HomeMy WebLinkAboutExhibit 1_23-24 Client Rep Letter Audit Differences
City of Diamond Bar
21810 Copley Drive | Diamond Bar, CA 91765-4178
909-839-7000 | Fax 909-861-3117
www.DiamondBarCA.gov
Chia Yu Teng
Mayor
District 4
Steve Tye
Mayor Pro Tem
District 1
Andrew Chou
Council Member
District 3
Stan Liu
Council Member
District 5
Ruth M. Low
Council Member
District 2
January 10, 2025
Lance, Soll & Lunghard, LLP
500 Technology Drive, Suite 350
Irvine, CA 92618
This representation letter is provided in connection with your audit of the financial
statements of the City of Diamond Bar, California (the “City”), which comprise the
respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information as of June 30, 2024, and the respective changes
in financial position and, where applicable, cash flows for the year then ended, and the
disclosures (collectively, the “financial statements”), for the purpose of expressing opinions
as to whether the financial statements are presented fairly, in all material respects, in
accordance with accounting principles generally accepted in the United States of
America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are
material. Items are considered to be material, regardless of size, if they involve an omission
or misstatement of accounting information that, in light of surrounding circumstances,
makes it probable that the judgment of a reasonable person relying on the information
would be changed or influenced by the omission or misstatement. An omission or
misstatement that is monetarily small in amount could be considered material as a result
of qualitative factors.
We confirm, to the best of our knowledge and belief, as of January 10, 2025, the following
representations made to you during your audit.
Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement
letter dated April 19, 2024, including our responsibility for the preparation and fair
presentation of the financial statements in accordance with U.S. GAAP and for
preparation of the supplementary information in accordance with the applicable criteria.
2) The financial statements referred to above are fairly presented in conformity with U.S.
GAAP and include all properly classified funds and other financial information of the
primary government and all component units required by generally accepted
accounting principles to be included in the financial reporting entity.
3) We acknowledge our responsibility for the design, implementation, and maintenance
of internal control relevant to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or error.
4) We acknowledge our responsibility for the design, implementation, and maintenance
of internal control to prevent and detect fraud.
5) The methods, significant assumptions, and data used in making accounting estimates
and their related disclosures are appropriate to achieve recognition, measurement, or
disclosure that is reasonable in accordance with U.S. GAAP.
6) Adjustments or disclosures have been made for all events, including instances of
noncompliance, subsequent to the date of the financial statements that would require
adjustment to or disclosure in the financial statements.
7) The effects of all known actual or possible litigation, claims, and assessments have been
accounted for and disclosed in accordance with U.S. GAAP.
8) Guarantees, whether written or oral, under which the City is contingently liable, if any,
have been properly recorded or disclosed.
Information Provided
9) We have provided you with:
a) Access to all information, of which we are aware, that is relevant to the
preparation and fair presentation of the financial statements, such as records
(including information obtained from outside of the general and subsidiary ledgers),
documentation, and other matters and all audit or relevant monitoring reports, if
any, received from funding sources.
b) Additional information that you have requested from us for the purpose of the
audit.
c) Unrestricted access to persons within the City from whom you determined it
necessary to obtain audit evidence.
d) Minutes of the meetings of the City Council or summaries of actions of recent
meetings for which minutes have not yet been prepared.
10) All material transactions have been recorded in the accounting records and are
reflected in the financial statements.
11) We have disclosed to you the results of our assessment of the risk that the financial
statements may be materially misstated as a result of fraud.
12) We have no knowledge of any fraud or suspected fraud that affects the City and
involves:
• Management,
• Employees who have significant roles in internal control, or
• Others where the fraud could have a material effect on the financial statements.
13) We have no knowledge of any allegations of fraud or suspected fraud affecting the
City’s financial statements communicated by employees, former employees, regulators,
or others.
14) We have no knowledge of instances of noncompliance or suspected noncompliance
with provisions of laws, regulations, contracts, or grant agreements, or waste or abuse,
whose effects should be considered when preparing financial statements.
15) We have disclosed to you all known actual or possible litigation, claims, and
assessments whose effects should be considered when preparing the financial
statements.
Government-specific
16) There have been no communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting practices.
17) We have identified to you any previous audits, attestation engagements, and other
studies related to the objectives of the audit and whether related recommendations have
been implemented.
18) We have identified to you any investigations or legal proceedings that have been
initiated with respect to the period under audit.
19) The City has no plans or intentions that may materially affect the carrying value or
classification of assets, deferred outflows of resources, liabilities, deferred inflows of
resources, and fund balance or net position.
20) We are responsible for compliance with the laws, regulations, and provisions of
contracts and grant agreements
applicable to us, including tax or debt limits and debt contracts, and legal and
contractual provisions for reporting
specific activities in separate funds.
21) We have appropriately identified, recorded, and disclosed all leases in accordance
with GASB No. 87.
22) We have appropriately disclosed or recognized conduit debt obligations and/or
certain arrangements
associated with conduit debt obligations in accordance with GASB No. 91.
23) We have appropriately identified, recorded, and disclosed subscription -based
information technology arrangements in accordance with GASB Statement No. 96.
24) There are no instances of identified and suspected fraud and noncompliance with
provisions of laws, regulations, contracts, and grant agreements that we believe have a
material effect on the financial statements.
25) There are no violations or possible violations of budget ordinances, laws and
regulations (including those pertaining to adopting, approving, and amending budgets),
provisions of contracts and grant agreements, tax or debt limits, and any related debt
covenants whose effects should be considered for disclosure in the financial statements,
or as a basis for recording a loss contingency, or for reporting on noncompliance.
26) As part of your audit, you assisted with preparation of the financial statements and
disclosures. We acknowledge our responsibility as it relates to those nonaudit services,
including that we assume all management responsibilities; oversee the services by
designating an individual, preferably within senior management, who possesses suitable
skill, knowledge, or experience; evaluate the adequacy and results of the services
performed; and accept responsibility for the results of the services. We have reviewed,
approved, and accepted responsibility for those financial statements and disclosures.
27) The City has satisfactory title to all owned assets, and th ere are no liens or
encumbrances on such assets nor has any asset been pledged as collateral.
28) The City has complied with all aspects of contractual agreements that would have a
material effect on the financial statements in the event of noncompliance.
29) The financial statements include all fiduciary activities required by GASB Statement
No. 84, as amended.
30) The financial statements properly classify all funds and activities in accordance with
GASB Statement No. 34, as amended.
31) All funds that meet the quantitative criteria in GASB Statement Nos. 34 and 37 for
presentation as major are identified and presented as such and all other funds that are
presented as major are particularly important to financial statement users.
32) Components of net position (net investment in capital assets; restricted; and
unrestricted) and classifications of fund balance (nonspendable, restricted, committed,
assigned, and unassigned) are properly classified and, if applicable, approved.
33) Investments are properly valued.
34) Provisions for uncollectible receivables have been properly identified and recorded.
35) Expenses have been appropriately classified in or allocated to functions and programs
in the statement of activities, and allocations have been made on a reasonable basis.
36) Revenues are appropriately classified in the statement of activities within program
revenues, general revenues, contributions to term or permanent endowments, or
contributions to permanent fund principal.
37) Interfund, internal, and intra-entity activity and balances have been appropriately
classified and reported.
38) Deposits and investment securities are properly classified as to risk and are properly
disclosed.
39) Capital assets, including infrastructure and intangible assets, are properly capitalized,
reported, and, if applicable, depreciated or amortized.
40) We have appropriately disclosed the City’s policy regarding whether to first apply
restricted or unrestricted resources when an expense is incurred for purposes for which
both restricted and unrestricted net position is available and have determined that net
position is properly recognized under the policy.
41) We are following our established accounting policy regarding which resources (that
is, restricted, committed, assigned, or unassigned) are considered to be spent first for
expenditures for which more than one resource classification is available. That policy
determines the fund balance classifications for financial reporting purposes.
42) We acknowledge our responsibility for the required supplementary information (RSI).
The RSI is measured and presented within prescribed guidelines and the methods of
measurement and presentation have not changed from those used in the prior period.
We have disclosed to you any significant assumptions and interpretations underlying the
measurement and presentation of the RSI.
43) With respect to the combining and individual fund financial statements
(“supplementary information”):
a) We acknowledge our responsibility for presenting the supplementary information
in accordance with accounting principles generally accepted in the United States
of America, and we believe the supplementary information, including its form and
content, is fairly presented in accordance with accounting principles generally
accepted in the United States of America. The methods of measurement and
presentation of the supplementary information have not changed from those used
in the prior period, and we have disclosed to you any significant assumptions or
interpretations underlying the measurement and presentation of the supplementary
information.
b) If the supplementary information is not presented with the audited financial
statements, we will make the audited financial statements readily available to the
intended users of the supplementary information no later than the date we issue the
supplementary information and the auditor’s report thereon.
44) With respect to the letter of transmittal (and other components of the introductory
section) and statistical section of the Annual Comprehensive Financial Report (“Other
Information”):
a) We acknowledge that we have informed you of all documents that may comprise
Other Information we expect to issue. The financial statements and Other Information
you obtained prior to the auditor's report date are consistent with one another, and
the Other Information does not contain any material misstatements.
b) With regard to the other information that will be included in the annual report that
has not been obtained by you prior to the auditor's report date, we intend to prepare
and issue the Other Information, as well as communicate the expected timing of
issuance, and provide you with the final version of the document(s) when available
and prior to the issuance of the annual report.
Signature: ________________
Title: Finance Director
SUMMARY OF AUDIT DIFFERENCES
Governmental Activities
For the Year Ended June 30, 2024
Current Year over (under)
Revenues and
Expenses
and Changes in
Net Position
Unadjusted audit differences:
Net capital assets $ 87,094
Lease liability (107,010)
Statement of activities 560
Cumulative effect (before effect of prior year differences) 19,356
Effect of unadjusted audit differences—prior year:
None -
Cumulative effect (after effect of prior year differences) $ 19,356