HomeMy WebLinkAboutMeasure A Transportation Fund Report FYE 06/30/2016CITY OF PALM DESERT
FINANCE DEPARTMENT
STAFF REPORT
REQUEST: RECEIVE AND FILE THE INDEPENDENT ACCOUNTANTS' REPORT
ON AGREED -UPON PROCEDURES PERFORMED ON THE MEASURE
A TRANSPORTATION FUND FOR THE FISCAL YEAR ENDED JUNE 30,
2016
DATE: February 9, 2017
SUBMITTED BY: Jose Luis Espinoza, CPA, Assistant Finance Director
CONTENTS: Independent Accountants' Report on Agreed -Upon Procedures
Recommendation
By Minute Motion, that the City Council receive and file the Independent
Accountants' Report on Agreed -Upon Procedures Performed on the Measure A
Transportation Fund for the fiscal year ended June 30, 2016.
Strategic Plan Objective
Not applicable.
Committee Recommendation
The Audit, Investment and Finance Committee received the Independent Accountants' Report at
their January 24, 2017 meeting, and recommended that the report be received and filed by the
City Council.
Background
The Measure A Fund is a special revenue fund that was created to keep track of funds received
by the Riverside County Transportation Commission. In 1988, Riverside County voters approved
a half cent sales tax, known as Measure A, to fund a variety of highway improvements, local
streets and roads maintenance, commuter assistance and specialized transit projects.
Conrad LLP performed the procedures which were agreed to by the Riverside County
Transportation Commission, Riverside, California (RCTC) solely to assist RCTC with respect to
an evaluation of the City of Palm Desert's Measure A Transportation Fund and degree of the
City's compliance with RCTC requirements for the year ended June 30, 2016.
Staff requests that the Council receive and file the Independent Accountants' Report on
Agreed -Upon Procedures Performed on the Measure A Transportation Fund for the fiscal year
ended June 30, 2016.
G:\Finance\Niamh Ortega\Staff Reports'Audit staff reports\Audit Staff Reports 2016\SR - Council audit 2016 Measure A.docx
Staff Report
Approval of Report on Procedures for Measure A Fund for Fiscal Year ended June 30, 2016
February 9, 2017
Page 2 of 2
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by:
Jose Lu. E,pinoza, CPA
Assists t Fjjnance Director
oore
tor of Finance / City Treasurer
JLE:nmo
Approval:
Lauri Aylaian
City Manager
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2016\SR - Council audit 2016 Measure A.docx
CITY OF PALM DESERT CALIFORNIA
Report on Agreed -Upon Procedures
Applied to Measure A — Local Streets and Roads
Fiscal Year Ended June 30, 2016
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Independent Accountant's Report
On Applying Agreed -Upon Procedures
The Board of Commissioners
Riverside County Transportation Commission
Riverside, California
We have performed the procedures enumerated below, which were agreed to by Riverside
County Transportation Commission ("RCTC"), solely to assist RCTC in determining whether the
City of Palm Desert, California ("City") was in compliance with the Measure A — Local Streets and
Roads Program grant terms and conditions for the year ended June 30, 2016. The City's
management is responsible for the accounting records. This agreed -upon procedures
engagement was conducted in accordance with attestation standards established by the
American Institute of Certified Public Accountants. The sufficiency of these procedures is solely
the responsibility of those parties specified in the report. Consequently, we make no
representation regarding the sufficiency of the procedures described below, either for the purpose
for which this report has been requested, or for any other purpose.
Our procedures and related findings are as follows:
1. Obtain the 2009 Measure A (Ordinance 02-001) compliance requirements. Western
County jurisdictions are required to participate in the Transportation Uniform Mitigation
Fee ("TUMF") program and in the Multi -Species Habitat Conservation Plan ("MSHCP")
which are administered by the Western Riverside Council of Governments ("WRCOG")
and the Western Riverside County Regional Conservation Authority ("RCA"), respectively.
Coachella Valley jurisdictions are required to participate in the TUMF program
administered by the Coachella Valley Association of Governments ("CVAG"). Indicate
participation in TUMF and/or MSHCP programs.
Finding: No exceptions were noted as a result of applying this procedure. The City
participates in the TUMF program administered by CVAG.
2. Obtain the City's approved 5-Year Capital Improvement Plan ("CIP") from RCTC for the
fiscal year ended June 30, 2016.
Finding: No exceptions were noted as a result of applying this procedure.
3. Obtain a detailed general ledger and balance sheet from the City for the fiscal year ended
June 30, 2016.
a. Identify the amount of Measure A cash and investments recorded at June 30,
2016. Compare amount to Measure A fund balance and provide an explanation for
any difference greater than 25% fund balance.
Finding: Measure A cash and investments were $19,131,717 at June 30, 2016.
The difference between Measure A cash and investments of $19,131,717 and fund
balance of $19,246,471 is $114,754 or 1% of the fund balance.
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1
Board of Commissioners
Riverside County Transportation Commission
Riverside, California
b. Identify amounts due from other funds.
Finding: There were no amounts due from other funds at June 30, 2016.
c. Identify the components of ending fund balance for Measure A activity.
Finding: Ending fund balance for Measure A activity was restricted in the amount
of $19,246,471 at June 30, 2016.
d. Identify the existence of any restatement of Measure A fund balance and inquire
of management as to the reason for any restatement.
Finding: We noted no restatement of Measure A fund balance at June 30, 2015.
4. Obtain an operating statement for Measure A activity for the fiscal year ended June 30,
2016 (see Exhibit A), including budget amounts.
a. Review the revenues in the operating statement.
i. Inquire of management as to what fund was used to record Measure A revenues
received from RCTC and document total revenues for the fiscal year ended June
30, 2016.
Finding: The City accounts for Measure A revenues in its Measure A Fund (Fund
#213). The City recorded total revenues in the amount of $6,885,291 for the fiscal
year ended June 30, 2016.
ii. Obtain a listing of Measure A payments made from RCTC to the City. Compare
the Measure A revenues recorded by the City to the listing of payments made by
RCTC.
Finding: We identified the following variances between the Measure A revenues
recorded by the City and the RCTC Measure A payment schedule.
Measure A revenue recorded
2015 clean up adjustment payment
2016 clean up adjustment payment
City of Palm
RCTC Desert
$ 2,585,856 $ 2,576,443
Measure A revenue reconciled $ 2.585.856
(66,884)
76.297
$ 2.585.856
The difference is due to a fiscal year 2015 clean up adjustment payment from
RCTC in the amount of $66,884 recorded by the City in fiscal year 2016 and a
fiscal year 2016 clean up adjustment payment from RCTC in the amount of
$76,297 to be recorded by the City in fiscal year 2017.
2
Board of Commissioners
Riverside County Transportation Commission
Riverside, California
iii. Determine the amount of interest allocated to Measure A activity for the fiscal year
ended June 30, 2016.
Finding: The City allocated interest in the amount of $110,078 to the Measure A
activity for the fiscal year ended June 30, 2016.
b. Review the expenditures in the operating statement.
i. Inquire of management as to what fund is used to record Measure A expenditures
and document total expenditures for the fiscal year ended June 30, 2016.
Finding: The City accounts for Measure A expenditures in its Measure A Fund
(Fund #213). The City recorded total expenditures in the amount of $2,418,818 for
the fiscal year ended June 30, 2016.
ii. Select expenditures for testing that comprise at least 20% of total Measure A
expenditures.
Finding: The City recorded Measure A expenditures in the amount of $2,418,818.
We selected $898,933 or 37% for testing.
1. For the expenditures selected for testing, compare the dollar amount recorded
in the general ledger to the supporting documentation.
Finding: No exceptions were noted as a result of applying this procedure.
2. For the expenditures selected for testing, review the 5-Year CIP and note
whether the projects claimed were included in the 5-Year CIP and whether they
constitute allowable costs.
Finding: Expenditures selected for testing were included in the 5-Year CIP and
were allowable costs. No exceptions were noted as a result of applying this
procedure.
iii. Inquire of management as to the nature of any transfers (in and out) recorded in
the Measure A Fund. For any transfers out, determine if nature of transfer out was
included in the 5-Year CIP.
Finding: There were no transfers recorded in the Measure A Fund that were noted
as a result of applying this procedure.
iv. Inquire of management as to the amount of general or non -project -related costs, if
any, included in expenditures. If indirect costs exceed 8% of Measure A revenue,
inquire of management as to the basis for indirect costs charged to Measure A. If
indirect costs are identified, determine if such costs are included in the 5-Year CIP.
Finding: Per discussion with management, there were no indirect costs recorded
for the fiscal year ended June 30, 2016.
3
Board of Commissioners
Riverside County Transportation Commission
Riverside, California
v. Inquire of management as to the amount of debt service expenditures recorded in
the Measure A fund.
Finding: There were no debt service expenditures recorded in the Measure A Fund
that were noted as a result of applying this procedure.
1. For cities with advance funding agreements with RCTC, compare debt service
expenditures to Measure A payments withheld by RCTC.
Finding: There was no advance funding agreement with RCTC noted.
2. For cities with other indebtedness, determine if such costs are included in the
5-Year CIP.
Finding: There were no debt service expenditures recorded in the Measure A
Fund that were noted as a result of applying this procedure.
5. Compare budgeted expenditures to actual amounts and inquire of management as to the
nature of significant budget variances.
Finding: The following schedule compares budgeted expenditures to actual amounts.
Budget Actual Variance
Construction and Maintenance $ 30,055.708 $ 2,418,818 $ (27,636,890)
Total
$ 30.055.708 $_2.41$.818 $ 27.636.890
Per discussion with City management, the Construction & Maintenance variance is due to
projects not being started timely or projects being in beginning stages at June 30, 2016.
6. Obtain from RCTC a listing of jurisdictions that participate in the Western County or
Coachella Valley TUMF programs.
a. If the jurisdiction is a participant in the TUMF program, select at least one
disbursement for validation as to the amount remitted to WRCOG or CVAG, as
applicable.
Finding: We selected one disbursement of $18,374 for validation. The payment
selected for testing indicated that the TUMF is collected and remitted to CVAG as
required.
b. Indicate the total amount of TUMF fees collected and remitted during the fiscal year
ended June 30, 2016.
Finding: The total amount of TUMF fees collected and remitted during fiscal year
ended June 30, 2016, were $705,743 and $449,176, respectively. The difference of
$256,567 was due to timing difference of collections and remittances. TUMF fee of
$256,567 for June 2016 was remitted in July 2016.
4
Board of Commissioners
Riverside County Transportation Commission
Riverside, California
7. Obtain from RCTC a listing of jurisdictions that participate in the Western County MSHCP
program.
a. If the jurisdiction is a participant in the Western County MSHCP program, select at
least one disbursement for validation as to the amount remitted to RCA.
Finding: The City is not a participant in the Western County MSHCP program.
b. Inquire of management as to the existence of any fees collected in prior years that
were not remitted to RCA by the end of this fiscal year.
Finding: The City is not a participant in the Western County MSHCP program.
c. Indicate the total amount of Western County MSHCP fees collected and remitted
during the fiscal year.
Finding: The City is not a participant in the Western County MSHCP program.
8. Obtain from RCTC the Maintenance of Effort ("MOE") base year requirement, including its
supporting detail calculations for the City, and the carryover amount allowed as of the
beginning of the fiscal year.
a. Obtain from the City a calculation of its current year MOE amount in a format similar
to its base year calculation. See Exhibit B.
Finding: No exceptions were noted as a result of applying this procedure.
b. Compare the current year MOE amounts from the General Fund to the general ledger.
Finding: No exceptions were noted as a result of applying this procedure.
c. Scan the General Fund general ledger to determine if there were any transfers in to
fund any MOE amounts.
Finding: No transfers in were noted as a result of applying this procedure.
d. Compare the amount of current year MOE expenditures to the MOE base requirement
and add any excess to, or subtract any deficiency from, the carryover amount.
Finding: We noted that current year MOE expenditures of $3,628,675 were greater
than the MOE base requirement of $2,398,146 resulting in an excess of $1,230,529
for fiscal year ended 2016.
e. If the amount of discretionary funds spent is less than the MOE base requirement
("MOE deficiency"), determine the amount of any prior year MOE carryover using the
information obtained from RCTC, and reduce the MOE deficiency by any available
MOE carryover to determine an adjusted current year expenditure amount.
5
Board of Commissioners
Riverside County Transportation Commission
Riverside, California
Finding: No exceptions were noted as result of applying this procedure. The City's
discretionary funds spent in the fiscal year ended June 30, 2016 exceeded the MOE
base year requirement. The City's MOE carryover at June 30, 2016 is calculated as
follows:
MOE excess at July 1, 2015
Current year MOE expenditures
Less: MOE base requirement
Excess MOE for fiscal year ended June 30, 2016
MOE excess at June 30, 2016
$ 6,617,977
3,628,675
(2.398.1461
1.230.529
$ 7.848,506
We were not engaged to, and did not, conduct an examination, the objective of which would be
the expression of an opinion on the accounting records. Accordingly, we do not express such an
opinion. Had we performed additional procedures, other matters might have come to our attention
that would have been reported to you.
This report is intended solely for the information and use of the Board of Commissioners and
management of RCTC and the City Council and management of the City and is not intended to
be, and should not be, used by anyone other than these specified parties.
Ca4 UP
Lake Forest, California
November 14, 2016
6
EXHIBIT A
CITY OF PALM DESERT, CALIFORNIA
Measure A Operating Statement
Fiscal Year Ended June 30, 2016
(Unaudited)
Variance From
Final Budget
Favorable
Budget Actual (Unfavorable)
Revenues:
Measure A $ 2,686,000 $ 2,576,443 $ (109,557)
Federal Grant 471,000 3,627,892 3,156,892
State Grant 69,000 (69,000)
Reimbursements from Other Agencies 100,000 570,878 470,878
Interest Income 35,000 110,078 75,078
Total Revenues 3,361,000 6,885,291 3,524,291
Expenditures:
Construction and Maintenance 30,055,708 2,418,818 27,636,890
Total Expenditures 30,055,708 2,418,818 27,636,890
Excess of Revenues
over Expenditures $ (26,694,708) $ 4,466,473 $ 31,161,181
7
CITY OF PALM DESERT, CALIFORNIA
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