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[00:00:02]

GOOD EVENING. IT IS 5:35 AND I'M CALLING THIS MEETING TO ORDER.

[1) CALL TO ORDER]

MADAM CLERK, WILL YOU CALL THE ROLL? YES. MAYOR REYNA.

I'M HERE. MAYOR PRO TEM PALLARES.

HERE COUNCILMEMBER LYNCH.

HERE. COUNCILMEMBER GARCIA.

HERE. COUNCILMEMBER MARTINEZ.

HERE. ALL MEMBERS ARE PRESENT.

THANK YOU, MADAM CLERK.

PLEASE STAND FOR A FLAG SALUTE IF YOU ARE ABLE.

THANK YOU. YOU MAY BE SEATED.

YES. WE MOVE ON TO ITEM 4.

[4)a. Receive and file the City of Wasco Financial Statements for the Year Ended June 30, 2022, and the City of Wasco Measure X Financial Statements for the Year Ended June 30, 2022.]

NEW BUSINESS.

RECEIVE AND FILE THE CITY OF WASCO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30TH, 2022, AND THE CITY OF WASCO MEASURE X FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30TH, 2022.

MR. PEREZ-HERNANDEZ.

WOW. IT'S BEEN A WHILE SINCE I'VE BEEN AT THE PODIUM.

GOOD EVENING, HONORABLE MAYOR, MEMBERS OF THE CITY COUNCIL.

SO THIS EVENING WE HAVE BADAWI AND ASSOCIATES.

WILL BE PRESENTING A BRIEF POWERPOINT PRESENTATION OF THE MEASURE X AND OUR CITYWIDE FINANCIAL STATEMENTS, THE FINANCIAL, HEALTH AND STABILITY OF OUR CITY, HOW WE ARE DOING, MOVING INTO THE FUTURE, AND AND HOW ANY ACCOUNTING UPDATES THAT HAD TO BE IMPLEMENTED THROUGHOUT THE YEAR.

AND AFTER HIS PRESENTATION, I'LL COME BACK AND MAKE SOME CLOSING COMMENTS AND JUST TURN IT OVER TO AHMED BADAWI.

THANK YOU. THANK YOU, ISAREL.

AND IF YOU ALLOW ME, I, MAYBE IF YOU CAN ALLOW ME TO SHARE MY SCREEN, I CAN SHARE MY PRESENTATION.

ARE YOU ABLE TO SHARE? ARE YOU ABLE TO SHARE YOUR SCREEN NOW? NOW I'M ABLE TO.

ALL RIGHT. SO THANK YOU AGAIN FOR INVITING ME.

TODAY, I'M GOING TO PRESENT YOU THE RESULT OF THE 2022 FISCAL YEAR AUDIT.

AND MY APOLOGIES THAT THE SLIDE MAY BE MOVING A LITTLE SLOW.

BUT WHAT I'M GOING TO COVER TODAY IS I'M GOING TO LET YOU KNOW WHO THE ENGAGEMENT TEAM WAS.

WHAT WERE OUR DELIVERABLES IN THE SCOPE OF OUR AUDIT, THE AREAS WE EMPHASIZED ON DURING OUR AUDIT PROCESS, THE TYPE OF OPINION WE'RE GETTING READY TO ISSUE AND SUMMARY OF THE SOME OF THE NUMBERS IN THE FINANCIAL STATEMENTS PROVIDE YOU SOME OF THE REQUIRED COMMUNICATIONS AS YOUR INDEPENDENT AUDITOR.

A BRIEF OVERVIEW OF THE NEW ACCOUNTING STANDARD AND SEE IF YOU HAVE ANY QUESTIONS FOR ME.

I KNOW THAT I AM ON A LIMITED TIME, SO I AM GOING TO TRY TO MOVE A LITTLE QUICKER.

BUT OF COURSE, FEEL FREE TO INTERRUPT ME ANY TIME IF YOU DO HAVE QUESTIONS.

SO AS FAR AS AN ENGAGEMENT TEAM, THIS WAS A COMPOSITION OF OUR ENGAGEMENT TEAM.

I WAS THE ENGAGEMENT PARTNER.

WE ALWAYS HAVE A QUALITY CONTROL REVIEWER AND THIS PERSON IS IN THE BACKGROUND REVIEWING OUR WORK, MAKING SURE WE ADHERE TO PROFESSIONAL STANDARDS.

ALSO PROVIDING A SECOND EYE FOR A SECOND REVIEW ON THE FINANCIAL STATEMENTS.

WE HAD A MANAGER ASSIGNED TO THE AUDIT AND THREE PROFESSIONAL STAFF.

AS FAR AS OUR DELIVERABLES AND THE SCOPE OF OUR AUDIT, WE WERE MAINLY ENGAGED TO PROVIDE AN OPINION ON THE CITY'S BASIC FINANCIAL STATEMENTS.

BECAUSE THE CITY IS SUBJECT TO GOVERNMENT AUDITING STANDARDS, WE'RE ALSO REQUIRED TO ISSUE AN OPINION ON THE INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE.

THE CITY IS A RECIPIENT OF FEDERAL FUNDS, SO THAT SUBJECT THE CITY TO A COMPLIANCE AUDIT, THE FEDERAL COMPLIANCE AUDIT.

[00:05:07]

WE CALL IT THE SINGLE AUDIT.

SO WE PERFORMED THAT AS WELL.

THE MEASURE X LIKE AS ALREADY MENTIONED.

SO WE ISSUE A SEPARATE FINANCIAL STATEMENTS ON THE MEASURE X REVENUES, THE AGREED UPON PROCEDURES FOR THE APPROPRIATION LIMITS, FOR THE [INAUDIBLE] LIMITS, AND THEN FINALLY COMMUNICATING WITH THE GOVERNING BODY, WHICH IS WHAT I'M DOING TODAY.

AND WE ALSO ISSUE A LETTER SUMMARIZING THOSE COMMUNICATIONS AT THE AT THE CONCLUSION OF THAT.

AS FAR AS AREAS OF PRIMARY EMPHASIS, I HAVE TO SAY THAT THOSE ARE PRETTY STANDARD AREAS.

SO MOST AUDITS WILL HAVE THOSE AREAS AS AREAS OF PRIMARY EMPHASIS, RISK OF MANAGEMENT, OVERRIDE OF CONTROLS.

WE'RE NOT SUGGESTING THAT MANAGEMENT OVERRIDDEN CONTROLS, HOWEVER, THEY'RE ALWAYS IN A POSITION TO DO SO.

THEY ARE THE ONE RESPONSIBLE FOR DESIGNING THE CONTROLS AND OVERSEEING THEM AND MONITORING THEM, AND THEY CAN SOMETIMES OVERRIDE THEM.

SO WE HAVE TO ALWAYS ASSUME THAT THIS RISK EXISTS AND DESIGN THEIR AUDIT PROCEDURES TO TRY TO MITIGATE IT TO AN ACCEPTABLE LEVEL.

WE DO THAT BY INCORPORATING AN ELEMENT OF UNPREDICTABILITY IN THE AUDIT PROCESS OF LOOKING AT ACCOUNTING ESTIMATES MADE BY MANAGEMENT, REVIEWING JOURNAL ENTRIES PREPARED BY MANAGEMENT, EVALUATING ANY RELATED PARTIES, MAKING SURE THAT THEY ARE ARM'S LENGTH TRANSACTIONS AND SO ON. ANOTHER AREA OF RISK IS REVENUE AND RECEIVABLE.

AGAIN, AUDITING STANDARDS REQUIRE US TO ASSUME THAT REVENUE IS AN AREA OF A HIGHER RISK UNLESS WE CAN JUSTIFY OTHERWISE.

SO NORMALLY WE TREAT REVENUES AS AN AREA OF HIGHER RISK AND WE RELY HEAVILY ON CONFIRMATIONS FROM THIRD PARTIES.

SO WE SEND CONFIRMATIONS TO THE COUNTY, THE STATE, TO FRANCHISEES, TO OTHERS, ASKING THEM TO CONFIRM AMOUNTS SUBMITTED TO THE CITY, AND WE RECONCILE THOSE TO THE CITY'S ACCOUNTING RECORDS.

WE ALSO PERFORM TREND ANALYSIS ON THE PROPRIETARY FUNDS OF THE CITY AND MAKE SURE THAT THAT BASICALLY NO ANOMALIES ARE IDENTIFIED.

FINALLY, PENSION IS AN AREA THAT INVOLVES LARGE DOLLAR AMOUNTS, COMPLEX ACCOUNTING, ACTUARIAL STUDIES AND SO ON.

SO IT'S AN AREA OF FOCUS FOR US AS WELL.

WE REVIEW THE ENTRIES PREPARED BY MANAGEMENT TO RECORD PENSION ACTIVITIES.

WE COMMUNICATE WITH CALPERS, WE OBTAIN AUDIT OPINIONS FROM CALPERS AUDITORS.

WE ALSO TEST THE DATA THAT THE CITY SUBMIT TO CALPERS ON A REGULAR BASIS.

SO THOSE WERE THE THE MAIN FOCUS AREA, THOSE WERE THE AREAS OF HIGHER RISK WE HAD TO ADDRESS.

BUT OF COURSE WE STILL AUDIT EVERY ACCOUNT BALANCE IN THE CITY'S FINANCIAL STATEMENTS.

THE REPORT IS IN A DRAFT FORM.

IT'S PRETTY MUCH COMPLETE AND SHOULD BE ISSUED ONCE APPROVED IN A FINAL FORM.

WE'RE GETTING READY TO ISSUE AN UNMODIFIED OPINION ON THE FINANCIAL STATEMENTS.

THAT'S, IN SIMPLE TERMS, IS A CLEAN OPINION.

THE OPINION STATES THE STANDARDS THAT WERE FOLLOWED, WHICH ARE THE GENERALLY ACCEPTED AUDITING STANDARDS AND THE GOVERNMENT AUDITING STANDARDS.

AND AN UNMODIFIED OPINION MEANS THAT WE BELIEVE THE FINANCIAL STATEMENTS ARE FAIRLY PRESENTED, THAT ALL ACCOUNTING POLICIES HAVE BEEN CONSISTENTLY APPLIED, THAT ALL ESTIMATES ARE REASONABLE, AND THAT ALL DISCLOSURES ARE PROPERLY REFLECTED IN THE FINANCIAL STATEMENTS.

WANT TO SUMMARIZE TO YOU SOME OF THE NUMBERS IN THE FINANCIAL STATEMENTS.

THIS SLIDE HERE SUMMARIZED THE CITY'S ASSETS OVER THE LAST THREE YEARS.

OF COURSE, THIS IS A 30,000 FOOT VIEW, SO WE'RE GROUPING DIFFERENT ASSETS TOGETHER.

AND AS YOU CAN SEE HERE, THERE IS REALLY NO MAJOR FLUCTUATION EXCEPT IN CASH.

THE CITY HAD POSITIVE OPERATING RESULTS, OBVIOUSLY THE HARPER FUNDS.

SO WE'VE SEEN AN INCREASE IN CASH AS A RESULT.

BUT EVERYTHING ELSE IS FAIRLY CONSISTENT.

ON THE LIABILITY SIDE, I THINK THE ONLY MAJOR INCREASE IS IN THE UNEARNED REVENUE AND THAT MOSTLY REPRESENT ARPA FUNDS.

ARPA FUNDS, HEY ARE RECEIVED IN ADVANCE, BUT THEY ARE NOT REALLY EARNED UNTIL THE CITY ACTUALLY SPEND THE FUNDS.

AND THAT HAS NOT HAPPENED, AT LEAST FOR A PORTION OF IT YET.

SO THAT'S THE REASON FOR THE UNEARNED REVENUES.

PENSION LIABILITY WENT DOWN.

WE'VE SEEN THAT IN ALL CALPERS MEMBERS.

THE CALPERS HAD GOOD RESULTS FOR THE ACTUARIAL VALUATION PERIOD THAT WE WERE LOOKING AT.

SO WE'VE SEEN PENSION LIABILITY GO DOWN FOR ALMOST ALL CALPERS PARTICIPANTS.

[00:10:02]

ON THIS SLIDE HERE IS A SUMMARY OF THE CITY'S NET POSITION.

AND THAT POSITION IS JUST ASSETS MINUS LIABILITIES.

IT IS DIVIDED INTO THREE CATEGORIES.

THE FIRST ONE, THE NET INVESTMENT IN CAPITAL ASSETS.

THIS REPRESENTS AMOUNTS THAT ARE NOT IN A SPENDABLE FORM.

SO THIS IS HOW MUCH THE CITY INVESTED IN BUILDING AND EQUIPMENT AND INFRASTRUCTURE ASSETS OVER THE YEARS.

THE RESTRICTED AMOUNTS REPRESENT AMOUNTS THAT ARE UNSPENT BUT RESTRICTED FOR OR LEGALLY RESTRICTED FOR A SPECIFIC PURPOSE.

SO THOSE CAN BE ANYTHING FROM GAS TAX TO TDA TO TRANSPORTATION DEVELOPMENT ACT, TO OTHER GRANTS, AMOUNTS THAT ARE LEGALLY RESTRICTED FOR A SPECIFIC PURPOSE.

AND THEN FINALLY, THE UNRESTRICTED AMOUNTS ARE THE AMOUNT THAT ARE UNDER THE COUNCIL CONTROL AND HAVE NO LEGAL RESTRICTION ON THEM.

AND THIS AMOUNT IS ABOUT $39 MILLION FOR THE CURRENT YEAR.

CHANGES IN THAT POSITION.

THAT'S JUST LOOKING AT REVENUES MINUS EXPENSES.

AGAIN, THIS IS A VERY SIMPLIFIED WAY OF LOOKING AT THE CITY'S REVENUES AND EXPENSES BECAUSE IT JUST GROUPS EVERYTHING TOGETHER, GOVERNMENTAL FUNDS AND PROPRIETARY FUNDS OR ENTERPRISE FUNDS AND FULL ACCRUAL BASIS.

BUT IT DOESN'T CHANGE THE FACT THAT THE CITY HAD POSITIVE RESULTS AND THE CITY'S BEEN HAVING POSITIVE RESULTS OVER THE LAST FEW YEARS.

SO THAT IS REPRESENTED HERE.

ON THIS SLIDE, THIS COMING SLIDE, HERE WE LOOK AT THE NET COST OF SERVICE TO TAX REVENUE.

NET COST OF SERVICE IS THE COST OF RUNNING CITY DEPARTMENTS MINUS ANY REVENUES THAT THOSE DEPARTMENTS BRING IN ON THEIR OWN.

SO A DEPARTMENT THAT BRINGS IN A GRANT TO OFFSET THE COST OR THAT THEY'RE ABLE TO CHARGE USERS A FEE TO OFFSET THE COSTS. SO WE LOOK AT THE NET COST OF SERVICE, WHICH IS REALLY EXPECTED TO BE COVERED BY TAX REVENUES.

SO OBVIOUSLY WE WANT TO SEE TAX REVENUES HIGHER THAN THE NET COST OF SERVICE.

AND AS YOU CAN SEE, IT'S BEEN CONSISTENTLY HIGHER OVER THE LAST THREE YEARS.

THE NET COST OF SERVICE SOMETIMES FLUCTUATE BECAUSE YOU HAVE SOME GRANTS, ADDITIONAL GRANTS THAT MAY COME IN AND OFFSET SOME OF THAT NET COST OF SERVICE.

SO THAT'S ONE OF THE REASONS WHY YOU SEE THE NET COST OF SERVICE GOING DOWN.

THE CONSISTENT TREND THAT WE'VE BEEN SEEING IS TAX REVENUES BEEN GOING UP IN MOST CITIES THAT WE ARE AND WASCO IS NO DIFFERENCE.

IF YOU WERE TO JUST FOCUS ON THE GENERAL FUND.

THE GENERAL FUND, WE LOOK AT THE UNRESTRICTED FUND BALANCE FUND BALANCE WITH NO OUTSIDE LEGAL RESTRICTION ON IT, AND WE COMPARE THAT TO ANNUAL EXPENDITURES TO SEE IF THE CITY HAS TO USE FUND BALANCE TO JUST PAY BILLS AND NO REVENUES ARE COMING IN.

HOW LONG CAN YOU CONTINUE TO DO THAT? AND WE'VE DETERMINED THAT YOU PROBABLY CAN CONTINUE TO DO THAT FOR ABOUT 24 MONTHS.

THIS IS OBVIOUSLY A VERY HEALTHY FUND BALANCE, NO DOUBT ABOUT THAT.

AND THE GFOA GOVERNMENT FINANCE OFFICERS ASSOCIATION RECOMMEND MINIMUM 2 TO 4 MONTHS.

SO I SHOULD ALWAYS PROBABLY ADD THAT WORD MINIMUM BECAUSE IT IS NOT THE IDEAL TARGET.

IT IS THE MINIMUM TARGET THAT BELOW THAT THERE ARE RED FLAGS ABOUT VIABILITY AND FINANCIAL STABILITY.

CLEARLY, THE CITY IS FAR AWAY FROM THAT MINIMUM.

THE NEXT FEW SLIDES JUST FOCUSING ON PENSION.

AND THIS IS A CONTRIBUTION TO THE CITY PENSION PLAN OVER THE LAST THREE YEARS.

AND THEN THE FUNDED STATUS OF THE PLAN OVER THE LAST THREE YEARS.

THE FIRST COLUMN IS HOW MUCH ASSETS ARE INVESTED IN THE PLAN.

THE MIDDLE COLUMN IS HOW MUCH IS THE TOTAL LIABILITY OF THE PLAN.

THE RIGHT HAND COLUMN IS THE DIFFERENCE BETWEEN THE TWO, WHICH IS THE UNFUNDED PORTION OF THE LIABILITIES.

AS YOU CAN SEE THAT THE MAIN REASON WHY THE UNFUNDED PORTION WENT DOWN WAS THE INCREASE IN THE ASSETS DURING THAT YEAR.

AND CLEARLY, THAT'S PROBABLY NOT GOING TO CONTINUE.

THE MARKET OBVIOUSLY HAS CHANGED.

SO WE'RE EXPECTING A SWING IN THE OPPOSITE DIRECTION NEXT YEAR.

BUT AT LEAST FOR THIS YEAR, THE NUMBERS LOOK GOOD AND EVERYONE SAW THEIR PENSION LIABILITY GO DOWN.

POTENTIAL LIABILITY IS AN ESTIMATED NUMBER, AND ONE OF THE MOST SIGNIFICANT ASSUMPTIONS IN DEVELOPING THAT ESTIMATE IS THE DISCOUNT RATE.

SO CURRENTLY THE CITY'S LIABILITY WAS CALCULATED BASED ON 7.15 DISCOUNT RATE.

THIS SHOWS YOU WHAT THE LIABILITY WOULD LOOK LIKE IF THAT DISCOUNT RATE IS EITHER INCREASED OR DECREASED BY 1%.

OF COURSE, WE SHOW THE INCREASE OR DECREASE BECAUSE THAT'S WHAT'S REQUIRED BY ACCOUNTING STANDARD.

[00:15:06]

HOWEVER, THERE ARE REALLY NO EXPECTATION THAT THE DISCOUNT RATE WILL INCREASE.

AS A MATTER OF FACT, NEXT YEAR, IN PREPARING THE FINANCIAL STATEMENTS FOR NEXT YEAR, WE'RE GOING TO BE USING A LOWER DISCOUNT RATE THAT CALPERS HAVE ALREADY LOWERED THAT.

I BELIEVE NOW IT'S ABOUT 6.8 OR 6.9, SOMETHING LIKE THAT.

SO THAT BY ITSELF IS GOING TO INCREASE THE LIABILITY IN ADDITION TO THE MARKET PERFORMANCE.

THAT TOOK A DIFFERENT OPPOSITE TURN THAT WE'RE EXPECTING THAT THERE WOULD BE A BIG SWING NEXT YEAR.

I THINK OTHER THAN THAT, THE LAST PART OF MY PRESENTATION, THE REQUIRED COMMUNICATION.

ON THIS SLIDE IS THE RESPONSIBILITY OF THE AUDIT FIRM VERSUS CITY MANAGEMENT.

OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THE CITY'S FINANCIAL STATEMENTS.

WE'RE ALSO RESPONSIBLE FOR EVALUATING INTERNAL CONTROL OVER FINANCIAL REPORTING, EVALUATING COMPLIANCE WITH LAWS AND REGULATIONS, ENSURING THAT THE FINANCIAL STATEMENTS ARE CLEAR AND TRANSPARENT, AND THEN FINALLY, COMMUNICATING WITH THE CITY COUNCIL.

MANAGEMENT IS THE ONE ULTIMATELY RESPONSIBLE FOR THE FINANCIAL STATEMENTS.

SO EVEN THOUGH WE CERTIFY AND AUDIT THOSE FINANCIALS AND OF COURSE WE HAVE SOME RESPONSIBILITY BASED ON OUR OPINION, BUT IT DOES NOT REALLY RELIEVE MANAGEMENT FROM ITS RESPONSIBILITY FOR THE COMPLETENESS AND ACCURACY OF THE FINANCIAL STATEMENTS.

MANAGEMENT IS RESPONSIBLE FOR ESTABLISHING AND MAINTAINING INTERNAL CONTROL OVER FINANCIAL REPORTING, FOR MAKING ALL FINANCIAL RECORDS AVAILABLE TO US DURING THE AUDIT OR ESTABLISHING CONTROL THAT WOULD PREVENT AND DETECT FRAUD, INFORM US OF ALL KNOWN AND SUSPECTED FRAUD, COMPLY WITH LAWS AND REGULATIONS, AND TAKE CORRECTIVE ACTION ON ANY AUDIT FINDINGS. AS FAR AS INDEPENDENCE, WE ARE RESPONSIBLE FOR EVALUATING AND MAINTAINING OUR INDEPENDENCE FROM THE CITY. WE EVALUATE ANY ADDITIONAL SERVICE THAT WE OFFER THE CITY.

FOR EXAMPLE, WE COMPILE THE FINANCIAL STATEMENTS ON BEHALF OF THE CITY, AND THIS IS A SERVICE THAT WILL IMPAIR INDEPENDENCE IF SAFEGUARDS ARE NOT PUT IN PLACE.

SO WE HAVE AN INDIVIDUAL WHO IS COMPLETELY INDEPENDENT FROM THE AUDIT THAT REVIEWS THOSE FINANCIAL STATEMENTS PRIOR TO ISSUANCE TO SATISFY THOSE REQUIREMENTS. WE ALSO EVALUATE ANY RELATIONSHIPS BETWEEN OUR FIRM STAFF AND CITY STAFF, WHETHER DIRECT OR INDIRECT, TO EVALUATE WHETHER THIS CAN IMPAIR INDEPENDENCE.

AS FAR AS TIMING OF THE AUDIT, WE BELIEVE THAT THE AUDIT WAS PERFORMED TIMELY IN THE TIMEFRAME COMMUNICATED TO THE CITY.

EVERY YEAR THERE ARE NEW ACCOUNTING STANDARDS TO BE IMPLEMENTED.

THIS IS A LISTING OF ALL THE NEW ACCOUNTING STANDARDS THAT WERE DUE TO BE IMPLEMENTED THIS YEAR.

IT DOESN'T MEAN THAT THEY WERE APPLICABLE TO THE CITY, BUT THE CITY CONSIDERED ALL OF THEM TO DETERMINE WHETHER ANYTHING WOULD IMPACT THE CITY'S FINANCIALS.

AS I MENTIONED EARLIER, SOME OF THE NUMBERS IN THE FINANCIALS ARE ESTIMATED NUMBERS AND ESTIMATES ARE ACCEPTABLE AS LONG AS THERE IS A REASONABLE BASIS BEHIND THOSE ESTIMATES.

SO JUST WANTED TO GIVE YOU AN IDEA ABOUT WHAT SOME OF THOSE ESTIMATED NUMBERS OF INVESTMENT VALUATION, USEFUL LIFE OF ASSETS, THE PENSION PLAN.

SO ON. I WANT TO JUST BRING TO YOUR ATTENTION, ALSO, SOME OF THE IMPORTANT DISCLOSURES IN THE FINANCIAL STATEMENTS AND THE NO DISCLOSURE OR THE NARRATIVE PART OF THE FINANCIALS PROVIDE SOME ADDITIONAL INFORMATION THAT IS NOT ON THE FACE OF THE FINANCIAL STATEMENTS.

I CAN PROVIDE YOU SOME MORE INSIGHT INTO, FOR EXAMPLE, THE CITY'S INVESTMENT POLICY AND INVESTMENT PORTFOLIO AND DIFFERENT RISKS THAT ARE THAT THE CITY IS EXPOSED TO. WE ENCOUNTERED NO DIFFICULTIES DURING OUR AUDIT.

I KNOW THAT THE CITY HAD SOME STAFFING TURNOVER AND WE BELIEVE THAT THE CITY STAFF CAME THROUGH AND PROVIDED US WHAT WE WERE LOOKING FOR AND WE ARE PRESENTING THE AUDIT TIMELY.

JUST ONE SECOND HERE. THERE WERE SOME ADJUSTMENTS IN RECLASSIFYING ENTRIES DURING OUR AUDIT, AND MANAGEMENT HAS POSTED ALL OF THOSE ADJUSTMENTS.

ADJUSTMENTS NORMALLY OCCUR WHEN WE START AUDITING AN ACCOUNT AND WE FOUND WE FIND ERRORS, THEN THAT WILL REQUIRE SOME ADJUSTMENTS.

SO THERE WERE SOME IN MANAGEMENT HAS AGREED AND AND CORRECTED THEM.

THERE WERE NO SIGNIFICANT RISK OR EXPOSURE IDENTIFIED.

WE NORMALLY COMMUNICATE WITH LEGAL COUNSEL TO CONFIRM ANY OUTSTANDING LITIGATIONS AND MAKE SURE THAT THEY'RE PROPERLY DISCLOSED IN THE FINANCIALS.

WE'RE PLEASED TO REPORT THAT WE HAD NO DISAGREEMENT WITH MANAGEMENT.

WE HAD NO MATERIAL WEAKNESSES IN INTERNAL CONTROL.

WE WILL BE OBTAINING A REPRESENTATION LETTER FROM MANAGEMENT.

IT'S BASICALLY MANAGEMENT ACKNOWLEDGING TO US THAT THEY HAVE DISCLOSED ALL KNOWN FACTS, THAT THEY HAVE RECORDED ALL TRANSACTIONS, THAT THEY ARE NOT AWARE OF ANY FRAUD AND SO ON.

[00:20:09]

WE'RE NOT AWARE OF ANY SIGNIFICANT ACCOUNTING OR AUDITING MATTER FOR WHICH MANAGEMENT HAS CONSULTED WITH OTHER FIRMS OTHER THAN THE ENGAGEMENT LETTER AND THE REPRESENTATION LETTER. THERE HAS BEEN NO OTHER COMMUNICATION WITH MANAGEMENT.

THERE WERE NO MATERIAL UNCERTAINTIES RELATING TO EVENTS AND CONDITIONS, AND WE HAVE NOT BECOME AWARE OF ANY INSTANCES OF FRAUD OR ILLEGAL ACTS.

I AM NOT GOING TO BOTHER YOU WITH ALL THE NEW ACCOUNTING STANDARDS, BUT THIS IS A LISTING OF ALL THE NEW ONES COMING THE CITY'S WAY IN THE YEAR THAT THEY WILL NEED TO BE IMPLEMENTED. OF COURSE, WE WORK WITH MANAGEMENT ON WHAT IT WILL TAKE TO IMPLEMENT THOSE STANDARDS IF THEY ARE APPLICABLE, AND WE DISCUSS IT IN MORE DETAIL WITH THEM. WITH THAT I WANT TO SAY THANK YOU FOR ALLOWING US THE OPPORTUNITY TO PROVIDE AUDITS SERVICE IN THE CITY, AND I'M MORE THAN HAPPY TO ANSWER ANY QUESTIONS.

THANK YOU, MR. BADAWI.

I APPRECIATE YOUR PRESENTATION.

ARE THERE ANY PUBLIC COMMENTS AT THIS TIME? OK, SEEING NONE.

MADAM CLERK, DO WE HAVE ANY EMAIL COMMENTS? NO EMAIL COMMENTS AT THIS TIME.

THANK YOU, MADAM CLERK.

ANY COMMENTS FROM THE MEMBERS? MAYOR PRO TEM PALLARES.

NO COMMENTS. THANK YOU.

MEMBER GARCIA. NONE, MAYOR.

THANK YOU. MEMBER LYNCH.

NO COMMENTS, SIR. MEMBER MARTINEZ.

NO COMMENTS. AND I JUST WILL SAY, MR. BADAWI, IT SHOWS THAT THE AUDIT WAS UNMODIFIED, IF I'M CORRECT.

SO THAT JUST SHOWS THAT OUR FINANCES ARE IN GOOD ORDER.

AM I CORRECT? THAT IS CORRECT.

THANK YOU. THANK YOU VERY MUCH.

I WOULD LIKE TO ENTERTAIN A MOTION FOR APPROVAL AT THIS TIME.

SO MOVE. IS THE DIRECTOR GOING TO FINISH? THE DIRECTOR NEED TO FINISH? I APOLOGIZE.

I'M MOVING HERE TOO QUICKLY.

THANK YOU, HONORABLE MAYOR AND COUNCIL MEMBERS.

I JUST WOULD LIKE TO MAKE A FEW CLOSING COMMENTS.

AS AHMED MENTIONED, OUR EXTERNAL AUDITOR, THROUGH THE SLIDES AND THEY STATED WE DO HAVE SOUND FINANCIAL BALANCES, WHICH INDUSTRY PRACTICE IS 2 TO 4 MONTHS WORTH OF RESERVES AND TO OPERATE THE CITY. HENCE WE HAVE 24 MONTHS WORTH.

HOW DOES THAT TRANSLATE TO US, THAT WE ARE IN A GOOD FINANCIAL FOOTING.

ALSO WANTED TO HIGHLIGHT THAT THE FINANCE STAFF IS WORKING ON AN ANNUAL COMPREHENSIVE FINANCIAL REPORT, WHICH IS AN IN-DEPTH ANALYTICAL STUDY OF TEN YEARS WORTH OF OUR FINANCIAL STATEMENTS AND TRENDS THAT HAVE OCCURRED FOR THE PAST TEN YEARS, WHICH IS SOMETHING THAT IS VIEWED BY BONDHOLDERS ISSUING BONDS OR EXTERNAL STAKEHOLDERS.

AND THE LAST TIME THAT THE CITY ISSUED THESE TYPE OF IN-DEPTH FINANCIAL STATEMENTS WAS 11 YEARS AGO. SO THAT IS A VERY LONG TIME.

AND THE REASON WHY I MAKE THAT POINT IS BECAUSE WE STARTED THIS EIGHT MONTHS AGO AND IT COULDN'T HAVE BEEN ACCOMPLISHED BY ONE OR TWO INDIVIDUALS.

IT TRULY TOOK A DEPARTMENT AND FINANCE DEPARTMENT AS WELL AS PUBLIC WORKS, COMMUNITY DEVELOPMENT AND CITY HALL, BUT ESPECIALLY THE FINANCE STAFF THAT ARE HERE TODAY.

THESE ARE THE THESE ARE THE FACE OF THE FINANCE DEPARTMENT AND THE MOUNTAINS THAT THEY HAD TO MOVE JUST TO BE ABLE TO PRESENT AND BRING FORWARD TO YOU IN A TIMELY MANNER WITHIN SIX MONTHS OF CLOSING THE YEAR.

TIMELY FINANCIAL STATEMENTS TO MAKE INFORMED DECISIONS OF HOW WE'RE GOING TO MOVE FORWARD WITH OUR NEW POLICE DEPARTMENT, WITH THE THE THE FARM, LABOR, HOUSING AND ALL THESE WIDE ARRAY OF FUNCTIONS THAT ARE THAT.

FINANCES ARE INTERTWINED AND HOW GRANTS PLAY A KEY ROLE IN THIS.

SO JUST PUTTING A FACE TO THE FINANCE DEPARTMENT.

HAVE THEM THERE IN THE AUDIENCE, AND I JUST WOULD REALLY WANT TO THANK THEM FOR ALL THEIR HARD WORK AND STEPPING OUT OF THEIR COMFORT ZONE AND TRULY LEARNING THESE NEW ASPECTS OF FINANCES.

[00:25:05]

AND WITH THAT, I'LL BE HAPPY TO ANSWER ANY QUESTIONS THAT THE COUNCIL MAY HAVE.

THANK YOU, MR. PEREZ. ANY QUESTION FOR OUR FINANCE DIRECTOR.

MEMBER PRO TEM.

MAYOR PRO TEM. NO COMMENTS.

THANK YOU. MEMBER GARCIA.

NOTHING. THANK YOU.

MEMBER LYNCH. NONE SIR.

MEMBER MARTINEZ.

OUTSTANDING JOB BY YOU AND YOUR TEAM.

THANK YOU. YOU KNOW, THE MARK OF A GOOD LEADER IS RECOGNIZING THOSE AROUND YOU.

SO I APPRECIATE WHAT YOU HAVE ACCOMPLISHED.

AND IT JUST SHOWS THE GREAT LEADERSHIP THAT YOU HAVE WITHIN YOUR DEPARTMENT AND OF COURSE, EVERYBODY ELSE THAT HAS HELPED TO ACHIEVE THIS IN THIS WAY.

SO THANK YOU VERY MUCH TO ALL OF YOU.

AND A ROUND OF APPLAUSE.

[APPLAUSE] PIONEERING THE WAY.

THANK YOU VERY MUCH. ALL RIGHT.

I WAS MOVING RAPIDLY HERE, SO I'LL COME BACK TO WHAT I WAS DOING.

AT THIS TIME I THINK WE HAVE A MOTION ON THE FLOOR AND WE HAVE A SECOND.

SECOND. MADAM CLERK, WOULD YOU CALL THE VOTE BY ROLL CALL? COUNCILMEMBER LYNCH, SECONDED BY COUNCILMEMBER GARCIA TO RECEIVE AND FILE MOTION IS UNANIMOUSLY APPROVED.

THANK YOU VERY MUCH.

AT THIS TIME, THIS MEETING IS ADJOURNED.

I WOULD RECOMMEND A VERY SHORT RECESS WHILE WE WORK WITH THE FOLKS THAT ARE OUTSIDE.

SURE. LET'S DO THAT. SO FIVE MINUTES? YES. DO YOU NEED MORE THAN THAT? FIVE MINUTE RECESS.

* This transcript was compiled from uncorrected Closed Captioning.