REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Travis Hopkins, Acting City Manager
VIA: David Cain, Interim Chief Financial Officer
PREPARED BY: Serena Bubenheim, Assistant Chief Financial Officer
Subject:
title
Year-End Audit Results for the FY 2023/24 Annual Comprehensive Financial Report (ACFR) and Approval of Fiscal Year 2023/24 Year-End Audit Adjustments
body
Statement of Issue:
Fiscal Year 2023/24 Year-End Audit Results
The City received an Unmodified (Clean) Audit Opinion for the City’s Fiscal Year (FY) 2023/24 Annual Comprehensive Financial Report (ACFR), which is the highest audit result attainable. In addition, the Government Finance Officers Association awarded their Certificate of Achievement for Excellence in Financial Reporting to the City for the 38th consecutive year. Included as an attachment is the FY 2023/24 ACFR to receive and file.
Fiscal Year 2023/24 Year-End Adjustments
As part of the year-end closing process for FY 2023/24, certain budgetary adjustments are needed to reconcile the budget with actual expenditures incurred; to comply with auditing, actuarial, accounting, and legal requirements; and to align with the City Council’s strategic goal of fiscal stability. City Council approval of these reconciliations is requested as part of the close-out of FY 2023/24.
Financial Impact:
1. Appropriation and Inter-Fund Transfers (various funds): Appropriation increases and inter-fund transfer authority of $947,504.21 are requested to reconcile the budget with actual expenditures incurred in various funds (Attachment 3).
2. Appropriation increases (various funds): Appropriation increases of $252,137.39 are requested to reconcile the budget with actual expenditures incurred in various funds (Attachment 3).
There are sufficient revenues, cash, and/or fund balances to support the above referenced adjustments.
Recommended Action:
recommendation
A) Receive and File the FY 2023/24 Annual Comprehensive Financial Report and other auditor-issued reports; and,
B) Approve year-end budget adjustments to the FY 2023/24 Revised Budget in the funds and by the amounts contained in Attachment 3.
end
Alternative Action(s):
Do not approve, and direct staff accordingly.
Analysis:
Fiscal Year 2023/24 Year-End Audit Results
Auditing firm Davis Farr LLP (Auditors) audited the City’s financial statements and internal control for the FY 2023/24. The City received an Unmodified (Clean) Audit Opinion for the FY 2023/24 Annual Comprehensive Financial Report (ACFR), which is the highest opinion possible (Attachment 1).
In addition, the Auditors issued the following reports (Attachment 2):
• AU-C 260 Letter: Auditor’s Communications with Those Charged with Governance
• Air Quality Management District (AQMD) Report
• Appropriations Limit Agreed-Upon Procedures
Fiscal Year 2023/24 Year-End Audit Adjustments
The FY 2023/24 Budget was adopted by City Council on June 26, 2023, for the fiscal year beginning July 1, 2023. As part of the year-end closing process, certain technical year-end budget adjustments to the FY 2023/24 Revised Budget are requested to align appropriations in certain funds with actual expenditures incurred through June 30, 2024, as actual expenditures cannot exceed the appropriation amounts contained in the Revised Budget. Adjustments are also required to ensure compliance with Generally Accepted Accounting Principles (GAAP), Governmental Accounting Standards Board (GASB), and other regulatory, contractual, or legal requirements. Please note that any appropriation increases are fully offset by commensurate amounts of revenues, available cash, or fund balances in each Fund. Additionally, no adjustments to the General Fund are being requested.
Inter-Fund Transfers (Other Funds):
Surf City “3” Cable Channel, Infrastructure, and Equipment Replacement Funds (243, 314 and 324):
An appropriation of $763,504.21 is requested to increase transfers out from the Surf City “3” Cable Channel Fund (243) into the Infrastructure Fund (314) in the amount of $611,888.68 and into the Equipment Replacement Fund (324) in the amount of $151,615.53. The requested transfer is to reimburse the Infrastructure and Equipment Replacement Funds for its fair share of various fiber and server and other equipment upgrades that supported the City’s Cable Channel.
Debt Service Bella Terra and Bella Terra Parking Structure Funds (410 and 711):
An appropriation of $184,000 is requested to increase transfers out from the Debt Service Bella Terra Fund (410) into the Bella Terra Parking Structure Fund (711) to cover increased maintenance and operations costs that are paid for from the Bella Terra Parking Structure Fund (711). A corresponding expenditure appropriation is being requested in the Bella Terra Parking Structure Fund (711) to cover the increased maintenance costs.
Appropriation Increases (Other Funds):
Hotel/Motel Business Improvement District (Hotel/Motel BID) Fund (709):
An appropriation increase of $46,673 is requested to align the budget with actual FY 2023/24 revenues and expenditures. The Hotel/Motel BID Fund is a pass-thru fund in which the City collects self-assessed revenues from the participating hotels and motels and submits them to Visit Huntington Beach per the BID’s agreement.
Downtown Business Improvement District (Downtown BID) Fund (710):
An appropriation increase of $9,011 is requested to align the budget with actual FY 2023/24 revenues and expenditures. All Downtown merchants have a self-assessment through the Business Improvement District (BID) that the City Council approves annually. The City collects the fees and redistributes them back to the District.
Bella Terra Parking Structure Fund (711):
An appropriation increase of $184,000 is requested to align the budget with actual FY 2023/24 revenues and expenditures. The City collects a maintenance fee from the owners of the center which is used to fund maintenance and operations costs for the structure.
Used Oil Grant Fund (960):
An appropriation increase of $12,453.39 is requested to align the budget with actual FY 2023/24 revenues and expenditures. A portion of prior year grant funds from the OPP13 term were unspent and needed to be returned to the Department of Resources Recycling and Recovery (CalRecycle).
Environmental Status:
Not applicable
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. FY 2023/24 Annual Comprehensive Financial Report (ACFR)
2. Other Auditor Issued Reports
3. Fiscal Year 2023/24 Year-End Budget Adjustments
4. FY 2023/24 ACFR and Year-End Budget Adjustments Presentation