Presentation to the Pasadena Audit Committee January 22, 2018

Audit Responsibilities and Process LSL has been engaged by the City to perform an expanded scope financial audit and to assist in preparing your annual Audited Financial Statements (CAFR). Audited all funds of the City Audited the City’s Component Units Rendered an opinion as of June 30, 2017 2

Status of Audits Performed 3

Audit Process and Report Interim Audit (June) Planning Inquiry and documentation Internal controls GASB 68 Test work Year-End Audit (October – December 2017) Account analysis Confirmations and Cut-off procedures GASB 68 Test work and Reporting Comprehensive Annual Financial Report Introductory Section (Transmittal Letter) Financial Section (Audit Report, MD&A, Statements and Footnotes) Statistical Section 4

Audit Opinion This audit work was all performed in order to render an “opinion” on the financial statements. Management is responsible for the information in the statements LSL’s opinion indicates the information is fairly stated in accordance with GAAP and is materially correct An “unmodified opinion” has been issued on your June 30 financial statements. 5

Internal Control Letter Statement on Auditing Standards (SAS) No.115: Communicating internal control related matters identified in an audit Material Weaknesses No Material Weaknesses 6

Internal Control Letter Statement on Auditing Standards (SAS) No.115: Communicating internal control related matters identified in an audit Significant Deficiencies Two Significant Deficiencies which related to: Reconciliation of Capital Assets Bank Reconciliation Timeliness and Reconciling Items 7

Audit Communication Letter Accounting Estimates Management Letter Representations New standards GASB 75 OPEB will be adopted in FY 2018 8

Summary LSL was engaged to perform an expanded scope Financial Audit The Financial Audit results in annual Audited Financial Statements (CAFR) and an Unmodified Opinion was rendered The SAS 115 and Audit Communication Letter were issued along with the audited financial statements 9

Questions? Richard Kikuchi, Engagement Partner Lance, Soll, & Lunghard LLP (714) 672-0022 Richard.Kikuchi@lslcpas.com 10