVE NOT BECOME AWARE OF ANY FRAUD OR ILLEGAL ACT.
THIS LAST SLIDE HERE IS A LISTING OF ALL THE NEW ACCOUNTING STANDARDS THAT WERE ISSUED TO DATE IN THE YEAR IMPLEMENTATION.
LIKE I MENTIONED EARLIER, WE NORMALLY DISCUSS THOSE WITH MANAGEMENT SEVERAL TIMES DURING THE YEAR. WE DISCUSSED WHETHER IT'S GOING TO IMPACT THE CITY OR NOT AND WHAT IT WILL TAKE TO COMPLY WITH THOSE.
WITH THAT I WANT TO SAY THANK YOU VERY MUCH FOR ALLOWING ME, ALLOWING US THE OPPORTUNITY AND FOR INVITING ME TO YOUR MEETING.
AND I'M MORE THAN HAPPY TO ANSWER YOUR QUESTIONS.
THANK YOU, MR. ALLAWI. I APPRECIATE YOUR PRESENTATION.
ARE THERE ANY PUBLIC COMMENTS AT THIS TIME.
SEEING, NONE. MADAM CLARK, DO WE HAVE ANY EMAIL COMMENTS? ON THIS. GIVE ME ONE MINUTE MAN.
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THERE'S NO EMAIL COMMENTS AT THIS TIME.ANY COMMENTS FROM THE MEMBERS? MAYOR PRO TEM PALLARES, NO COMMENTS.
THANK YOU. THANK YOU. MEMBER CORTEZ NO COMMENT.
THANK YOU. THANK YOU. MEMBER GARCIA, MADAM TAMARA, THANK YOU.
I REMEMBER MARTINEZ AND I DO NOT HAVE ANY COMMENTS.
I WOULD LIKE TO ENTERTAIN A MOTION FOR APPROVAL AT THIS TIME.
MADAM CLERK, IT'S BEEN MOVED IN A SECOND.
WOULD YOU CALL THE VOTE BY ROLL CALL? MAYOR REYNA, AYE.
A MOTION BY COUNCIL MEMBER MARTINEZ, SECONDED BY MAYOR PRO TEM PALLARES.
TO APPROVE ITEM 13, A MOTION IS UNANIMOUSLY APPROVED.
ITEM SIX REPORTS FROM CITY MANAGER.
HONORABLE MAYOR, I HAVE NO REPORTS AT THIS TIME DURING THE SPECIAL MEETING.
WE'LL COVER THOSE IN THE FOLLOWING MEETING.
THANK YOU VERY MUCH. REPORTS FROM CITY COUNCIL MAYOR PRO TEM.
NO REPORT. THANK YOU, MEMBER, CORTEZ.
NO COMMENTS, THANK YOU. MEMBER GARCIA, NO COMMENTS.
MEMBER MARTINEZ, NO COMMENTS AND I DON'T HAVE ANY COMMENTS, SO THANK YOU VERY MUCH AT THIS TIME WE'LL ADJOURN THIS MEETING.
* This transcript was compiled from uncorrected Closed Captioning.