DINUBA – Years spent being cautious and improving its accounting processes has left the city of Dinuba in a healthy fiscal position, according to the most recent audit of the city’s finances.
Ahmed Badawi, founder of auditing firm Badawi and Associates, presented these results to the Dinuba City Council on Jan. 14 in the form of the 2024-25 Annual Comprehensive Financial Report (ACFR). In providing an overview of the financials, Badawi said his team issued a clean opinion on the audit and did not identify any significant deficiencies in the city’s internal controls over financial reporting.
“I’ve heard you over several years, and for the first time I’m so glad there are no internal control issues,” Councilmember Kuldip Thusu said to Badawi. “It looks like over the years you have had a relationship with our team and slowly everything has fallen in place, and I must compliment the team for doing a wonderful job.”
Following Badawi’s presentation, which covered the process taken by the firm to complete the audit and the items the firm looked at, the council voted 4-0 to receive and accept the report; Councilmember Linda Launer was absent.
A clean audit means the auditors, through a series of reviews and tests, believe the city’s financial statements are fairly stated and contain reasonable estimates, and that the city consistently followed all accounting policies.
“As always, management has been very cooperative providing us with documentation and was responsive to our requests,” Badawi said.
Although the audit was presented to the council in January, the ACFR was finished by the end of December. Badawi said he believes this is the first time the city has completed its audit before the end of the calendar year since 2017.
Additionally, while auditors did identify some errors in financial reporting that required adjustments, none of the issues were considered to be material weaknesses or significant deficiencies. Badawi and Associates had previously identified deficiencies in the city’s internal controls in both the 2022-23 and 2023-24 ACFRs.
Along with reviewing some of the city’s main account balances, Badawi noted that the city had just one out-of-the-ordinary transaction during the fiscal year.
Specifically, the city wrote off the previously recorded liability of nearly $20 million related to online sales tax revenue. This was done after Dinuba reached an agreement with the California Department of Tax and Fee Administration that determined the city would not have to pay the CDTFA any previously recorded online sales tax revenue.
According to the ACFR, Dinuba moved the funds it held in a liability account back into its general fund because of this, resulting in a general fund balance increase of 220% at the end of fiscal year 2024-25.
With an ending balance of nearly $35 million, Badawi said the city has 22 months of operating expenses available in its general fund, when the recommended reserve balance is usually equivalent to two months.
In response to a question from Thusu asking why the write-off was mentioned as an unusual transaction, Badawi said that although this was pointed out, that does not mean it was a bad thing — it simply isn’t something the city runs into every year.
“From our point of view, it was the council and the staff’s foresight and that we really talked through very well and set aside that money just in case something were to happen, so it should be seen as a positive light rather than anything else,” Thusu said.
The full 2024-25 ACFR is available on the city website.
