Receive the audit prepared by Richardson & Company of the Yolo LAFCo Financial Statements for the Fiscal Years Ending 2024, 2023 and 2022

Receive and file the audit prepared by Richardson & Company of the Yolo LAFCo Financial Statements for the Fiscal Years Ending 2024, 2023 and 2022, and direct staff to prepare a future agenda item to amend our Administrative Policies and Procedures per audit recommendation.

For this fiscal year, the LAFCo budget appropriated a total of $15,000 in Account 510251 for Auditing and Accounting Services. On May 23, 2024, the Commission approved a contract with Richardson & Company LLP for an amount not to exceed $15,900. Although the contract amount slightly exceeded the budget, there are sufficient funds in Services and Supplies to accommodate the overage and there is no fiscal impact.

LAFCo has conducted a financial audit of its last three fiscal years in accordance with Administrative Policies and Procedures Policy 5.18 which states:

"LAFCo shall have financial audits performed on a three year cycle (i.e. the auditor reviews the prior three fiscal years at one time). For those interim years when a formal audit has not yet been performed, staff from the County Auditor-Controller’s Office shall prepare a financial statement for Commission review following the close of the fiscal year."

The audited financial statements present two sets of numbers based on different basis of accounting. The “government-wide” statements (Statement of Net Position and Statement of Activities) present numbers on an accrual basis of accounting which accounts for both long-term and short-term balances. The fund statements (Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balance) present short-term balances only. LAFCo uses the fund financial statements numbers to budget from, and therefore the discussion below will be based on those numbers unless otherwise stated.

Richardson & Company LLP made no financial findings in the current audit and provided lists of minor adjustments related to posting pension and OPEB inflows/outflows that the County does not post in LAFCo's general ledger. In addition, there are adjustments to true-up prepaid costs and assigned fund balance. Overall, the total fund balance has increased from $154,524 to $208,652 over 2022-2024 and has been used to offset agency contributions each year. 

In addition to the numbers presented in the fund financial statements, government-wide statements include the following liability balances. Accrued compensated absences equal $2,549, which represents the calculated value of banked vacation hours due. Net pension liability has increased from $400,289 in 2022 to $629,640 in 2024. This is the actuarial-calculated amount of pension due for prior and future employee service. There is a net OPEB liability (retiree medical) of $76,019. This is the actuarial-calculated amount of retiree medical insurance due to prior and future employee service. LAFCo participates in the County’s retirement and OPEB plans and has no ability to pay down these amounts and must agree to all plan changes and future lump sum payments. In addition, there are many factors involved in calculating these amounts, such as return on investments, employee demographics, mortality rates, etc. which makes these numbers fairly soft. 

The audit makes one recommendation to formally document in LAFCo's Administrative Policies and Procedures that it has adopted Yolo County benefits for LAFCo employees, including documenting which bargaining unit and MOU are applicable to each LAFCo position.

Brian N. Nash, CPA and Partner with Richardson & Company, LLP will attend the meeting to present the audit and answer any questions.