PICA – Opinion on Five Year Forecasted Statements


Date: July 15, 2024
Categories
  • Finance & Policy
Controller: Christy Brady
Tags
  • Budget,
  • Finance,
  • Five year plan,
  • Revenue,
  • Treasurer

Description


INDEPENDENT ACCOUNTANT’S REPORT

We have examined the accompanying forecast of the City of Philadelphia, Pennsylvania, which comprises the forecasted general fund statements of operations and summaries of significant assumptions and accounting policies for each of the five years ending through June 30, 2029, of the City of Philadelphia, Pennsylvania, based on the guidelines for the presentation of a forecast established by the American Institute of Certified Public Accountants (AICPA). City of Philadelphia’s Office of the Director of Finance management is responsible for preparing and presenting the forecast in accordance with the guidelines for the presentation of a forecast established by the AICPA. Our responsibility is to express an opinion on the forecast based on our examination.

Our examination was conducted in accordance with attestation standards established by the AICPA. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the forecast is presented in accordance with the guidelines for the presentation of a forecast established by the AICPA, in all material respects. An examination involves performing procedures to obtain evidence about the forecast. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of the forecast, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

We are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements relating to the engagement.

In our opinion, the accompanying forecast is presented, in all material respects, in accordance with the guidelines for the presentation of a forecast established by the AICPA, and the underlying assumptions are suitably supported and provide a reasonable basis for management’s forecast.

There will usually be differences between forecasted and actual results because events and circumstances frequently do not occur as expected, and those differences may be material. We have no responsibility to update this report for events and circumstances occurring after the date of this report.

Emphasis of a Matter – Growth in Revenues Resulting from the American Rescue Plan Act

The forecasted statement referred to above, and footnote C.6. reflect significant growth in revenues for fiscal year 2025 due to grant funding received under the American Rescue Plan Act (ARPA). ARPA provided direct relief to state and local governments in the wake of negative economic impacts caused by the COVID-19 public health emergency. The City received a $1.395 billion grant in FY 21 that, in accordance with federal regulations, must be obligated by December 2024. As such, no new ARPA grant funding is anticipated in fiscal years 2026 through 2029. The City’s forecasted annual spending combined with the ARPA fiscal cliff represent a substantial risk to the City’s fund balance, which is forecasted to decrease significantly from fiscal year 2026 through 2029. Our opinion is not modified with respect to this matter.

Emphasis of a Matter – Labor Agreements

The forecasted statement referred to above, and footnote 7.A. includes assumptions that are particularly sensitive due to the uncertainty in the outcome of expected future negotiations with the major unions. Currently, one-year contract extensions are granted for the Fraternal Order of Police, International Association of Firefighters, Deputy Sheriffs, Steelworkers, and Correctional Officers. Contracts with District Councils 33 and 47 employees have not been extended past June 30, 2024. Our opinion is not modified with respect to this matter.