6-2019 City of Orange Internal Control Over Financial Reporting GAS2875 Michelle Drive, Suite 300 | Irvine, California 92606 | WNDECPA.com | 714.978.1300
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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Honorable City Council
of the City of Orange
Orange, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund and the aggregate remaining fund information
of the City of Orange, California (the City), as of and for the year ended June 30, 2019 and the related
notes to the basic financial statements, which collectively comprise the City’s basic financial
statements, and have issued our report thereon dated December 3, 2019.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinions on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly,
we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the City’s financial statements will not be prevented, or detected and corrected, on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies, and therefore, material weaknesses or significant deficiencies
may exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed the following instance of noncompliance or other
matter that is required to be reported under Government Auditing Standards and which is described
below.
Compliance with Senate Bill 341
Auditors’ Comment and Recommendation
Senate Bill 341 requires all successor housing entities to comply with annual report requirements. One
requirement is for the City to report housing financial and activity information by including specified
information with the Annual Progress Report (APR) required to be annually submitted to the
Department of Housing and Community Development (HCD) by April 1 of the subsequent year
pursuant to the State of California housing law in reporting progress in implementing the housing
element. The City submitted the APR for the fiscal year ended June 30, 2018 on April 10, 2019, which
was after the due date of April 1, 2019. We recommend that the City implements policies and
procedures to ensure timely reporting of the APR to HCD.
Management’s Response
Staff resource limitations and competing project demands resulted in a delay to accumulate the
required information and submit the report to the State. The City continues to make efforts to submit
this report on a timely basis.
City’s Response to Finding
The City’s response to the finding identified in our audit is described above. The City’s response was
not subjected to the auditing procedures applied in the audit of the financial statements, and
accordingly, we express no opinion on it.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
December 3, 2019