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HomeMy WebLinkAboutItem 10 - File Fiscal Year 2021-22 Annual Comprehensive Financial ReportFinance and Management Services www.santa-ana.org/finance Item # 10 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report February 21, 2023 TOPIC: Receive and File Fiscal Year 2021-22 Annual Comprehensive Financial Report, related audit reports, and Measure X Agreed -upon -Procedures Report AGENDA TITLE: Receive and File Fiscal Year 2021-22 Annual Comprehensive Financial Report, Related Audit Reports, and Measure X Agreed -upon -Procedures Report RECOMMENDED ACTION Receive and file the following audited and separately issued reports for the Fiscal Year Ended June 30, 2022: 1. The Auditor's unmodified "clean" opinion letter for the fiscal year 2021-22 Audited Financial Statements included in the Annual Comprehensive Financial Report (ACFR) 2. Government Auditing Standards (GAS) Letter 3. Governance Letter 4. Air Quality Management District (AQMD) Audited Financial Statements 5. The Auditor's report on the Appropriations Limit (GANN Limit) 6. The Auditor's report on compliance with the Statement of Investment Policy 7. Measure X Agreed -Upon -Procedures Report DISCUSSION The Finance and Management Services Agency's Accounting Division (Accounting Division) is the lead on various audit and separately issued reports compiled and prepared by the City's Independent Auditor, CliftonLarsonAllen LLP (CLA). Outlined below is a list of the reports and related status. AUDIT REPORTS: Audited Financial Statements — Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022 Annually, the Accounting Division prepares an ACFR, which includes the City's audited financial statements and statistical information for each fiscal year. The ACFR is prepared in accordance with the Generally Accepted Accounting Principles (GAAP) along with the reporting requirements of the Governmental Accounting Standards Board Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022 February 21, 2023 Page 2 (GASB). The City's independent public accounting firm, CLA, audits the financial statements, reviews other financial items at the City's request, and issues reports. The Accounting Division is pleased to report that the City received an unmodified opinion commonly known as a clean opinion; which is considered the most favorable conclusion for the audit. The unmodified opinion indicates that the City's financial statements present fairly, in all material respects, the financial position of the City, changes in financial position, and cash flows for the fiscal year ended June 30, 2022 (Exhibit 1). The ACFR for the fiscal year ended June 30, 2022 is posted and available on the City's website (https://www.santa-ana.org/financial-reports) along with prior fiscal years. The report was submitted to the Government Finance Officer Association's Certificates of Achievement for Excellence in Financial Reporting Program. The award is the highest form of recognition in governmental accounting and financial reporting. The City has received this prestigious award for forty-four consecutive years. In addition to the audit opinion, CLA issued the following communication letters: Government Auditina Standards (GAS) Letter (Exhibit 2) Auditor's communication of reportable conditions based on their review of the City's internal controls over financial reporting and on compliance. The results of their review disclosed no instances of noncompliance for the fiscal year 2021-22. Governance Letter (Exhibit 3) Formal communication from the auditor to the City Council, which discloses information related to the audit, including but not limited to the City's accounting practices and implementation of new accounting rules and estimates. Audit of the City's Air Quality Management District (AQMD) Financial Statements Exhibit 4 Under Assembly Bill 2766 Chapter 1705 [California Health and Safety Code (CHSC) Sections 44220 through 44247] cities and counties receiving the AB 2766 funds are required to separately account for the revenue and to expend the revenue for air pollution reduction measures. The AQMD audit report reflects the City's compliance to such measures. The Accounting Division is pleased to report that the City received an unmodified opinion (clean) on the AQMD audit report and no compliance findings were noted. Single Audit Report — Not Included Herein The City is also required to have a Single Audit of federal financial assistance by March 31 St following each fiscal year. Staff expects the Single Audit Report will be issued during March 2023 and will be presented to the City Council shortly thereafter. Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022 February 21, 2023 Page 3 SEPARATELY ISSUED REPORTS: In addition to the ACFR and the AQMD reports, CLA performed the following Agreed - Upon Procedures (AUP) examinations. Appropriation Limit Calculations, also known as GANN Limit (Exhibit 5) The GANN limit established the appropriations limit on expenditures for publicly funded programs in accordance with Section 1 of Article XIII of the California Constitution. The Accounting Division is pleased to report that no findings were noted as a result of this AUP Review. City's Compliance with the Statement of Investment Policy (Exhibit 6) The City elected to have the auditor confirm the City's compliance with its Investment Policy. The Accounting Division is pleased to report that no findings were noted as a result of this review. Measure X Agreed -Upon -Procedures Report (Exhibit 7) In accordance with SAMC 35-216, staff has prepared an annual report that includes the list of expenditures made with Measure X money for FY 2021-22. In accordance with SAMC 35-215, the City's independent auditor has reviewed the annual report prepared by staff, verified the numbers presented, and opined the numbers are fairly stated. On January 18, 2023, the audit engagement partner presented the report to the Measure X Citizens Oversight Committee, in accordance with Section 6 of Resolution No. 2019-008 (the Committee's establishing resolution). We expect the Committee will prepare its annual report and make recommendations to the City Council in time for the budget process, in accordance with the same establishing resolution. FISCAL IMPACT There is no fiscal impact associated with this action. EXHIBIT 1. Audit Opinion Letter 2. Government Auditing Standards (GAS) Letter 3. Governance Letter 4. Air Quality Management District (AQMD) Report 5. GANN Limit Agreed -Upon Procedures Report 6. Investment Policy Agreed -Upon Procedures Report 7. Measure X Agreed -Upon Procedures Report Submitted By: Kathryn Downs, FMSA Executive Director Approved By: Kristine Ridge, City Manager EXHIBIT 1 Clifton LarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT Honorable Mayor and Members of the City Council City of Santa Ana Santa Ana, California Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business - type activities, each major fund, and the aggregate remaining fund information of the City of Santa Ana (the City), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise City's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2022, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Emphasis of a Matter Change in Accounting Principle As described in Note 1 E to the financial statements, effective July 1, 2021, the City adopted new accounting guidance, Statement of Governmental Accounting Standards Board (GASB Statement) No. 87, Leases. Our opinions are not modified with respect to this matter. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer Honorable Mayor and Members of the City Council City of Santa Ana Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City of Santa Ana's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about City of Santa Ana's ability to continue as a going concern for a reasonable period of time. Honorable Mayor and Members of the City Council City of Santa Ana We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that that the management's discussion and analysis, budgetary comparison schedules - general and major special revenue funds, notes to the required supplementary information, schedule of changes in net pension liability and related ratios and schedule of plan contributions for the miscellaneous, safety, and supplementary retirement plans, and schedule of changes in the total OPEB liability and related ratios be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Santa Ana's basic financial statements. The combining and individual non -major fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the combining and individual non -major fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditors' report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Honorable Mayor and Members of the City Council City of Santa Ana Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 28, 2022, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. CliftonLarsonAllen LLP Irvine, California December 28, 2022 EXHIBIT 2 Clifton LarsonAllen LLP �TFAWA CLAconnect.com 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 Honorable City Council City of Santa Ana Santa Ana, 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 Santa Ana (the City), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated December 28, 2022. Report on 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) as a basis for designing 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 entity'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. 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 or significant deficiencies may exist that were not identified. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer Honorable City Council City of Santa Ana Report on 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 financial statements. 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 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 entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CliftonLarsonAllen LLP Irvine California December 28, 2022 EXHIBIT 3 Clifton LarsonAllen LLP CLAconnect.com Honorable City Council City of Santa Ana Santa Ana, California We have audited the financial statements of the governmental activities, business -type activities, each major fund, and the aggregate remaining fund information of the City of Santa Ana (the City) as of and for the year ended June 30, 2022, and have issued our report thereon dated December 28, 2022. We have previously communicated to you information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit in our engagement letter dated August 16, 2022. Professional standards also require that we communicate to you the following information related to our audit. Significant audit findings Qualitative aspects of accounting practices Accounting policies Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note I to the financial statements. As described in Note 1 E, the City changed accounting policies related to leases by adopting Governmental Accounting Standards Board (GASB) Statement No. 87, Leases, effective July 1, 2021. Accordingly, the accounting change has been applied to the beginning of the period of adoption. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: The annual required contributions, pension expense, net pension liability, and corresponding deferred outflows of resources and deferred inflows of resources for the City's agent multiple employer defined benefit pension plans are based on actuarial valuations provided by California Public Employee Retirement System actuaries and for the City's single employer defined benefit pension plan are based on an actuarial valuation provided by a third -party actuary. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Honorable City Council City of Santa Ana Page 2 The other postemployment benefits (OPEB) expense and total OPEB liability, and corresponding deferred outflows of resources and deferred inflows of resources for the City's OPEB plan are based on an actuarial valuation provided by a third -party actuary. • The claims liability for workers' compensation and general liabilities are based on certain actuarial assumptions and methods prepared by an outside consultant. The allowance for uncollectible accounts are based on management's analysis of collectability of receivables based on terms and conditions of agreements, as well as current economic conditions and considerations of creditors ability to pay. Financial statement disclosures Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. There were no particularly sensitive financial statement disclosures. The financial statement disclosures are neutral, consistent, and clear. Difficulties encountered in performing the audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Uncorrected misstatements Professional standards require us to accumulate all misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. Corrected misstatements None of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. No such disagreements arose during our audit. Circumstances that affect the form and content of the auditors' report As previously communicated to you, the report was modified to include an emphasis of a matter to direct readers to Note IE to the financial statements regarding adoption of new account guidance, Statement of Governmental Accounting Standards Board (GASB Statement) No. 87, Leases. Management representations We have requested certain representations from management that are included in the management representation letter dated December 28, 2022. Honorable City Council City of Santa Ana Page 3 Management consultations with other independent accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the entity's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Required Supplementary Information With respect to the required supplementary information (RSI) accompanying the financial statements, we made certain inquiries of management about the methods of preparing the RSI, including whether the RSI has been measured and presented in accordance with prescribed guidelines, whether the methods of measurement and preparation have been changed from the prior period and the reasons for any such changes, and whether there were any significant assumptions or interpretations underlying the measurement or presentation of the RSI. We compared the RSI for consistency with management's responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained during the audit of the basic financial statements. Because these limited procedures do not provide sufficient evidence, we did not express an opinion or provide any assurance on the RSI. Supplementary information in relation to the financial statements as a whole With respect to the combining and individual non -major fund financial statements and schedules (collectively, the supplementary information) accompanying the financial statements, on which we were engaged to report in relation to the financial statements as a whole, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period or the reasons for such changes, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We have issued our report thereon dated December 28, 2022. Other information included in annual reports Other information (financial or nonfinancial information other than the financial statements and our auditors' report thereon) is being included in your annual report and is comprised of introductory and statistical sections. Our responsibility for other information included in your annual report does not extend beyond the financial information identified in our opinion on the financial statements. We have no responsibility for determining whether such other information is properly stated and do not have an obligation to perform any procedures to corroborate other information contained in your annual report. We are required by professional standards to read the other information included in your annual report and consider whether a material inconsistency exists between the other information and the financial statements because the credibility of the financial statements and our auditors' report thereon may be undermined by material inconsistencies between the audited financial statements and other information. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Our auditors' report on the financial statements includes a separate section, "Other Information," which states we do not express an opinion or any form of assurance on the other information included in the annual report. We did not identify any material inconsistencies between the other information and the audited financial statements. Honorable City Council City of Santa Ana Page 4 This communication is intended solely for the information and use of the City Council and management of the City of Santa Ana and is not intended to be, and should not be, used by anyone other than these specified parties. Clifton LarsonAllen LLP Irvine, California December 28, 2022 Honorable City Council City of Santa Ana Page 5 City of Santa Ana Uncorrected NTisstatements June 30, 2022 DEBIT (CREDIT) DESCRIPTION ASSET LIABILITY NET POSITION REVENUE EXPENSE General Fund To record effect ofprior year uncorrected misstatements Expense Fund balance Water Fund To adjust deposit liability Deposit payable Net Position Revenue To accrue invoices to proper period Expense Accounts payable Sewer Fund To accrue invoices to proper period Expense Accounts payable 413,923 - 413,923 413 923 129,344 (130,379) 1,035 166,286 (166,286 (36,942)1 (130,379) 1,035 166,286 64,672 (64,672) (64,672) 64,672 EXHIBIT 4 CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2022 CPAs I CONSULTANTS I WEALTH ADVISORS C LAconnect.com CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND TABLE OF CONTENTS YEAR ENDED JUNE 30, 2022 INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENTS BALANCE SHEET 4 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE 5 NOTES TO FINANCIAL STATEMENTS REQUIRED SUPPLEMENTARY INFORMATION 6 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL 10 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 11 op, Honorable Mayor and Members City Council City of Santa Ana Santa Ana, California Clifton LarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT Report on the Audit of the Financial Statements Opinion We have audited the accompanying financial statements of the Air Quality Improvement Special Revenue Fund of the City of Santa Ana, California (the City), as of and for the year ended June 30, 2022, and the related notes to the financial statements, as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Air Quality Improvement Special Revenue Fund of the City, as of June 30, 2022, and the changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GARS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Emphasis of Matter As discussed in Note 1, the financial statements present only the Air Quality Improvement Special Revenue Fund and do not purport to, and do not, present fairly the financial position of the Santa Ana, City of, California, as of June 30, 2022, the changes in its financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAslobal.com/disclaimer. 0) Honorable Mayor and Members City Council City of Santa Ana Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison schedule be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. (2) Honorable Mayor and Members City Council City of Santa Ana Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the financial statements. Such missing information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. Our opinion on the financial statements is not affected by this missing information. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 28, 2022 on our consideration of the Air Quality Improvement Special Revenue Fund's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City's internal control over financial reporting and compliance. Clifton LarsonAllen LLP Santa Ana, California December 28, 2022 (3) CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND BALANCE SHEET JUNE 30, 2022 ASSETS Cash and Investments $ 1,676,260 Intergovernmental Receivable 108,986 Interest Receivable 3,479 Total Assets $ 1,788,725 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCE LIABILITIES Accounts Payable DEFERRED INFLOWS OF RESOURCES Unavailable Revenues 110,415 FUND BALANCE Restricted for Air Quality Improvement 1,678,310 Total Liabilities, Deferred Inflows of Resources, and Fund Balance $ 1,788,725 See accompanying Notes to Financial Statements. (4 ) CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2022 REVENUES Motor Vehicle Fees Investment Income Miscellaneous Total Revenues EXPENDITURES Direct Program Administrative Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers Out CHANGES IN FUND BALANCE Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR $ 319,256 12,347 165 331,768 350,924 21,222 372,146 (40,378) (1,810) (42,188) 1,720,498 $ 1,678,310 See accompanying Notes to Financial Statements. (5) CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE1 GENERAL The financial statements are intended to reflect the financial position and changes in the financial position attributable to the Air Quality Improvement Special Revenue Fund (AQMD) of the City of Santa Ana, California (the City). These financial statements are exclusively for AQMD and do not purport to, and do not present fairly the financial position and changes in the financial position for the City. The South Coast Air Quality Management District (SCAQMD) is authorized under Assembly Bill 2766 (AB 2766) Chapter 1705 [California Health and Safety Code (CHSC) Sections 44220 through 44247] to impose a motor vehicle registration fee to be used by the SCAQMD and local governments specifically for programs to reduce air pollution from mobile sources and related planning, monitoring, enforcement, and technical studies necessary for the implementation of the California Clean Air Act of 1988. The California Department of Motor Vehicles collects the vehicle registration fee and subvenes it to SCAQMD. Upon receipt, the vehicle registration fee is split into segments with 40% of the revenue place in a special revenue fund designated as the Air Quality Improvement Trust Fund for quarterly distribution to local governments. CHSC Section 44243 requires cities and counties receiving the AB 2766 funds to separately account for the revenues and to expend the revenues for air pollution reduction measures pursuant to the California Clean Air Act of 1988 or the SCAQMD's Air Quality Management Plan pursuant to Article 5 of Chapter 5.5 of Part 3 of the CHSC. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Fund Accounting The financial activity of the City is accounted for on the basis of funds, each of which is considered a separate accounting entity with a self -balancing set of accounts. Monies under AB 2766 are accounted for in the Air Quality Improvement Special Revenue Fund, which is a special revenue fund. B. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. BE CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Measurement Focus and Basis of Accounting (Continued) AQMD's financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. C. Budgetary Accounting The City's fiscal year begins on July 1 of each year and ends June 30 the following year. On or before the 15th of June of each year, the City Manager recommends and submits to the City Council a proposed budget for the next ensuing fiscal year based on a detailed financial plan prepared by the heads of the various offices, agencies and departments of the City and its component units. Upon receipt of the proposed budget, the Council holds a public hearing wherein the public is given an opportunity to be heard, after which the Council may make any revisions deemed advisable. After the conclusion of the public hearing, the Council may make modifications with the affirmative vote of at least a majority of its members. On or before the 31st day of July, the City Council adopts the budget as amended by the affirmative vote of at least a majority of its members. Upon final adoption, the budget is in effect for the ensuing fiscal year and becomes the authority for the various offices, agencies, and departments to expend subject to controls established by the City Charter. At any meeting after the adoption of the budget, the City Council may amend or supplement the budget by affirmative vote of at least two-thirds of the members so as to authorize the transfer of unused balances appropriated for one purpose to another purpose, or to appropriate available revenue not included in the budget. Where appropriations are made to offices, departments, or agencies for more than one activity or program, "appropriations" are considered in the aggregate with respect to total expenditures authorized for that office, department, or agency within each fund, limited to purposes for which the revenues of such funds are to be spent. The City Manager is authorized to make revisions among the items included in such appropriations if, in the City Manager's opinion, such revisions are necessary and proper. Budgetary control exists at the department level. Council action is necessary for transfers between departments/agencies or transfers between funds. During the fiscal year, all budget and supplemental amendments were necessary and made in a legally permissible manner. (7) CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Budgetary Accounting (Continued) The City legally adopts annual budgets for the Special Revenue Funds including the Air Quality Improvement Special Revenue Fund. The budgetary control for the Special Revenue Funds is under the department in charge. The Air Quality Improvement Special Revenue Fund is managed by the Public Works Agency. Monthly budgetary reports are prepared to effect control through fiscal management. The City Council approved supplemental appropriations during the year, but they were not considered material. Budgets are prepared on a modified accrual basis. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as restrictions of fund balances since they do not constitute expenditures or liabilities. All other annual appropriations lapse at fiscal year-end to the extent that they have not been expended or lawfully encumbered. During the fiscal year, the total Fund's expenditures were within the legal prescribed limits as approved by the City Council. D. Deferred Inflows of Resources In addition to liabilities, the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of fund balance that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. The AQMD fund has one item that qualifies for reporting in this category, which is unavailable revenues from intergovernmental revenues and interest receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. E. Fund Balance AQMD's fund balance is reported based on the extent to which the City is bound to observe constraints on the use of the AQMD's resources. AQMD's fund balance is classified under restricted, which include amounts which are constrained for specific purposes that are 1) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or 2) imposed by law through enabling legislation. AQMD's fund balance is restricted for programs initiated for the purpose of implementing the California Clean Air Act. Information regarding the fund balance reporting policy adopted by the City is described in Note 1 to the City of Santa Ana's Annual Comprehensive Financial Report. on CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND NOTES TO FINANCIAL STATEMENTS JUNE 30, 2022 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 3 CASH AND INVESTMENTS AQMD's cash and investments balances are pooled with various other City funds for deposit and investment purposes. Each fund's share of the pooled cash account is separately accounted for, and investment income is apportioned to the participating funds based on the relationship of their average daily balances to the total of the pooled cash and investments. Information regarding the credit risk and authorized types of deposits and investments in the City's pooled cash and investments is included in the City's Annual Comprehensive Financial Report. This report can be obtained from the City of Santa Ana. BE CITY OF SANTA ANA, CALIFORNIA AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2022 REVENUES Motor Vehicle Fees Investment Income Miscellaneous Total Revenues EXPENDITURES Direct Program Administrative Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers Out CHANGES IN FUND BALANCE Fund Balance - Beginning of Year FUND BALANCE - END OF YEAR Budaeted Amounts Original Final $ 640,000 $ 640,000 3,000 3,000 2,000 2,000 645,000 645,000 Variance with Final Budget Positive Actual (Negative) $ 319,256 $ (320,744) 12,347 9,347 165 (1,835) 331,768 (313,232) 605,180 1,712,099 350,924 1,361,175 23,600 23,600 21,222 2,378 628,780 1,735,699 372,146 1,363,553 16,220 (1,090,699) (40,378) 1,050,321 - (1,812) (1,810) 2 16,220 (1,092,511) (42,188) 1,050,323 1,720,498 1,720,498 1,720,498 - $ 1,736,718 $ 627,987 $ 1,678,310 $ 1,050,323 Is op, Clifton LarsonAllen LLP CLAconnect.com 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 GOVERNMENTAUDITING STANDARDS Honorable Mayor and Members City Council City of Santa Ana Santa Ana, 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 City of Santa Ana, California (the City), including the Air Quality Improvement Special Revenue Fund (the AQMD), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the AQMD's basic financial statements, and have issued our report thereon dated December 28, 2022. Report on Internal Control over Financial Reporting In planning and performing our audit of the AQMD financial statements, we considered the City's internal control over financial reporting (internal control) as it relates to the AQMD as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control related to the AQMD. Accordingly, we do not express an opinion on the effectiveness of the City's internal control related to the AQMD. 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 entity'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. 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 or significant deficiencies may exist that were not identified. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAslobal.com/disclaimer. (11) Honorable Mayor and Members City Council City of Santa Ana Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the AQMD's financial statements are free from material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including Assembly Bill 2766 Chapter 1705 (Health and Safety Code Sections 44220 through 44247), noncompliance with which could have a direct and material effect on the financial statements. 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 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 entity's internal control or on compliance related to the AQMD. 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 related to the AQMD. Accordingly, this communication is not suitable for any other purpose. Clifton LarsonAllen LLP Santa Ana, California December 28, 2022 (12) 0 Global INDEPENDENT NETWORK MEMBER CLA (CliftonLarsonAllen LLP) is a network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC -registered investment advisor. EXHIBIT 6 Clifton LarsonAllen LLP CLAconnect.com INDEPENDENT ACCOUNTANTS' REPORT Honorable City Council City of Santa Ana Santa Ana, California We have performed the procedures enumerated below on assisting the City of Santa Ana (the City) in determining whether the City's investment activities are in compliance with the City's Statement of Investment Policy (the Policy) and the California Government Code, §53600, et al. (the Code) for the quarter ended June 30, 2022. The City's management is responsible for the compliance with the Policy and the Code. The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of determining whether the City's investment activities are in compliance with the City's Statement of Investment Policy (the Policy) and the California Government Code, §53600, et al. (the Code). This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures and the associated findings are as follows: We obtained a copy of the City's Quarterly Investment Report for the quarter ended June 2022 and compared the investments listed in the report to the types of investments authorized by the Policy for fiscal year 2021/2022. No exceptions were noted as a result of our performing this procedure. 2. We compared the investments listed on the City's Quarterly Investment Report for the quarter ended June 30, 2022 to the type of investments authorized by the Code. No exceptions were noted as a result of our performing this procedure. 3. We observed the maturity dates for all investments listed on the City's Quarterly Investment Report for the quarter ending June 30, 2022 and compared to the maturity limits stated in the Policy to determine the dates do not exceed the limits in the policy. No exceptions were noted as a result of our performing this procedure. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLA¢lobal.com/disclaimer Honorable City Council City of Santa Ana Page 2 4. We obtained the City's Quarterly Investment Report for the quarter ending June 30, 2022 and observed that it contained the information/data required by the Code and met the timing requirements of the Code, as follows: a. Included the type of investment, issuer, date of maturity, par and dollar amount invested on all securities, investments and monies held by the City. b. Included those funds under management of contracted parties (fiscal agents, trustees, etc.). c. Included market value (and source) as of the date of the report for all securities held by the City or under management of any outside party that was not also a local agency or the State of California Local Agency Investment Fund. d. Stated compliance of the portfolio to the Policy of the City. e. Included a statement addressing the ability of the City to meet the pool's expenditure requirements for the next six months. No exceptions were noted as a result of our performing this procedure. 5. We compared the investments listed in the City's Quarterly Investment Report for the quarter ended June 30, 2022 to the prohibited investments listed in the Code. No exceptions were noted as a result of our performing this procedure. 6. We obtained and observed the date of submission of City's Quarterly Investment Report for the quarter ended June 30, 2022 per the submission evidence documentation to determine that the date is within 30 days following the end of the quarter. No exceptions were noted as a result of our performing this procedure. We were engaged by the City of Santa Ana to perform this agreed -upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the compliance with the Policy. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the City of Santa Ana and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed -upon procedures engagement. City Council and management of the City of Santa Ana Page 3 This report is intended solely for the information and use of City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties. l Clifton LarsonAllen LLP Irvine, California January 17, 2023 EXHIBIT 6 Clifton LarsonAllen LLP CLAconnect.com INDEPENDENT ACCOUNTANTS' REPORT Honorable City Council City of Santa Ana Santa Ana, California We have performed the procedures enumerated below on assisting the City of Santa Ana (the City) in determining whether the City's investment activities are in compliance with the City's Statement of Investment Policy (the Policy) and the California Government Code, §53600, et al. (the Code) for the quarter ended June 30, 2022. The City's management is responsible for the compliance with the Policy and the Code. The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of determining whether the City's investment activities are in compliance with the City's Statement of Investment Policy (the Policy) and the California Government Code, §53600, et al. (the Code). This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes. The procedures and the associated findings are as follows: We obtained a copy of the City's Quarterly Investment Report for the quarter ended June 2022 and compared the investments listed in the report to the types of investments authorized by the Policy for fiscal year 2021/2022. No exceptions were noted as a result of our performing this procedure. 2. We compared the investments listed on the City's Quarterly Investment Report for the quarter ended June 30, 2022 to the type of investments authorized by the Code. No exceptions were noted as a result of our performing this procedure. 3. We observed the maturity dates for all investments listed on the City's Quarterly Investment Report for the quarter ending June 30, 2022 and compared to the maturity limits stated in the Policy to determine the dates do not exceed the limits in the policy. No exceptions were noted as a result of our performing this procedure. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLA¢lobal.com/disclaimer Honorable City Council City of Santa Ana Page 2 4. We obtained the City's Quarterly Investment Report for the quarter ending June 30, 2022 and observed that it contained the information/data required by the Code and met the timing requirements of the Code, as follows: a. Included the type of investment, issuer, date of maturity, par and dollar amount invested on all securities, investments and monies held by the City. b. Included those funds under management of contracted parties (fiscal agents, trustees, etc.). c. Included market value (and source) as of the date of the report for all securities held by the City or under management of any outside party that was not also a local agency or the State of California Local Agency Investment Fund. d. Stated compliance of the portfolio to the Policy of the City. e. Included a statement addressing the ability of the City to meet the pool's expenditure requirements for the next six months. No exceptions were noted as a result of our performing this procedure. 5. We compared the investments listed in the City's Quarterly Investment Report for the quarter ended June 30, 2022 to the prohibited investments listed in the Code. No exceptions were noted as a result of our performing this procedure. 6. We obtained and observed the date of submission of City's Quarterly Investment Report for the quarter ended June 30, 2022 per the submission evidence documentation to determine that the date is within 30 days following the end of the quarter. No exceptions were noted as a result of our performing this procedure. We were engaged by the City of Santa Ana to perform this agreed -upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants and the standards applicable to attestation engagements contained in Government Auditing Standards, issued by the Comptroller General of the United States. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the compliance with the Policy. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. We are required to be independent of the City of Santa Ana and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed -upon procedures engagement. City Council and management of the City of Santa Ana Page 3 This report is intended solely for the information and use of City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties. l Clifton LarsonAllen LLP Irvine, California January 17, 2023 EXHIBIT 7 CITY OF SANTA ANA, CALIFORNIA SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES WITH INDEPENDENT ACCOUNTANTS' REPORT ON EXAMINATION OF MANAGEMENT'S ASSERTIONS ABOUT THE CITY'S COMPLIANCE WITH MEASURE X YEAR ENDED JUNE 30, 2022 CPAs I CONSULTANTS I WEALTH ADVISORS C LAconnect.com CITY OF SANTA ANA, CALIFORNIA TABLE OF CONTENTS YEAR ENDED JUNE 30, 2022 INDEPENDENT ACCOUNTANTS' REPORT ON EXAMINATION OF MANAGEMENT'S ASSERTIONS ABOUT THE CITY'S COMPLIANCE WITH MEASURE X SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES 2 NOTES TO SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES 3 Clifton LarsonAllen LLP . CLAconnect.com INDEPENDENT ACCOUNTANTS' REPORT ON EXAMINATION OF MANAGEMENT'S ASSERTIONS ABOUT THE CITY'S COMPLIANCE WITH MEASURE X Measure X Citizen Oversight Committee and Members of City Council of the City of Santa Ana Santa Ana, California We have examined management of the City of Santa Ana, California's, (City) assertion that the accompanying schedule of Measure X revenues and uses/expenditures (Schedule) for the fiscal year ended June 30, 2022 is accurate and that the City's uses/expenditures of Measure X funds complied with the requirements of Measure X ballot language ("the specified requirements"). The City's management is responsible for its assertion. Our responsibility is to express an opinion on management's assertion about the City's compliance with the specified requirements based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether management's assertion about compliance with the specified requirements is fairly stated, in all material respects. An examination involves performing procedures to obtain evidence about whether management's assertion is fairly stated, in all material respects. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of management's assertion, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement. Our examination does not provide a legal determination on the City's compliance with the specified requirements. In our opinion, management's assertion that the accompanying Schedule for the fiscal year ended June 30, 2022 is accurate and that the City's uses/expenditures of Measure X funds complied with the requirements of Measure X ballot language, is fairly stated, in all material respects. This report is intended solely for the information and use of the Measure X Citizen Oversight Committee, City Council, and management of the City of Santa Ana and is not suitable for any other purpose. CliftonLarsonAllen LLP Irvine, California December 2, 2022 CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Glom CLAelobal.com/disclaimer (1) CITY OF SANTA ANA SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES YEAR ENDED JUNE 30, 2022 Amount Measure X Revenue: July 2020 $ 6,788,501 August 2020 7,184,416 September 2020 6,896,311 October 2020 6,380,666 November 2020 6,066,076 December 2020 9,393,421 January 2021 5,969,453 February 2021 5,719,456 March 2021 8,795,649 April 2021 6,675,711 May 2021 7,103,723 June 2021 9,029,618 Total Measure X Revenue $ 86,003,001 Amount Measure X Uses/Expenditures: Maintain Effective 911 Response Retaining Firefighters Retaining Police Officers Addressing Homelessness Fixing Streets Maintaining Parks Youth Services Unrestricted General Revenue Purpose Total Measure X Uses/Expenditures $ 7,803,546 7,217,460 7,318,061 10,924,955 1,402,596 4,509,450 2,210,274 22,650,165 $ 64,036,507 See accompanying notes to the Schedule of Measure X Revenues and Uses/Expenditures. (2) CITY OF SANTA ANA NOTES TO SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES YEAR ENDED JUNE 30, 2022 NOTE 1 REVENUES AND USES/EXPENDITURES Measure X revenues consist of the 1.5 cent transactions and use (i.e., sales) tax approved by the voters of Santa Ana on November 6, 2018 and became effective April 1, 2019. Total revenue collected in fiscal year 2021-22 was $86,003,001. Measure X is a general-purpose tax, which means the revenues received from the tax go into the City's General Fund to maintain or enhance any lawful City program, improvement, or service such as maintain effective 9-1-1 response; retaining firefighters and police officers; addressing homelessness; fixing streets; maintaining parks; and unrestricted general revenue purposes. To determine Measure X expenditures, the City performs an analysis comparing expenditures between the current year and the base year. The base year has been identified as fiscal year 2018-19, representing the year of Measure X's passage. When completing the analysis, the City determines; (1) the amount of the increase of expenditures when compared to the base year, (2) significant contractual increases, and (3) increase in expenditures between cost centers or programs. The accompanying Schedule of Measure X Revenues and Uses/Expenditures presents the increase in expenditure by ballot category. Total Measure X uses/expenditures for fiscal year 2021-22 were $77,897,427, including amounts carried forward to fiscal year 2022-23. The largest program expense was unrestricted general revenue purposes totaling $22,650,165, which included the following: • Addressing prior year deficits and employee compensation increases for non - Safety employees totaling $11.7 million o $10.2 million - deficit o $1.5 million - planned savings • Santa Ana Regional Transportation Center Subsidy and Maintenance - $3.0 million • Business Interruption Fund Program - $0.8 million • Subsidy to Support Downtown Business Activity with Free Parking - $0.8 million • Streetlight retrofit Debt Service - $0.8 million • Vehicle Incentive Program - $0.7 million • Other Programs (various) - $4.8 million The revenues are higher than uses/expenditures reported for the period, however management has designated the excess of approximately $22 million as an addition to reserves for the year ended June 30, 2022. (3) CITY OF SANTA ANA NOTES TO SCHEDULE OF MEASURE X REVENUES AND USES/EXPENDITURES YEAR ENDED JUNE 30, 2022 NOTE 1 REVENUES AND USES/EXPENDITURES (CONTINUED) The following is a recap of the activity for fiscal year 2021-22: Amount Total Measure X Revenue $ 86,003,001 Total Measure X Uses/Expenditures $ 64,036,507 Additions to Reserves 21,966,494 Subtotal $ 86,003,001 Included in additions to reserves are $13,860,920 of budget carryovers for amounts that have been committed but not yet expended as of June 30, 2022. (4) 0 Global INDEPENDENT NETWORK MEMBER CLA (CliftonLarsonAllen LLP) is a network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC -registered investment advisor.