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HomeMy WebLinkAboutAccountants Report Measure A Transportation Fund for FYE 06/30/2015CITY 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, 2015 DATE: March 10, 2016 SUBMITTED BY: Paul S. Gibson, 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, 2015. Committee Recommendation The Audit, Investment and Finance Committee will receive the Independent Accountants' Report at their March 22, 2016 meeting. The Committee has already received and filed the other audit reports for the fiscal year ended June 30, 2015 and recommended that all reports be received and filed by 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. Macias, Gini & O'Connell, 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, 2015. 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, 2015. G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2015\SR - Council audit 2015 Measure A.docx Staff Report Approval of Report on Procedures for Measure A Fund for Fiscal Year ended June 30, 2015 March 10, 2016 Page 2 of 2 Fiscal Impact There is no fiscal impact associated with this action. Submitted by: Paul S. Gibson Finance Director/City Treasurer Approval: Jo M. Wohlmuth Manager t r G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2015\SR - Council audit 2015 Measure A.docx Certified Public -qw- ID Accountants 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 the Riverside County Transportation Commission (RCTC), solely to assist RCTC in determining whether the City of Palm Desert, California (the City), was in compliance with the Measure A Local Streets and Roads Program grant terms and conditions for the year ended June 30, 2015. 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: 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, 2015. 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, 2015. a. Identify the amount of Measure A cash and investments recorded at June 30, 2015. Compare amount to Measure A fund balance and provide an explanation for any difference greater than 25% of fund balance. Finding: Measure A cash and investments were $14,527,336 at June 30, 2015. The difference between Measure A cash and investments of $14,527,336 and fund balance of $14,779,998 is $252,662 or 1.7%. W.) rul C rr(•k Gdkl,i n;l C �naiiv'�ty San Pit vo k'a,, % G!r. & O'Connell LLP 467G hinr; ithu! Co,jrt SJ CP V'J Nlrr:Puit Beach, CA i2�,bu , www.mgocpa.com b. Identify amounts due from other funds. Finding: There were no amounts due from other funds as of June 30, 2015. c. Identify the components of ending fund balance for Measure A activity. Finding: The Measure A fund balance as of June 30, 2015 was $14,779,998 and is comprised of a restricted fund balance of $14,779,998. 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, 2014. 4. Obtain an operating statement for Measure A activity for the fiscal year ended June 30, 2015 (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, 2015. Finding: The City accounts for Measure A revenues in its Measure A Fund (Fund 4213). The City recorded total revenues in the amount of $4,319,120 for the fiscal year ended June 30, 2015. 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 a variance of $2,627 between the Measure A revenues recorded by the City and the RCTC Measure A payment schedule. The difference is due to a fiscal year 2014 clean up adjustment payment from RCTC, in the amount of $69,512, recorded by the City in fiscal year 2015, and a fiscal year 2015 clean up adjustment payment from RCTC, in the amount of $66,885, to be recorded by the City in fiscal year 2016. The following schedule summarizes these differences. Measure A revenue recorded 2014 clean up adjustment payment 2015 clean up adjustment payment City of RCTC Palm Desert $ 2,576,819 $ 2,579,446 - (69,512) 66,885 Measure A revenue reconciled $ 2,576,819 $ 2,576,819 iii. Determine the amount of interest allocated to Measure A activity for the fiscal year ended June 30, 2015. Finding: The City allocated interest in the amount of $56,967 to Measure A activity for the fiscal year ended June 30, 2015. 2 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, 2015. Finding: The City accounts for Measure A expenditures in its Measure A Fund (Fund 4213). The City recorded total Measure A expenditures in the amount of $8,077,366 for the fiscal year ended June 30, 2015. 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 $8,077,366. We selected $1,848,162 or 22.9%, 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: The 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 recorded in the Measure A Fund. For any transfers out, determine if such costs are included in the 5-Year CIP. Finding: We noted no transfers in the Measure A Fund for the fiscal year ended June 30, 2015. iv. Inquire of management as to the amount of general or non -project -related indirect 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 City management, no indirect costs were allocated to the Measure A Fund for the fiscal year ended June 30, 2015. 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. 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. 3 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 variances. Finding: The following schedule compares budgeted expenditures to actual amounts. Budget Actual Variance Construction and maintenance $ 32,580,111 $ 8,077,366 $ 24,502,745 Per discussion with City management, the variance in construction and maintenance was due to projects that were either not started or were in the beginning stages at year end June 30, 2015. 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 in the amount of $102,954. The payment selected for testing indicated that 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, 2015. Finding: The total amount of TUMF fees collected and remitted during fiscal year ended June 30, 2015, were $378,126 and $433,249, respectively. The difference of $55,123 was due to timing difference of collections and remittances. TUMF fee of $1,837 for June 2015 was remitted in July 2015, while TUMF fee of $56,960 for June 2014 was remitted in July 2015. 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 MSI-ICP 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 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. 4 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 July 1, 2014. 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 $3,377,207 were greater than the MOE base requirement of $2,398,146 resulting in an excess MOE of $979,061 for the fiscal year ended June 30, 2015. 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. Finding: No exceptions were noted as a result of applying this procedure. The City's discretionary funds spent in the fiscal year ended June 30, 2015, exceeded the MOE base year requirement. The City's MOE carryover at June 30, 2015, is calculated as follows: MOE excess at July 1, 2014 $ 5,638,916 Current year MOE expenditures 3,377,207 Less: MOE base year requirement (2,398,146) Excess MOE for fiscal year ended June 30, 2015 979,061 MOE excess at June 30, 2015 $ 6,617,977 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 of Palm Desert and is not intended to be, and should not be, used by anyone other than these specified parties. i S g�j L! Newport Beach, California February 9, 2016 CITY OF PALM DESERT, CALIFORNIA Measure A Operating Statements For the Fiscal Year Ended June 30, 2015 (Unaudited) Revenues: Measure A Federal grants State grants Reimbursements from other agencies Investment income Total revenues Expenditures: Construction and maintenance Budget $ 2,718,000 3,335,253 69,000 17,870,000 82,000 24,074,253 32,580,111 Actual $ 2,579,446 828,990 853,717 56,967 4,319,120 8,077,366 Exhibit A Variance $ (138,554) (2,506,263) (69,000) (17,016,283) (25,033) (19,755,133) 24,502,745 Deficiency of revenues under expenditures $ (8,505,858) $ (3,758,246) $ 4,747,612 7 y C� 00 00 C 0000 0000 N 00 M N vN1 `V N C O M ID t— O 00 Q- M v� O j' M O+ L N N G' N N 10 N M N V c u V c C7 (; ---_ _ — _ _ — — _ _ bs _ _ _ 69 bs 65 69 o � c 0`! 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