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To The Honorable Mayor and Members <br /> of the Audit Committee of the City of Redwood City <br />Redwood City, California <br />Page 2 <br /> <br /> <br />Planned Scope and Timing of the Audit <br />An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the <br />financial statements; therefore, our audit involves judgment about the number of transactions to be <br />examined and the areas to be tested. <br />Our audit included obtaining an understanding of the entity and its environment, including internal <br />control, sufficient to assess the risks of material misstatement of the financial statements and to design <br />the nature, timing, and extent of further audit procedures. Material misstatements may result from (1) <br />errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or <br />governmental regulations that are attributable to the entity or to acts by management or employees <br />acting on behalf of the entity. <br />We performed the audit according to the timing previously communicated to you on the engagement <br />letter. <br />Significant Audit Findings <br />Qualitative Aspects of Accounting Practices <br />Management is responsible for the selection and use of appropriate accounting policies. The significant <br />accounting policies used by the City are described in Note 1 to the financial statements described in <br />Note 1 to the financial statements, the City changed accounting policies related to financial reporting by <br />adopting Statements of Governmental Accounting Standards (GASB Statement) No. 74, Financial <br />Reporting for Postemployment Benefit Plans Other Than Pension Plans, No. 77, Tax Abatement Disclosure, No. <br />78, Pension Provided through Certain Multiple‐Employer Defined Benefit Pension Plans, No. 80, Blending <br />Requirements for Certain Component Units in 2017. We noted no transactions entered into by the City <br />during the year for which there is a lack of authoritative guidance or consensus. All significant <br />transactions have been recognized in the financial statements in the proper period. <br />Accounting estimates are an integral part of the financial statements prepared by management and are <br />based on management’s knowledge and experience about past and current events and assumptions <br />about future events. Certain accounting estimates are particularly sensitive because of their significance <br />to the financial statements and because of the possibility that future events affecting them may differ <br />significantly from those expected. The most sensitive estimates affecting the City’s financial statements <br />were: <br /> Depreciable lives and estimated residual value of property and equipment <br /> Pension plans (actuarial assumptions) <br /> Self-insurance liabilities (actuarial assumptions) <br /> Investments Valuations <br /> Allowance for uncollectible accounts <br /> Net Other Post-employment Benefits (OPEB) Obligation (actuarial assumptions) <br />6.1.C. - Page 38