Going-Concern Audits
A “going concern” opinion is an auditor’s formal statement of substantial doubt about a government’s ability to meet its financial obligations. El Cerrito’s CAFRs/ACFRs contain this language across a specific multi-year period, documented year by year below.
| Fiscal Year | Going-Concern Language |
|---|---|
| 2012 | Absent |
| 2013 | Present |
| 2014 | Present |
| 2015 | Absent |
| 2016 | Absent |
| 2017 | Present |
| 2018 | Present |
| 2019 | Present |
| 2020 | Present |
| 2021 | Absent — explicitly discontinued |
| 2022–2025 | Absent (standard auditor-responsibility language only; not a City-specific finding) |
FY2013 and FY2014
“The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the City as a going concern. However, as of June 30, 2014, the General Fund’s unrestricted cash balance was only $1… Although the City continues to issue Tax Revenue Anticipation Notes to supplement cash temporarily during the fiscal year, if deficit spending continues, it reduces the likelihood that the City will be able to continue as a going concern.”
FY2014 CAFR, Independent Auditor’s Report, “Emphasis of Matters,” pages 2–3. Auditor: Maze & Associates. FY2013 CAFR contains substantially similar language (page 3); General Fund unrestricted cash represented under 5 days of expenditures that year; FY2014’s total citywide unrestricted cash was $40,384.
FY2015 and FY2016
No going-concern language present in either year’s CAFR.
FY2017 and FY2018
“The accompanying financial statements have been prepared assuming that the City will continue as a going concern. As discussed in Note 21 to the financial statements, the City’s General Fund has a very limited fund balance that indicates that the City may not be able to continue as a going concern. These conditions raise substantial doubt about its ability to continue as a going concern…”
FY2017 and FY2018 CAFRs, Independent Auditor’s Report, “Emphasis of Matter Regarding Going Concern,” referencing Note 21. Auditor: Badawi and Associates, CPAs. FY2017 available fund balance: deficit $186,227. FY2018: deficit $2,233,507.
FY2019
“The City’s unassigned fund balance in the General Fund was a deficit of $1,707,620, which represents a $525,887 improvement over… the prior fiscal year.”
FY2019 CAFR, Independent Auditor’s Report (“Emphasis of Matter Regarding Going Concern”) and Note 20, “GOING CONCERN.” Auditor: Badawi and Associates, CPAs (report dated January 31, 2020). Note: the auditor’s letter refers to “Note 21,” but the corresponding note in this year’s financial statements is numbered Note 20 — an apparent carryover drafting error from the prior year’s template, not a discrepancy in the underlying finding.
FY2020
“The City’s unassigned fund balance in the General Fund was a deficit of $1,777,532.”
FY2020 CAFR, Independent Auditor’s Report (“Emphasis of Matter Regarding Going Concern”) and Note 21, “GOING CONCERN.” Auditor: Badawi & Associates. The FY2020 CAFR separately states elsewhere in its narrative that the City had been “on the going concern watch list since FY 2017, the first year that the City changed auditors in about a decade” — the City’s own characterization of the period.
FY2021 — Going-Concern Language Discontinued
“As a result of the fund balance at 19% of estimated expenditures and a positive trend in both revenue and expenditures, the ‘Going Concern’ designation by Badawi and Associates is no longer included in the FY 2021 ACFR.”
FY2021 ACFR, Management’s Discussion and Analysis. Auditor: Badawi and Associates (same auditor as the prior four years; the going-concern designation ended before the subsequent auditor change).
FY2022–FY2025
No going-concern designation or dedicated note in any of these four years. Auditor of record changed to Chavan & Associates, LLP beginning with the FY2022 ACFR. These CAFRs contain only standard, boilerplate auditor-responsibility language required under current audit standards (SAS 132) in every modern audit report — not a City-specific finding — and include no “Emphasis of Matter Regarding Going Concern” heading and no dedicated going-concern note.
All years above verified directly against primary-source CAFR/ACFR PDFs.