Oxnard obtains a clean audit opinion during its annual comprehensive financial report


Mayor John Zaragoza (Photo by Chris Frost)

Oxnard – The Finance and Governance Committee received its annual comprehensive summary report from auditors Eadie & Payne during the Tuesday 11th January meeting.

Eden Casareno introduced the item to the committee and said the company had completed the financial statements for the city of Oxnard for June 30, 2021.

“That’s six months after the end of the fiscal year,” she said.

The city received a clean report on June 30, 2021.

“A clean audit opinion means that the financial statements presented to you and the public are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States,” she said. “Our verdict is based on the review process that we conducted from May or June to December.”

She said it was also based on a report by the Oxnard Housing Authority auditor.

In 2020, the city’s assets and outflows totaled approximately $3 billion. That increased by about $90 million in 2021.

“More than $70 million of this increase is an increase in cash and investments,” she said. “There is also an increase in claims of more than $20 million.”

She said liabilities and preferred inflows increased $58 million from $845 million to $903 million.

“The biggest increase in liabilities came from pension, OPEB (Other Post-Employment Benefits) and autoinsurance claims,” ​​she said.

The city’s net position increased by approximately $32 million.

“The net restricted position increased by $3 million while the net unrestricted position increased by approximately $50 million,” Casareno said. “Net investments and capital assets showed a decrease.”

Property taxes, sales taxes, and levies on services provided the city with its three main sources of income.

“Public safety, government, culture, recreation and libraries are the biggest expenses in the city,” she said. “In general, the city’s government revenue increased by $39 million in 2021. That’s about 18 percent of the city’s total annual income to date.”

She said the city’s spending increased by $89 million, or 38 percent of the city’s spending last year.

The only corporate fund where expenses exceed income is the Environmental Resources Fund.

“It’s something to look at,” she said. “In 2020 it also had a deficit.”

Mayor John Zaragoza interjected that he believes this may be because the city has purchased capital goods.

Environmental Resources’ revenue is $46.7 million and expenses are $50.2 million, possibly reflecting lower rates for the sale of recycle materials.

Eadie & Payne’s Hong Nguyen reviewed the general fund and said that with spending in 2021 before transfers, there was a significant increase in revenue compared to 2020.

“Spending is down slightly compared to 2020,” she said. “Total revenue consists mostly of taxes, service fees and other items. If you compare 2021 to 2020, there is a significant increase in your tax category. It rose to $144 million in fiscal 2021 from $119 million the year before. These are mostly increases due to the property tax bases and in particular the new measure E of the sales tax. In service fees you are actually seeing a decrease mainly due to the transfer of the golf course activities to a corporate fund as well as the pandemic slowing down.”

She said it incurred $23 million in service charges in 2021, and about $18 million in 2021.

“Public safety is the biggest piece of the pie in general fund group spending, which is fairly consistent with last year,” she said. “Then you have culture, leisure and library services, which make up the next biggest expense in 2021. There are expenses of $18 million. The state has $17 million in spending. Both are down on last year.”

She said the general fund group consists of several funds, including Fund 101, Fund 104, the half-cent tax, Measure O and Measure 105. Road maintenance accounts for the bulk of the general fund group.

“Overall, we end up with a positive net fund balance of $19.8 million,” she said. “However, you will see that Fund 101 has a negative deficit of about $3.3 million,” Nguyen said. “The reason for this is that in 2021 due to the other sources of funding and uses and transfers especially from Fund 101, Fund 104 and Fund 105 in FY 2021 due to the transfer/reimbursement of the IUF piece back to business activities. Water, Wastewater and Environmental Resources will recover approximately $36.5 million in total in IUF fees. Since this settlement was determined in fiscal 2021, all of this has been acknowledged.”

Zaragoza questioned why the golf course is still considered a general fund issue and not a corporate fund.

“The golf course was converted into a corporate fund earlier in the fiscal year,” Nguyen said. “That $1.23 million is actually cumulative earnings from fiscal 2020. If you look at the 2020 financial statements, they also show positive operating income. This $1.2 million represents the transfer of accumulated earnings and cash from the golf course to the corporate fund.”

Nguyen discussed critical audit matters with the committee, including allowances for doubtful accounts, pensions and OPEB, autoinsurance claims due, and deficit costs and accumulated expenses.

“All numbers, we want them to be perfect and accurate; However, when preparing financial statements, estimates are required, which is not uncommon,” she said. “The usual accounting estimates found in these financial statements are allowances for bad debts. These relate to the collectability of the receivables.”

She noted that critical disclosures include deficit fund balances, prior period adjustments, pension and OPFB-related expenses, commitments, contingencies and follow-up expenses.

“These are generally unusual, but this year they are occurring due to new accounting pronouncements,” she said. “The new accounting pronouncements refer to DSR 84, i.e. the presentation of fiduciary activities. With the new accounting standards, some changes were required, which we have to present to you in the notes to the adjustment of the previous period.

This story continues on January 21st.


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