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Home My WebLink About19F - STATEMENT OF AUDITING STANDARDSRok femFIN CITY COUNCIL MEETING DATE. NOVEMBER 17, 2015 TITLE: STATEMENT OF AUDITING STANDARDS PLANNING LETTER FOR THE YEAR -ENDED JUNE 30, 2015 (STRATEGIC PLAN NO. 4, 1) CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 19'Reading ❑ Ordinance on 2n'Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Receive and file the Statement of Auditing Standards correspondence for fiscal -year ended June 30, 2015. DISCUSSION The City, since April 2012, has engaged the Independent Audit firm of Macias Gini & O'Connell, LLP (MGO) to conduct various engagements including but not limited to an audit of the City's financial statements and assistance in preparing the Comprehensive Annual Financial Report (CAFR). A routine component of the audit engagement is for MGO to draft a correspondence to the Mayor and City Council known as the Statement of Auditing Standards (SAS) planning. The SAS correspondence highlights valuable information regarding the audit process including but not limited to the following: planning, scope and timing of the audit; the auditor consideration of the City's existing internal control when developing the audit procedures related to the said audit. Additionally, the auditor describes timeline for the audit and its expected date of completion. The audit of the City's financial statements for the fiscal year -ended June 30, 2015, commenced on June 15, 2015 and is expected to be completed by no later than December 31, 2015. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City's to meet Goal #4 City Financial Stability, Objective #1 (maintain a stable, efficient and transparent financial environment). 19F -1 Statement of Auditing Standards Planning Letter for YE June 2015 November 17, 2015 Page 2 FISCAL IMPACT There is no fiscal impact associated with this action. wZy -r,� � A� Francisco Gutierrez Executive Director Finance and Management Services Agency Sv Exhibit 1: Statement of Auditing Standards Correspondence dated October 22, 2015 19F -2 Exhibit 1 ® A n breed Sacramento of proro fessional services firm Ar(nieA4 Walnut Creek Oakland October 22, 2015 Los Angeles The Honorable City Council Century aey of the City of Santa Ana 20 Civic Center Plaza Newport Beach Santa Ana, California 92701 San Diego We are engaged to audit the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Santa Ana (City) for the year ended June 30, 2015. Professional standards require that we provide you with the following information related to our audit. We would also appreciate the opportunity to meet with you to discuss this information further since a two -way dialogue can provide valuable information for the audit process. Our Responsibilities under U.S. Generally Accented Auditing Standards Government Auditing Standards and OMB Circular A -133 As stated in our engagement letter dated October 22, 2015, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we will consider the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over financial reporting. We will also consider internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A -133. As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we will perform tests of its compliance with certain provisions of laws, regulations, contracts, and grants. However, providing an opinion on compliance with those provisions is not an objective of our audit. Also in accordance with OMB Circular A -133, we will examine, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A -133 Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City's compliance with those requirements. While our audit will provide a reasonable basis for our opinion, it will not provide a legal determination on the City's compliance with those requirements. Planned Scope, Timing of the Audit, and Other An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. Our audit will include obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Material misstatements may result from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. We will generally communicate our significant findings at the conclusion of the audit. However, some matters could be communicated sooner, Macias Gini & O'Connell LLP New MacArthur Court, Suite bbo New 19F, —3 Newport death, CA 92660 www.mgoepa.com particularly if significant difficulties are encountered during the audit where assistance is needed to overcome the difficulties or if the difficulties may lead to a modified opinion. We will also communicate any internal control related matters that are required to be communicated under professional standards. Effective December 26, 2014, the City is subject to the requirements of the new OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth in Title 2 CFR, Subtitle A, Chapter 11, Part 200 (Uniform Guidance). The City will implement GASB Statement No. 68 Accounting and Financial Reporting for Pensions An Amendment of GASB Statement No. 27 for the year ended June 30, 2015. This statement requires governments providing defined benefit pensions to recognize their long -term obligation for pension benefits as aliability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. It also enhances accountability and transparency through revised and new note disclosures and required supplementary information We began our audit on June 15, 2015 and plan to issue our report no later than December 31, 2015. Katherine V. Lai is the engagement partner and is responsible for supervising the engagement and signing the report or authorizing another individual to sign it. This information is intended solely for the use of the City Council and management of the City of Santa Ana and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Macias Gim & O'Connell LLP 19R -4