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