Rancho Water committee hears and approves audit report

Rancho California Water District’s Finance and Audit Committee and Board of Directors meet Thursday, Nov. 5, via teleconference. Valley News/Courtesy photo

The Rancho California Water District’s Finance and Audit Committee and Board of Directors met Thursday, Nov. 5, and unanimously approved a procedures report on expanded audit test work from Davis Farr LLP.

The committee had previously expressed an interest in having Davis Farr perform audit procedures that include analytical procedures and detailed testing of areas identified in the auditor’s risk assessment.

“This one was a little bit different due to COVID-19 and, and everything that was going on, they weren’t able to get everything completed during their regular testing of our normal audits,” Kathy Naylor, accounting manager for Rancho Water, said in her report. “But completed it shortly after. And that’s why we’re presenting the results now. The results were that Davis Farr, our independent CPA firm, noted no exceptions in the report.”

Richard Aragon, assistant general manager of Rancho Water, chimed in.

“Essentially this was a detailed audit of the entire customer service area on what their bread and butter transactions are,” he said. “I have to say on these kinds of very detailed reviews, it’s not a normal audit. I mean, they look at every single little thing for the transactions they’re looking at. To get no findings, no discrepancies on an area for us that involves thousands of transactions is just really a testament to that group and to really good work and our overall effort for accuracy and doing everything properly.”

The committee approved the report unanimously.

The committee also heard an update of the retirement medical benefits plan and actuarial valuation results.

“This report is really required every two years, and it’s to determine the estimated liability and then the annual required payments which dictates our funding of our retirement medical benefit plan,” Naylor said. “This valuation is generally done in conjunction with the types of estimates that CalPERS uses. As with CalPERS, you’ll see things fluctuating from year to year.

“One area that we saw a huge improvement upon is how much our annual required contribution is each year. In our prior valuations, we were paying $970,000 a year. And the big majority of that is for past liability amounts. We made a huge contribution in March of this year, and although that’s not reflected in the actual valuation, they did update what our projected payments needed to be for our funding status for this year. And next year, based on the fact that we did contribute $7.7 million to the fund, and that was in March at the direction of the board. This really significantly lowered the UAAL portion of our annual payments. For this year, we’re looking at $476,000 compared to $969,000,” Naylor said.

The committee moved the item to the board of directors unanimously.

The committee also accepted an award from the Government Finance Officers Association for Rancho Water’s comprehensive annual financial report for the fiscal year that ended June 30.

“Even though we do get it every single year it’s good feedback to know that we’re on track,” Naylor said. “And then also if we do get any recommendations. It’s a really worthy cause that we’re very proud to be part of.”

The committee also approved an extension of the district’s contract with Davis Farr unanimously, reviewed financial statements for Sept. 30, reviewed the per diems and reimbursements paid to Rancho Water directors, reviewed the treasurer’s report and ratified the register of audited demands for Sept. 24 through Oct. 21.

They also reviewed outside contracts, capital projects and purchasing reports, heard a coronavirus update and the assistant general manager’s report

Jeff Pack can be reached by email at jpack@reedermedia.com.