19D - 2018-19 FISCAL RPT - Laserfiche WebLink

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Significant Audit Findings (Continued) Qualitative Aspects of Accounting Practices (Continued) d. The annual required contributions, pension expense, net pension liability and corresponding deferred outflows of resources and deferred inflows of resources for the City's public defined benefit plans with CalPERS and PARS are based on actuarial valuations provided by CalPERS and an outside consultant, respectively. e. The Other Post -Employment Benefit Plan (OPEB) expense, total OPEB liability, and corresponding deferred outflows of resources and deferred inflows of resources for the City's OPEB plan are based several key assumptions that are set by management with the assistance of an independent third party actuary. These key assumptions include anticipated investment rate of return, health care cost trends, mortality and certain amortization periods. f. Management's estimate of the claims payable liabilities related to general liability and worker's compensation claims are based on actuarial valuations. We evaluated the key factors and assumptions used to develop these estimates in determining that they were reasonable in relation to the financial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were reported in Note 4E regarding the CalPERS defined benefit plans, Note 4F regarding the PARS supplementary retirement plan, and Note 4G regarding the City's OPEB plan. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. As a result of our audit related testwork, we proposed no significant corrections to the financial statements. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. 196-10