City of Laguna Beach

Laguna Beach City Finances Fact Check

Laguna Beach City Finances
Fact Check


Fact Check: Laguna Beach City Finances

The purpose of the following Fact Check is to clear up some misconceptions that appeared in opinion columns and letters to the editor about financial oversight in the City.

Laguna Beach- The City fiscal year ends every June 30. The books are reviewed by City staff and closed by the end of October; a Certified Public Accounting firm (CPA firm) reviews the City’s financial reports, ledgers and internal controls from October to December; at the end of the audit, the City releases the Comprehensive Annual Financial Report (CAFR) and the CPA firm issues its audit findings and recommendations. The CPA firm is available to meet with City Council members or members of Citizens’ Audit Review and Measure LL Oversight Committee (Audit Committee) to address questions about findings or other concerns starting in February and until the Audit Committee produces its report. The Audit Committee reviews the audit report and then provides a written report of its findings to the City Council at a public meeting. A representative of the Audit Committee makes the presentation and a representative of the CPA firm is available to answer questions from the City Council during that meeting. The CPAs from the audit firm are independently licensed by the State of California and have clearly defined standards, obligations and professional ethics to meet or face disciplinary action by the California Board of Accountancy. Since 2017, the City’s CPA firm has been White Nelson Diehl Evans, a California Certified Public Accounting firm that has specialized in providing services to the government industry for over 86 years and annually audits more than 100 governmental organizations.

The City has received the Certificate of Achievement for Excellence in Financial Reporting for its annual financial report for the past four years. This Certificate of Achievement is the highest form of recognition in governmental accounting and financial reporting.

Statement: The City’s Citizens’ Audit Review and Measure LL Oversight Committee oversees the entire City budget.

Fact: The Audit Committee does not oversee the City’s budget. The City Council approves the City budget and any changes.

Statement: City Staff doesn’t prepare accurate financial records monthly. They wait until year-end or until the auditors find mistakes.

Fact: The City’s Finance Division prepares and distributes monthly financial reports to City departments generally within fifteen days after the month-end giving departments the information they need to make timely and informed financial decisions about City services and programs.

Statement: Another fiscal year ended six months ago, and the City still has not dealt with the prior year’s issues, as stated in the auditor’s report. The beginning balances for the fiscal year 2018 were not in agreement with June 30, 2017, audited CAFR—it’s been financially incorrect all year.

Fact: The beginning balances mentioned in the audit reports were reviewed and reconciled during the audit. This process resulted in no impact to the City’s annual financial report.

Statement: According to the auditor’s letters and report, the City has failed to properly review and adjust deposit balances, lacks a Capital Asset Policy, and internal controls and operational matters have not been remedied from the last audit.

Fact: The City immediately addresses any internal control and operational matters identified during an audit. For example, the Capital Asset Policy was completed last year and City staff is working on a strategy to refund deposits for completed projects within five years of the initial deposit.

Statement: The auditors found that the bulk of the City’s assets (cash and fixed assets) do not have good oversight nor are they following generally accepted accounting procedures.

Fact: The auditor’s opinion is clear:
“In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.”

Finally, the Citizens’ Audit Review and Measure LL Oversight Committee are expected to present their report for the Fiscal Year 2017-18 to the City Council on February 4, 2020.

If you have any questions about the City’s finances or the City budget, please contact Gavin Curran, Director of Administrative Services, at (949) 497-0315 or gcurran@lagunabeachcity.net.

City of Laguna Beach, January 29, 2020, Media Release

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