HomeMy WebLinkAboutCAG2023-660 - Original - WA State Auditor's Office - 2022 Financial & Single Audit Management Rep Letter - 12/28/2023 FOR CITY OF KENT OFFICIAL USE ONLY
Sup/Mgr:
Agreement Routing Form DirAsst:
40
• For Approvals,Signatures and Records Management Dir/Dep:
KENT This form combines&replaces the Request for Mayor's Signature and contract cover (optional)
WASH 1 N G T O N Sheet forms. (Print on pink or cherry colored paper)
Originator: Department:
Paula Painter Finance
Date Sent: Date Required:
> 12/28/2023 12/28/2023
0
L.
a Mayor or Designee to Sign. Date of Council Approval:
a
Q Interlocal Agreement Uploaded to Website N/A
Budget Account Number: Grant? Yes❑ NoF,/�
N/A
Budget?❑Yes ONO,
Type: N/A
Vendor Name: Category:
State Auditors Office Other
Vendor Number: Sub-Category:
c Original
*a Project Name: 2022 Financial & Single Audit
E Project Details: Management rep letter for the 2022 financial & single audit
0
c
c
Basis for Selection of Contractor: *
Agreement N/A Sole Source
� "Memo to Mayor must be attached El
i Start Date: N/A Termination Date: N/A
C1
Q Local Business?❑Yes❑No*ffmeets requirements per KCC 3.70.100,please complete"Vendor Purchase-Local Exceptions"form on Cityspace,
Business License Verification: ❑Yes El In-Process❑Exempt(KCC 5.01.045) ❑Authorized Signer Verified
Notice required prior to disclosure? Contract Number:
❑Yes❑No N/A CAG2023-660
Comments:
/s/ Adam Long
0
c c
a�
Vf �
3 0
a,
> 12/28/2023 - rcvd in City Clerk's Office already signed by Mayor. M.M.
F12/2Date Received:City Attorney: Date Routed:Mayor's Office City Clerk's Office
8/23
adccW22373_1_20 Visit Documents.KentWA.gov to obtain copies of all agreements
rev.20221201
FINANCE DEPARTMENT
Paula Painter, CPA, Finance Director
220 4th Avenue South
KENT Kent, WA 98032
WASH-PTO" Fax: 253-856-6255
Phone: 253-856-5264
December 28, 2023
Office of the Washington State Auditor
3200 Capitol Blvd
P.O. Box 40031
Olympia, WA 98504-0031
To the Office of the Washington State Auditor:
We are providing this letter in connection with your audit of the City of Kent for the period from
January 1, 2022 through December 31, 2022. Representations are in relation to matters existing during
or subsequent to the audit period up to the date of this letter.
Certain representations in this letter are described as being limited to matters that are significant or
material. Information is considered significant or material if it is probable that it would change or
influence the judgment of a reasonable person.
We confirm, to the best of our knowledge and belief, having made appropriate inquires to be able to
provide our representations, the following representations made to you during your audit. If we
subsequently discover information that would change our representations related to this period, we
will notify you in a timely manner.
General Representations:
1. We have provided you with unrestricted access to people you wished to speak with and made
available all requested and relevant information of which we are aware, including:
a. Financial records and related data.
b. Minutes of the meetings of the governing body or summaries of actions of recent meetings
for which minutes have not yet been prepared.
c. Other internal or external audits,examinations,investigations or studies that might concern
the objectives of the audit and the corrective action taken to address significant findings
and recommendations.
d. Communications from regulatory agencies, government representatives or others
concerning possible noncompliance, deficiencies in internal control or other matters that
might concern the objectives of the audit.
e. Related party relationships and transactions.
f. Results of our internal assessment of business risks and risks related to financial reporting,
compliance and fraud.
City of Kent Finance Department
Paula Painter, CPA, Director
2. We acknowledge our responsibility for compliance with requirements related to confidentiality of
certain information,and have notified you whenever records or data containing information subject
to any confidentiality requirements were made available.
3. We acknowledge our responsibility for compliance with applicable laws, regulations, contracts
and grant agreements.
4. We have identified and disclosed all laws, regulations, contracts and grant agreements that could
have a direct and material effect on the determination of financial statement amounts, including
legal and contractual provisions for reporting specific activities in separate funds.
5. We have complied with all material aspects of laws, regulations, contracts and grant agreements.
6. We acknowledge our responsibility for establishing and maintaining effective internal controls
over compliance with applicable laws and regulations and safeguarding of public resources,
including controls to prevent and detect fraud.
7. We have established adequate procedures and controls to provide reasonable assurance of
safeguarding public resources and compliance with applicable laws and regulations.
8. We have no knowledge of any loss of public funds or assets or other illegal activity, or any
allegations of fraud or suspected fraud involving management or employees.
9. In accordance with RCW 43.09.200, all transactions have been properly recorded in the financial
records, notwithstanding immaterial uncorrected items referenced below.
10. We are responsible for,and have accurately prepared,the summary schedule of prior audit findings
to include all findings, and we have provided you with all the information on the status of the
follow-up on prior audit findings.
11. We are responsible for taking corrective action on audit findings and have developed a corrective
action plan.
Additional representations related to the financial statements:
12. We acknowledge our responsibility for fair presentation of financial statements and believe
financial statements are fairly presented in conformity with generally accepted accounting
principles in the United States of America.
13. We acknowledge our responsibility for establishing and maintaining effective internal control over
financial reporting.
14. The financial statements include financial information of the primary government and all
component units, fiduciary and other activity required by generally accepted accounting principles
to be included in the financial reporting entity.
15. The financial statements properly classify all funds and activities.
16. All funds that meet the quantitative criteria in GASB requirements or are otherwise particularly
important to financial statement users, are presented as major funds.
17. Capital assets, including infrastructure and intangible assets, are properly capitalized,reported and
depreciated as applicable.
18. We have no plans or intentions that may materially affect the reported value or classification of
assets, liabilities or net position.
19. Revenues are appropriately classified by fund and account.
20. Expenses have been appropriately classified by fund and account, and allocations have been made
on a reasonable basis.
21. Net position components (net investment in capital assets, restricted and unrestricted) and fund
balance components (nonspendable, restricted, committed, assigned and unassigned) are properly
classified and, as applicable, approved.
22. Significant assumptions we used in making accounting estimates are reasonable.
23. The following have been properly classified, reported and disclosed in the financial statements, as
applicable:
a. Interfund, internal, and intra-entity activity and balances.
b. Related-party transactions, including sales, purchases, loans, transfers, leasing
arrangements, and guarantees, and amounts receivable from or payable to related parties.
c. Joint ventures and other related organizations.
d. Guarantees under which the government is contingently liable.
e. All events occurring subsequent to the fiscal year end through the date of this letter that
would require adjustment to, or disclosure in, the financial statements.
f. Effects of all known actual or possible litigation, claims, assessments, violations of laws,
regulations, contracts or grant agreements, and other loss contingencies.
24. We have accurately disclosed to you all known actual or possible pending or threatened litigation,
claims or assessments whose effects should be considered when preparing the financial statements.
We have also accurately disclosed to you the nature and extent of our consultation with outside
attorneys concerning litigation, claims and assessments.
25. We acknowledge our responsibility for reporting supplementary information (the Schedule of
Expenditures of Federal Awards) in accordance with applicable requirements and believe
supplementary information is fairly presented, in both form and content in accordance with those
requirements.
26. We have disclosed to you all significant changes to the methods of measurement and presentation
of supplementary information, reasons for any changes and all significant assumptions or
interpretations underlying the measurement or presentation.
27. We acknowledge our responsibility for the supplementary information required by generally
accepted accounting principles in the United States (RSI) and believe RSI is measured and
presented within prescribed guidelines.
28. We have disclosed to you all significant changes in the methods of measurement and presentation
of RSI, reasons for any changes and all significant assumptions or interpretations underlying the
measurement or presentation of the RSI.
29. We believe the effects of uncorrected financial statement misstatements summarized below are not
material, both individually and in the aggregate, to each applicable opinion unit.
30. We acknowledge our responsibility not to publish any document containing the audit report with
any change in the financial statements, supplementary and other information referenced in the
auditor's report. We will contact the auditor if we have any needs for publishing the audit report
with different content included.
31. We acknowledge our responsibility for presenting Annual Comprehensive Financial Report
combining statements and supplemental schedules in accordance with generally accepted
accounting principles in the United States.We believe that combining statements and supplemental
schedules are fairly presented, including both form and content, in accordance with those
principles.
32. We have disclosed to you all significant changes to the methods of measurement and presentation
of combining statements and supplemental schedules, reasons for any changes and all significant
assumptions or interpretations underlying the measurement or presentation of the combining
statements and supplemental schedules.
33. We adequately considered the qualifications of Healthcare Actuaries LLC and agree with
conclusions regarding other post-employment benefits liability, which are reflected in financial
statement amounts and disclosures. We provided Healthcare Actuaries LLC with accurate and
complete information and did not give or cause any instructions to be given to Healthcare Actuaries
LLC with respect to the values or amounts derived in an attempt to bias their work, and we are not
otherwise aware of any matters that have had an impact on the independence or objectivity of
Healthcare Actuaries LLC.
Dana Ralp , Paula Pa' ter, CPA
Mayor Finance Director
List of Uncorrected Misstatements
Description Statement/Schedule Opinion Unit
The City did not report a current portion of its total
OPEB liability.The supporting actuary reports for
the total OPEB liability indicate that the current
portion of the total OPEB liability is$1,410,338 for Statement of Net Position— Governmental Activities
the LEOFF 1 liability and$102,316 for the VEBA Government-wide
liability,for a total of$1,512,654.This is a
classification error. (GASB 34, par. 31) (See question
5.31 in implementation guide 2017-1)
The City is expected to receive funds as a result of
state opioid lawsuit. It appears the City did not Statement of net position—
report the remaining receivable, revenue,or Governmental Activities
restricted amounts on the government wide Government-wide
statements. (February 7 BARS alert)
Generally,the net pension asset is more liquid than
capital assets and should be reported before capital Statement of net position— Governmental Activities
assets in this presentation. GFOA checklist item 6- Government-wide
002-01
The City is expected to receive funds as a result of
the state opioid lawsuit. It appears the City did not Governmental Funds- Balance
report the remaining receivable,deferred inflow for Sheet General Fund
unavailable revenue,or restricted fund balance in
the fund statements.(February 7 BARS alert)
Special revenue fund classification
The Capital Resource Fund is characterized as a
special revenue fund on the face of the financial
statements.The statements include a budget to
actual schedule for the Capital Resource Fund.
Budget to actual schedules are expected for the
General Fund and special revenue funds with a
legally adopted annual budget(GASB 34, para 130).
Special revenue funds can only be used for funds
that report proceeds of specific revenue sources Governmental Funds-Balance Capital Resources Fund
that are restricted or committed to expenditure for Sheet
specified purposes other than debt service or capital
projects. (GASB 54 paragraph 30&GFOA checklist
item 8-001-02)
Based on the description of this fund in Note 1 and
the activity in this fund,it appears most of the
resources are restricted for capital and debt activity.
Therefore,the City appears to have incorrectly
classified the Capital Resource fund as a special
revenue fund. GFOA checklist item 8-001-02*
General fund, capital
Unrealized gains and losses should not be reported Governmental Funds— resources fund,street
separately from realized gains and losses.GFOA Statement of Revenues, capital project fund,
checklist item 8-003-02-2 Expenditures and Changes aggregate remaining funds
Note 6 Capital Assets and Depreciation/b. business
type activities capital assets-the Right of Use Asset
should not have a beginning amount for
amortization (governmental activities$249,751).
This amount should be$0 in the year of
implementation
Note 10 Prior period adjustment-The City reported Notes to the Financial N/A
a prior period adjustment related to leases,which Statements
appears incorrect.We would not expect any prior
period adjustments needed for the implementation
of GASB 87. In the year of implementation,from the
lessee side the asset should equal the liability and
from the lessor side the receivable will equal the
deferred inflow.
Note 8 Long-Term Obligations—Changes in long
term liabilities table—The Total OPEB Liability Notes to the Financial
should have a current portion since it is not in a Statements N/A
trust. (GASB 34, par. 31)(See question 5.31 in
implementation guide 2017-1)
Note 11 Enterprise Funds—This note provides more
detailed information on the activity in these funds Notes to the Financial N/A
compared with note 1.C. Consider incorporating Statements
these descriptions into note 1. (GASB 34, par. 31)
Note 13.d Personnel Benefits— Under the PERS Plan
2/3 table, PERS plan 1 UAAL of$2,010,312 is shown,
however this includes the$103,381 of PERS 1 UAAL
of$103,381 also shown under the PSERS Plan 2 Notes to the Financial
table,which appears duplicative. N/A
Statements
It appears the$2,010,313 reported under the PERS
2/3 table should be$1,906,313 to accurately reflect
the source of the PERS 1 UAAL.
RSI -Schedule of Proportionate Share of net pension
liability
For the LEOFF 1 and LEOFF 2 schedules the"State's Schedule of Proportionate
proportionate share of the net pension liability N/A
Share of net pension liability
(asset) associated with the employer„ and
corresponding totals are omitted.See the BARS RSI
reporting template.
On the updated statements,the Fund balance as of Schedule of Revenues,
12/31/2022 related to the Operating Grants and Expenditures and Changes in General Fund
Arts Fund does not foot.We consider this a Fund Balances-Budget to
presentation error. Actual
Deferred Inflows Related to Leases(1-18-001 and Proprietary Funds-Statement Golf Complex Fund
LAG2019-001)was understated by$6,365. of Net Position