TO: Honorable Mayor and Members of the City Council
THRU: Tom Kisela, City Manager
FROM: Trang Nguyen, Finance Director
1. Subject
title
Annual Comprehensive Financial Report and Related Financial Reports for the Fiscal Year ended June 30, 2024.
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2. Summary
Financial Reports and Statements provided by Lance, Soll, Lunghard, LLP, independent auditors, as a result of the annual financial audit for the fiscal year ended June 30, 2024.
3. Recommended Action
recommendation
Receive and file the following documents for the fiscal year ended June 30, 2024:
1. Annual Comprehensive Financial Report
2. Audit Communication Letter
3. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheets
4. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Investment Portfolio
5. Air Pollution Reduction Fund Financial Statements and Independent Auditors’ Report
6. Independent Auditors’ Report on Internal Control Over Financial Reporting
7. Housing Successor Fund Financial Statements
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4. Fiscal Impact
None.
5. Strategic Plan Goals
Goal 2: Enhance Economic Development and Achieve Fiscal Sustainability
Objective 2.9: Create a fiscal sustainability plan
6. Discussion and Background
Lance, Soll, and Lunghard, LLP (LSL), an independent certified public accounting firm, provided audit services to the City for the fiscal year ended June 30, 2024. The audited financial statements follow the requirements of Generally Accepted Accounting Principles (GAAP) as set forth by the Governmental Accounting Standards Board (GASB).
The City’s audit was performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Auditing Standards, issued by the Comptroller General of the United States. Such audits utilize sampling of data, inquiries of staff and management, testing of procedures and transactions, confirmation with outside parties, and checking of internal files and documents. The audit resulted in an unmodified or “clean” audit opinion. This provides assurance that the City’s financial transactions are presented fairly, in all material respects, and can be relied upon not only for proper reporting of past financial results in the City’s Fiscal Year (FY) 2023-24 Annual Comprehensive Financial Report (ACFR), but also on a go-forward basis as we craft the FY 2025-26 Budget. This is important given the results reflected in the ACFR include fixed assets, non-spendable assets such as inventory, and restricted fund balances such as catastrophic reserve that are not readily available to City for appropriation in operating costs, debt services, and capital infrastructure improvements.
The following Reports, Letter, and Statements are presented for fiscal year ended June 30, 2023:
1. Annual Comprehensive Financial Report (ACFR) - This report is divided into three major sections: the Introductory Section, the Financial Section, and the Statistical Section. The Introductory Section includes a Letter of Transmittal. The Financial Section comprises the Audit Opinion, Management’s Discussion and Analysis, and the Basic Financial Statements. The Statistical Section provides important historical and trend information about the City. The Audit opinion is an “unmodified opinion”, which states that, in the auditor’s opinion, the basic financial statements of the City are presented fairly in all material respects and are in conformity with generally accepted accounting principles (GAAP).
2. Audit Communication Letter - a report on recommendations made to management by the auditors to improve internal controls and/or operating efficiencies within the City.
3. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheets - procedures performed solely to assist the City in meeting the requirements of Section 1.5 of the Article XIIIB of the California Constitution.
4. Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Investment Portfolio - independent review of investment operations and compliance with the City’s investment policy.
5. Air Pollution Reduction Fund Financial Statements and Independent Auditors’ Report - audited financial statements in accordance with Generally Accepted Auditing Standards and the standards applicable to the financial audits contained in Government Auditing Standards.
6. Independent Auditors’ Report on Internal Control Over Financial Reporting - a report to describe the scope of testing of the City’s internal control over financial reporting and the results of that testing.
7. Housing Successor Fund Financial Statements- audited financial statements in accordance with Generally Accepted Auditing Standards and the standards applicable to the financial audits contained in Government Auditing Standards.
A single audit, a compliance audit of federally assisted grant programs, is required if federal grant expenditure exceeds $750,000. While the City’s federal grant expenditures met this requirement, the final report is still pending from the auditors. Therefore, the single audit report for the fiscal year ended June 30, 2024, is not included with this staff report. There are no audit findings noted at this time and staff will return to the City Council with the final single audit report at a future meeting.
7. ATTACHMENTS
• City of Orange Annual Comprehensive Financial Report and Summary of Audit Results
• Audit Communication Letter
• Independent Accountants’ Report on Agreed-Upon Procedures Applied to the Appropriations Limit Worksheets
• Independent Accountants’ Report on Agreed-Upon Procedures Applied to Investment Portfolio
• Air Pollution Reduction Fund Financial Statements and Independent Auditors’ Report
• Independent Auditors’ Report on Internal Control Over Financial Reporting
• Housing Successor Fund Financial Statements