Receive the audit prepared by Richardson & Company of the Yolo Local Agency Formation Commission’s Financial Statements for the Fiscal Years Ending 2021, 2020 and 2019

Receive and file the audit prepared by Richardson & Company of the Yolo Local Agency Formation Commission’s Financial Statements for the Fiscal Years Ending 2021, 2020 and 2019.

For this fiscal year, the LAFCo budget appropriated a total of $15,000 in Account 501151 for Auditing and Accounting Services. On June 24, 2021, the Commission approved a contract with Richardson & Company LLP for an amount not to exceed $12,900.  Therefore, sufficient funds were budgeted for these professional services 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, 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. LAFCo has operated within its budget and expenditures were consistently less than what was appropriated each fiscal year. Total fund balance has increased from $120,376 to $236,722 over 2019-2021 and was used to offset agency contributions each year. Since 2019 agency contributions have gone down due to proposal application revenue, even though total expenditures have increased from $401,257 to $444,501 over 2019-2021.

In addition to the numbers presented in the fund financial statements, government-wide statements include the following liability balances. Accrued compensated absences equal $16,277 which represents the calculated value of banked vacation hours due. Net pension liability has decreased from $594,380 in 2019 to $528,211 in 2021. This is the actuarial calculated amount of pension due for prior and future employee service. There is a net OPEB liability (retiree medical) of $109,913. 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 as such 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. However, future increases in the CalPERS employer contributions are to be expected due to changes made by CalPERS to increase the funding ratios of all retirement plans.

The audit makes two recommendations:

• Adding a referencing in the LAFCo Administrative Policies and Procedures clarifying which County bargaining unit MOU is applicable to each LAFCo employee position; and
• Documenting an administrative agreement with the County regarding current practices related to the payment (or nonpayment) for office space and other services provided such as payroll/human resources for which the County normally charges internal users an overhead charge.

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