2000 Audit LetterMcGLADREY& PULLEN, LLP RSM
® Certified Public Accountants international
To the Honorable Mayor and
Members of the City Council
City of Rosemead, Califomia
This letter is intended to inform the City Council of the City of Rosemead (the City) about significant
matters related to the conduct of the annual audit so that you can appropriately discharge your oversight
responsibility, and that we comply with our professional responsibilities. This letter is intended solely for
the information and use of the City Council and management.
We have provided a separate letter, dated September 8, 2000, concerning internal control conditions and
compliance matters that we noted during our audit of the City's financial statements for the year ended
June 30, 2000.
The Auditor's Responsibility under Generally Accepted Auditing Standards
Our audit of the City's financial statements for the year ended June 30, 2000, was conducted in
accordance with generally accepted auditing standards and the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable, rather than absolute,
assurance about whether the financial statements are free of material misstatement whether caused by
error, fraudulent financial reporting or misappropriation of assets. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. Accordingly, the audit was designed to obtain
reasonable, rather than absolute, assurance about the financial statements. We believe that our audit
accomplished that objective.
We noted that beginning with the fiscal year ended June 30, 2003, the City will be required to convert
their financial statements in accordance with GASB No. 34, Basic Financial Statements - and
Management's Discussion and Analysis - for State and Local Governments. The City will begin
addressing this issue soon. GASB No. 34 will eliminate the General Long-teen Debt Account Group
(GLTDAG), among other changes, and will require the City to reflect debt arising from advances between
funds in the respective fund for financial reporting purposes. We noted that as of June 30, 2000,
$35,356,610 is currently reflected in the GLTDAG. Other changes include:
changes in fiduciary funds,
creation of permanent funds,
new equity accounts,
elimination of contributed capital,
single category for transfers, and
infrastructure reporting and depreciation accounting.
City of Rosemead
Page 2
Significant Accounting Policies
The City Council and Finance Committee have the ultimate responsibility for the appropriateness of the
accounting policies used by the City. The City did not adopt any significant new accounting policies nor
have there been any changes in existing significant accounting policies during the current period which
should be brought to your attention for approval.
Significant or Unusual Transactions
We did not identify any significant or unusual transactions or significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Management Judgments and Accounting Estimates
Accounting estimates are an integral part of the preparation of financial statements and are based upon
management's current judgment. The process used by management encompasses their knowledge and
experience about past and current events and certain assumptions about future events. Management has
informed us that they used all the relevant facts available to them at the time to make the best judgments
about accounting estimates, and we considered this information in the scope of our audit.
Significant Audit Adjustments
The following is a description of adjustments arising from the audit that could, in our judgment, either
individually or in the aggregate, have a significant effect on the entity's financial reporting process:
We assisted the City with 22 audit adjustments related primarily to investments, operating transfers,
and accounts receivable and payable.
We also identified four reclassification adjustments that collectively were considered immaterial and,
therefore, not recorded on the City's books but are reflected in the financial statements for reporting
purposes.
In addition, we identified one potential adjustment related to cash that was considered immaterial
and, therefore, management decided not to record it in the financial statements.
Other Information in Documents Containing Audited Financial Statements
We are not aware of any documents, other than the Comprehensive Annual Financial Report, which
contain the City's financial statements for the year ended June 30, 2000. We are required to perform
certain additional reviews and other procedures under our quality assurance system whenever our reports
are included, or we are named as accountants, auditors or "experts," in any document used in any public
or private offering of equity or debt securities.
Disagreements with Management
We had no disagreements with management on financial accounting or reporting matters or over auditing
procedures. No major issues were discussed with management relative to our initial or recurring retention
and no difficulties have been encountered in dealing with management in the performance of the audit.
City of Rosemead
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Consultations with Other Accountants
We are not aware that management has consulted with other accountants relative to generally accepted
accounting principles or generally accepted auditing standards or Government Auditing Standards.
Difficulties Encountered in Performing the Audit
We did not encounter any difficulties in dealing with management relating to the performance of the
audit.
This letter is intended solely for the information and use of management of the City of Rosemead,
California.
We will be pleased to respond to any questions you may have about the foregoing.
Pasadena, California
September 8, 2000