Finance Committee Agenda and Packet 2023 08 17

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We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. We have provided our comments regarding internal controls during our audit in our Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards dated June 17, 2022. We have also provided our comments regarding compliance with the types of compliance requirements referred to above and internal controls over compliance during our audit in our Independent Auditor's Report on Compliance with Each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance dated July 26, 2023. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and other firms utilized in the engagement, if applicable, have complied with all relevant ethical requirements regarding independence. Significant Risks Identified As stated in our auditor's report, professional standards require us to design our audit to provide reasonable assurance that the financial statements are free of material misstatement whether caused by fraud or error. In designing our audit procedures, professional standards require us to evaluate the financial statements and assess the risk that a material misstatement could occur. Areas that are potentially more susceptible to misstatements, and thereby require special audit considerations, are designated as "significant risks". We have identified the following significant risks: • Management override of controls — Professional standards require auditors to address the possibility of management overriding controls. Accordingly, we identified as a significant risk that management of the City may have the ability to override controls that the City has implemented. Management may override the City's controls to modify the financial records with the intent of manipulating the financial statements to overstate the City's financial performance or with the intent of concealing fraudulent transactions. • Improper revenue recognition — Professional standards require auditors to presume that improper revenue recognition is a fraud risk. Accordingly, we identified this as a fraud risk in which management may use various techniques to overstate revenue or conceal fraudulent recognition of revenue. • GASB-87, Leases Implementation — We identified the implementation of the GASB-87, Lease standard as a significant risk based on our professional judgment based on the complex nature of determining the completeness of the lease population applicable to the new standard required to be implemented in fiscal year 2022. 14/57