title
Receive a presentation and accept the following reports for the fiscal year ended June 30, 2021: Solano County Comprehensive Annual Financial Report (CAFR), Report to the Board of Supervisors, Report on Internal Controls in Accordance with Generally Accepted Government Auditing Standards (GAGAS), Report to Management; and the Report on Applying Agreed-Upon Procedures (AUP, GANN Limit) for the fiscal year ended June 30, 2022
body
Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The Auditor-Controller’s Office (ACO) recommends that the Board of Supervisors receive a presentation and accept the following reports for the fiscal year ended June 30, 2021:
1) Solano County Comprehensive Annual Financial Report (CAFR);
2) Report to the Board of Supervisors;
3) Report on Internal Controls in Accordance with Generally Accepted Government Auditing Standards (GAGAS);
4) Report to Management; and
5) Report on Applying Agreed-Upon Procedures (AUP, GANN Limit) for the fiscal year ended June 30, 2022.
SUMMARY:
In accordance with Government Code §25250 and pursuant to the contract terms approved by the Board of Supervisors on April 14, 2020, Eide Bailly, L.L.P., CPAs, conducted audit services and has issued the following reports: 1) Comprehensive Annual Financial Report (CAFR); 2) Report to the Board of Supervisors; 3) Report on Internal Controls in Accordance with Generally Accepted Government Auditing Standards (GAGAS); 4) Report to Management; and 5) Report on Applying Agreed-Upon Procedures (AUP, GANN Limit) for the fiscal year ended June 30, 2022.
For the fiscal year ended June 30, 2021, the County received an unmodified opinion (clean opinion) on the CAFR. The Report to the Board of Supervisors did not note any significant or material audit matters. The Report on Internal Controls did not identify any findings. The Report to Management included one recurring observation from prior year relating to the Solano County Fair and a new observation to develop an Information Technology (IT) Business Continuity Plan. The AUP, GANN Limit Report noted no exceptions.
Consistent with the prior years, the Auditor-Controller’s Office believes the current CAFR continues to meet the Certificate of Achievement Program’s requirements and has submitted it to the GFOA for consideration for another award.
FINANCIAL IMPACT:
The costs associated with preparing the agenda item are nominal and absorbed by the department’s FY2020/21 Adopted Budget.
DISCUSSION:
Comprehensive Annual Financial Report
The ACO prepares the Comprehensive Annual Financial Report (CAFR). The CAFR includes an introductory section, a financial section, and a statistical section.
The introductory section provides general information on the County’s structure, awards received and personnel as well as information useful in assessing the County’s financial condition (pages 1-12).
The financial section (pages 13-156) contains the basic financial statements and required supplementary information as well as the independent auditor’s report. A narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, 2021 is included in the Management’s Discussion and Analysis (pages 19-31). In addition, the financial section provides information on each individual fund and component unit not reported separately within the basic financial statements.
The statistical section (pages 157-183) provides a broad range of trend data covering key financial indicators from the past 10 years. It also contains demographic and miscellaneous data useful in assessing the County’s financial condition.
Basic financial statements are defined as government-wide financial statements (pages 35-37), fund financial statements (pages 38-46), and notes to the financial statements (pages 47-106). Areas of particular interest include the detailed note disclosures on cash and investments (pages 64-73), long-term obligations (pages 80-86), fund balance classifications (page 87), employee retirement plans (pages 88-96), and Post Employment Health Care Benefits (pages 96-101).
The focus of the government-wide financial statements is to report the extent to which the government has met its operating objectives, using all resources available for that purpose. The focus of the fund financial statements is to demonstrate the government’s actions in the current period have complied with the public decisions in raising and spending the public funds within the budgetary cycle.
The required supplementary information presents the schedules of changes in net pension liability and related ratios for the defined benefit pension plans (pages 110-117) and schedules of changes in net OPEB liability and related ratios for the OPEB plan (pages 118-119). Also, this section presents the County’s budgetary comparison schedules for the General Fund (page 120) and all major special revenue funds (pages 121-122). The combining statements in connection with non-major governmental and internal service funds are presented immediately following the required supplementary information (pages 125-156).
The County’s unfunded pension liability and pension activities are presented in the County’s government-wide financial statements, note disclosures and supplementary schedules in accordance with the Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting of Pensions - an amendment of GASB Statement No. 27.
The County’s Net Pension Liability of $596,187,563 ($453,215,353 for the Miscellaneous Plan and $142,972,210 for the Safety Plan, excluding the Courts) is presented in the Statement of Net Position (page 35). This is a net increase of $36,779,369 from prior year’s net pension liability of $559,408,194. Additional detail and pension information is disclosed in the pension footnote (pages 88-96).
The County’s unfunded other postemployment benefits (OPEB) liability and OPEB activities are presented in the County’s government-wide financial statements, note disclosures and supplementary schedules in accordance with the Government Accounting Standard Boards (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions.
The County’s Net OPEB Liability of $14,910,784 is presented in the Statement of Net Position (page 35). This amount is a net decrease of $1,124,216 from prior year’s net OPEB obligation of $16,035,000. Additional detail and OPEB information are disclosed in the OPEB footnote (pages 96-101).
Report to the Board of Supervisors
The Report to the Board of Supervisors communicates any significant audit matters and other information contained in the audited financial statements. There were no significant material audit matters reported. The report includes uncorrected misstatements whose effects in the current and prior periods are immaterial to the financial statements taken as a whole.
Report on Internal Controls in Accordance with Generally Accepted Government Auditing Standards (GAGAS)
The Report on Internal Control communicates internal control over financial reporting and on compliance and other matters in accordance with Government Auditing Standards. The report did not identify any findings.
Report to Management
The Report to Management communicates weaknesses in internal controls and related matters identified in the audit that warrant communication to management but are not material weaknesses in internal controls. The report cited a recurring observation from prior year relating to the Solano County Fair and its required debt service payment to the County and a new observation to develop an Information Technology (IT) Business Continuity Plan.
The preparation of these reports would not have been possible without the dedication of the Auditor-Controller’s staff. The ACO would like to recognize Sheila Turgo, Adrienne Clark, Jennifer Laron, Debbie Peirce, Ernestine Villanueva and Kaitlin McDonald for their commitment and hard work. Credit must also be given to the County Administrator and the Board of Supervisors for their support in maintaining the highest standards of professionalism in the management of the County’s finances. In addition, the ACO also thanks the County departments for their cooperation and outstanding support in the preparation of these reports.
ALTERNATIVES:
The Board could elect not to accept the audit reports as presented; however, this alternative is not consistent with sound public policy and is therefore not recommended.
OTHER AGENCY INVOLVEMENT:
The ACO was the liaison between the external auditors, Eide Bailly, L.L.P. and other County departments, including the Workforce Development Board. As the liaison, the ACO coordinated test work and meetings with County departments, facilitated access to financial system (OneSolution) reports and supporting documentation, etc. Prior to the final issuance of the various reports, the ACO invited staff from the County Administrator’s Office, the Grand Jury, and County departments to meet with Eide Bailly, L.L.P., to review and discuss the contents of the various audit reports.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION