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City auditors give Lompoc an unmodified opinion; report flags $39,000 overcharge to successor-agency fund
Summary
External auditors issued an unmodified opinion on the City of Lompoc’s FY2023–24 annual comprehensive financial report, but reported one significant deficiency and recommended a corrective action plan. City staff said general fund reserves are below policy and recommended a multi‑year plan to rebuild reserves.
An independent audit firm issued an unmodified (clean) opinion on the City of Lompoc’s fiscal year 2023–24 financial statements, but included a single significant deficiency related to administrative charges to a successor-agency trust fund.
Ryan Domino, principal and partner at LSL CPAs, told the City Council that the audit was performed under generally accepted auditing standards and government auditing standards and that the firm rendered the highest level of opinion for the ACFR. Domino said auditors found one significant control deficiency: administrative costs charged to the successor agency private-purpose trust fund exceeded California Department of Finance allowable amounts by roughly $39,000. He said the overcharge arose from a staff misunderstanding of Department of Finance letters and that staff has drafted a corrective action plan; auditors do not expect the issue to recur.
Management services director Christie Donnelly told the council the audit also included normal year-to-year adjustments and a restatement of prior-year revenues totaling $436,638 to correct timing. Donnelly summarized other highlights: a net general fund increase of about $380,000 for the year, unassigned general fund reserves representing about 14% of current-year expenditures (below the city policy of 16.7%), capital assets up about $10 million, long-term debt up roughly $4.3 million, a CalPERS pension liability increase of about $5.1 million, and an OPEB liability increase of about $2.9 million. Domino said the pension liability movement reflected CalPERS’ investment returns missing actuarial targets.
Council members pressed staff on a number of details: the source and size of credit-card processing fees (Donnelly said fees totaled $1,061,000 in FY2023–24, compared with a budget of $375,000), wastewater revenue declines, and interfund advances (staff identified a $7.1 million advance from the water utility to solid waste for a stormwater project that will be funded by bonds). Donnelly recommended a methodical plan to restore the general fund reserve to policy — roughly $250,000 a year over four to five years — and said staff will present a 10‑year financial forecast later this year that will model CalPERS payments and other major drivers.
The council thanked staff and the auditors for the work and directed follow-up on several line items. Donnelly said staff will return with a more detailed analysis of credit-card fees and additional clarifications for council review.
Ending: Staff said they would incorporate council questions and return with follow-up information (credit card processing options, wastewater revenue details, and projection modeling) and would present the required corrective actions for the successor-agency finding in the next cycle.
