HomeMy WebLinkAboutAudited Financial Reports for Measure A Fund - FY Ended June 30, 2003City of Palm Desert
STAFF REPORT
Council Meeting of May 13, 2004
TO:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: PAUL S. GIBSON, DIRECTOR OF FINANCE/CITY TREASURER
SUBJECT: City of Palm Desert Audited Financial Reports for the Measure A Fund
for the Fiscal Year Ending June 30 2003
DATE: May 13, 2004
RECOMMENDATION:
By Minute Motion, receive and file the audited financial statements of the Measure A Fund
for the City of Palm Desert for the fiscal year ending June 30, 2003.
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
improvement, local street and road maintenance, commuter assistance and specialized
transit projects.
We received an unqualified opinion which is the highest opinion that an audit firm can issue.
This indicates that in the auditor's opinion, the financial statements are presented fairly, in all
material respects, the financial position of the MeasureA Fund. In conducting the audit, the
auditors are also required to test the internal control of the City. Their report showed no
instance of noncompliance or material weaknesses.
Staff recommends that the City Council receive and file the audited financial statements for
the Measure A Fund for the fiscal year ending June 30, 2003.
Respectfully submitted,
Reviewed and concur,
PAUL S GIBSON, CARLOS L. TEGA,
CITY MANAGER
DIRECTOR OF FINANCE/TREASURER
H:L4cctg03\Aud it03\staffreportmeasurea2003auditwpd
City of
Palm Desert
Transportation Funds
Palm Desert, California
Financial Statements and
Independent Auditors' Reports
For the years ended June 30, 2003 and 2002
IC&L
Caporicci & Larson
Certified Public Accountants
City of Palm Desert Transportation Funds
Table of Contents
Independent Auditors' Re
—age
Financial port........................................................................................................1
nancial Statements
Balance Sheets ...............................................
Statements of Revenues, Expenditures and Changes in Fund Balances ....
Statements of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - For the year ended June 30, 2003
Statements of Revenue, Expenditures and Changes in Fund Balances -
Budget and Actual - For the year ended June 30, 2002 ............
Notes to the Financial Statements ..............
Independent Auditors'................................................................................ 6
Report on Compliance and on Internal Control
Over Financial Reporting of the Measure A and TDA Section 99234
Transportation Funds based on an Audit of the Measure A and TDA
Section 99234 Transportation Funds' Financial Statements in Accordance
with Government Auditing Standards.....
i
I
i
i
CAL
' Caporicci & Larson
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and Members of the City Council
of the City of Palm Desert
Palm Desert, California
We have audited the accompanying financial statements of the Measure A and Transportation
Development Act
("TDA") Section 99234 Transportation Funds ("Transportation Funds") of the City of Palm Desert, California
("City"), as of and for the year ended June 30, 2003. We have also audited the accompanying financial statements
of the TDA Section 99234 Transportation Fund as of and for the year ended June 30, 2002. These financial
statements are the responsibility of the City's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the Measure A Transportation Fund as
June 30, 2002, were audited by other auditors whose report dated October 25, 2002, expressed an unqualifiof
ed
opinion on those statements. q
We conducted our audit in accordance with generally accepted auditing standards in the United States and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroll
General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management,
well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable as
basis for our opinion.
As described in Note 1, the financial statements present only the Transportation Funds and
present fairly the financial position and results of operations of the City,conformity age not ltato
accounting principles in the United States. with nerallyaccepted ed
In our opinion, based on our audit and the report of other auditors, the financial statements of the Measure
A
and TDA Section 99234 Transportation Funds as of and for the year ended June 30, 2003 and the financial
statements of the TDA Section 99234 Transportation Fund as of and for the year ended June 30, 2002 present
fairly, in all material respects, the financial position and the results of operations for the years then end
conformity with generally accepted accounting principles in the United States. ed in
In accordance with Government Auditing Standards, we have also issued our report as of and
June 30, 2003, dated October 29, 2003, on our consideration of the City's internal control over financial rep o deg
and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That reportting
is
an integral part of an audit performed in accordance with Government Auditing Standards and should be readn
i
conjunction with this report in considering the results of our audit.
San Diego, California
October 29, 2003
Toll Free Ph: (877) 862-2200
Oakland
180 Grand Ave„ Suite 1365
Oaldand, California 94612
Orange County
3184-D Airway Avenue
Costa Mesa, California 92626
Toll Free Fax: (866) 436-0927
Sacramento
777 Campus Commons Rd., Suite 200
Sacramento, California 95825
Sari Diego
G00 "B" Street, Suite 1900
San Diego, California 92101
City of Palm Desert Transportation Funds
Balance Sheets
June 30, 2003 and 2002
ASSETS
Cash
Accounts receivable
Due from other governmental agencies
Total assets
LIABILITIES
AND FUND BALANCES
Liabilities:
Accounts payable
Due to other funds
Retentions payable
Total liabilities
Fund Balances:
Reserved for continuing appropriations
Reserved for encumbrances
Designated for future projects
Total fund balances
Total liabilities and fund balances
Measure A
2003
2002
TDA
Section 99234
2003
$ 6,213,022 $ 6,686,002 $
6,321
1,428,788 1,157,236
$ 7,648,131 $ 7,843,238
$ 311,801 $ 1,013,761 $
154,661 245,587
466,462 1,259,348
6,821,564
297,665
62,440
7,181,669
3,040,615
3,531,822
11,453
6,583,890
$ 7,648,131 $ 7,843,238
2002
54,000
54,000
$ 45,883
8,117
54,000
54,000
See accompanying Notes to the Financial Statements.
2
1
1
i
City of Palm Desert Transportation Funds
Statements of Revenues, Expenditures and Changes in Fund Balances
For the years ended June 30, 2003 and 2002
REVENUES:
Intergovernmental allocations:
Measure A
Article 3
State Transportation Improvement Program
Reimbursements from other agencies
Interest income
Other revenue
Total revenues
Measure A
TDA
Section 99234
2003 2002 2003 2002
$ 2,177,816 $ 1,952,787 $
1,500,846 270,065
998,870 1,606,639
111,400 226,432
1,840 400
4,790,772 4,056,323
54,000
54,000
EXPENDITURES:
Construction and maintenance 4,235,698 5,084,370 - 109,412
Total expenditures 4,235,698 5,084,370 109,412
REVENUES OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Sale of Measure A funded property
Total other financing sources (uses)
REVENUES AND OTHER FINANCING
SOURCES (USES) OVER
(UNDER) EXPENDITURES
FUND BALANCES:
Beginning of year
End of year
555,074 (1,028,047) (55,412)
42,705
55,412
42,705 55,412
597,779 (1,028,047)
6,583,890 7,611,937
$ 7,181,669 $ 6,583,890
See accompanying Notes to the Financial Statements.
3
City of Palm Desert Transportation Funds
Statements of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
For the year ended June 30, 2003
Measure A
TDA
Section 92234
Budget
REVENUES:
Variance Variance
Favorable Favorable
Actual (Unfavorable) Budget Actual (Unfavorable)
Intergovernmental allocations:
Measure A $ 2,100,000 $ 2,177,816 $ 77,816 $
Article 3
State Transportation
Improvement Program 1,500,846 1,500,846
Reimbursements from other agencies 998,870 998,870
Interest income 365,000 111,400 (253,600)
Other income 1,840 1,840
Total revenues
2,465,000 4,790,772 2,325,772
EXPENDITURES:
Construction and maintenance 16,983,874 4,235,698 12,748,176
Total expenditures 16,983,874 4,235,698 12,748,176
REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING
SOURCES (USES):
(14,518,874) 555,074 15,073,948
Sale of Measure A funded property - 42,705 42,705
Total other financing
sources (uses) - 42,705 42,705
REVENUES AND OTHER
FINANCING SOURCES (USES)
OVER (UNDER) EXPENDITURES $ (14,518,874) 597,779 $ 15,116,653 $
FUND BALANCES:
Beginning of year
End of year
6,583,890
7,181,669 $
See accompanying Notes to the Financial Statements.
4
City
of Palm Desert Transportation Funds
Statements of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
' For the year ended June 30, 2002
TDA
I Measure A Section 92234
Variance Variance
Favorable Favorable
Budget Actual (Unfavorable) Budget Actual (Unfavorable)
REVENUES:
111
Intergovernmental allocations: $
Measure A $ 1,850,000 $ 1,952,787 $ 102,787 $ $
54,000 54,000
Article 3
State Transportation
Improvement Program - 270,065 270,065
Reimbursements from other agencies 1,280,000 1,606,639 326,639
I
365,000 226,432 (138,568)
Interest income
Other revenue 400 400
Total revenues 3,495,000 4,056,323 561,323 54,000 54,000
EXPENDITURES:
111 Construction and maintenance 15,696,184 5,084,370 10,611,814 109,000 109,412 (412)
Total expenditures 15,696,184 5,084,370 10,611,814 109,000 109,412 (412)
I REVENUES OVER
(UNDER) EXPENDITURES (12,201,184) (1,028,047) 11,173,137 (55,000) (55,412) (412)
OTHER FINANCING
SOURCES (USES):
- - 55,000 55,412 412
I
Transfers in
Total other financing
- - 55,000 55,412 412
sources (uses)
IREVENUES AND OTHER
FINANCING SOURCES (USES) $
OVER (UNDER) EXPENDITURES $ (12,201,184) (1,028,047) $ 11,173,137 $
FUND BALANCES:
I
Beginning of year 7,611,937
End of year $ 6,583,890 $
See accompanying Notes to the Financial Statements.
5
City of Palm Desert Transportation Funds
Notes to Financial Statements
For the years ended June 30, 2003 and 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Reporting Entity
The Measure A and the Transportation Development Act ("TDA") Section 99234 Transportation
Funds' ("Transportation Funds") financial statements are intended to present the financial position
and results of operations of only those transactions attributable to the Riverside County
Transportation Commission Transportation Expenditure Plan and Retail Transaction and Use Tax
Ordinance ("Measure A") and TDA Public Utilities Code Section 99234 ("TDA Section 99234")
funds administered and disbursed by the City of Palm Desert, California ("City")
The Riverside County Transportation Commission ("RCTC") allocated Measure A funds to the
City to supplement the City's existing local streets and roads improvement program and TDA
Y
Section 99234 funds to supplement pedestrian and bicycles facilities improvements or bicycle
safety education programs.
The accounting policies of the Transportation Funds of the City are in conformity with generally
accepted accounting principles in the United States applicable to governmental units. The
Governmental Accounting Standards Board ("GASB") is the accepted standard -setting body for
establishing accounting and financial reporting principles.
Fund Accounting
The accounts of the City are organized on the basis of funds which are considered to be separate
accounting entities. The operations of the Transportation Funds are accounted for in separate sets
of self -balancing accounts that comprise their assets, liabilities, fund equity, and revenues and
expenditures. Government resources are allocated to and for individual funds based on the
purposes for which they are spent and means by which spending activities are controlled. The
funds represented in the Transportation Funds' financial statements are governmental types. The
following fund types are maintained.
Special Revenue Funds - Special Revenue Funds account for the proceeds of specific revenue
sources that are legally restricted for specified purposes.
The Measure A Fund accounts for the City's share of the County of Riverside's additional /%
sales tax allocations.
Capital Projects Funds - Capital Projects Funds account for the proceeds allocated to specific
capital projects.
The TDA Section 99234 Fund accounts for the City's share of TDA Article 3 allocations.
These funds are legally restricted for specific purposes and are included in the basic financial
statements of the City.
6
i
i
City of Palm Desert Transportation Funds
Notes to Financial Statements, Continued
For the years ended June 30, 2003 and 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its
measurement focus and basis of accounting. Financial statements for the special revenue fund and
capital projects fund types of governmental funds are presented using the current financial
resources measurement focus and the modified accrual basis of accounting.
Basis of accounting refers to when revenues and the related assets and liabilities are recognized in
the accounts and reported in the Transportation Funds' financial statements. Specifically, it relates
to the timing of measurements made, regardless of the nature of the measurement. Revenues are
recognized in the accounting period in which they become measurable and available.
Expenditures are recognized in the accounting period in which the fund liability is incurred, if
measurable, except for unmatured interest on general long term liabilities, which is recognized
when due.
Under the modified accrual basis of accounting, revenues are recorded when susceptible to
accrual; that is, when they become both measurable and available to finance expenditures in the
fiscal period. "Available" means collectible within the current period or soon enough thereafter to
be used to pay liabilities of the current period. For the City, revenues and other governmental fund
financial resources are recognized if measurable and collectible generally within 60 days following
the end of the fiscal year. Revenues considered susceptible to accrual primarily. include Measure A,
TDA Section 99234, reimbursements from other agencies, State Transportation Improvement
Program and interest.
Revenue Recognition
Recognition of revenues arising from nonexchange transactions, which include revenues from
taxes, certain grants, and contributions, is based on the principle characteristic from which the
revenues are received by the City. Measure A and TDA funds originate from "derived tax
revenues", of which the primary characteristic is that the assessing government provides funding
under certain provisions.
For the City, funds received for streets and roads improvement purposes under Measure A retain
the primary characteristic from' which derived, whereas funds disbursed by RCTC under the
bicycle facilities improvements and safety programs obtain the characteristic of a voluntary
nonexchange transaction similar to a grant. Revenues received under the Measure A Streets and
Roads program are recognized in the period when the underlying exchange has occurred and
resources are available. Revenues under TDA Section 99234 are recognized in the period when all
eligibility requirements have been met.
City of Palm Desert Transportation Funds
Notes to Financial Statements, Continued
For the years ended June 30, 2003 and 2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Bud et Control and Encumbrances
adopts an annual budget on a basis consistent with generally y manageed ment aco control
The City p an
principles in the United States anueand enforcingsrevenuesprovisions. Under this
technique to assist in controllingexpenditures
system, the current year expenditures are charged against the reservations budgeted appropriation.
proncesfor
Y
Encumbrancesoutstanding
expenditures
g at year-end are as they do not constitute eexpenditures or liabilities.
subsequent year
Use of Estimates
ting
The reparation of financial statements in conformity with that affect enerally pce accepted
reportedon
passumptions
principles requires management to make estimates and
amounts and disclosures. Accordingly, actual results could differ from those estimates.
2. CASH AND INVESTMENTS
Cityhas pooled its cash and investments in order to achieve a higher returavailable to meet
The is on investments while facilitating management of cash. The cash
Transportation balance
Funds. l Cash accounts
excess of current
current operating requirements of the
re uirements is invested in various interest -bearing accounts internaland other
investments
p olorwhiping
q
terms. Transportation Fund cash is deposited in the City's
is
reported at fair value. Interest income is allocated on the Transportation Funds are those of
pp
he basis of average cash balances.
Investment policies and associated risk factors applicable to
the City and are included in the City's basic financial statements.
The investments made by the City are limited to those allowable under State Statutes and include
the following types of investments:
Certificates of Deposit
Bankers Acceptances
Medium Term Notes
Repurchase Agreements
Government Agency Securities
Treasury Bill and Notes
Passbook Savings Accounts
State of California Local Agency Investment Fund (LAIF)
8
1
i
I
City of Palm Desert Transportation Funds
Notes to Financial Statements, Continued
For the years ended June 30, 2003 and 2002
2. CASH AND INVESTMENTS, Continued
The City's investments with LAIF at .June 30, 2003, included a small portion of the pool funds
invested in derivatives and similar transactions. These investments may include the following:
Structured Notes - Debt securities (other than Asset -Backed Securities) whose cash -flow
characteristics (coupon rate, redemption amount, or stated maturity) depend on one or more
indices and/or that have imbedded forwards or options.
Asset -Backed Securities - Generally mortgage -backed securities which entitle their purchasers to
receive a share of the cash flows from a pool of assets such as principal and interest repayments
from a pool of mortgages (such as CMO's), or credit card receivables.
As of June 30, 2003, the City had $100,915,898 (43%) of its pooled cash and investments in LAIF
which had invested 2.327% of the pool investment funds in derivatives and similar investments.
The investments representing the Transportation Funds' equity in the City's internal investment
pool and the money market funds are not classified by risk categories because they are not
evidenced by securities that exist in physical or book entry form as defined by GASB Statement
No. 3.
3. COMPLIANCE REQUIREMENTS
Funds received pursuant to the provisions of Measure A (Ordinance No. 88-1 of the County
Riverside) may only be used for local streets and roads. Funds received pursuant to TDA Section
99234 of the Public Utilities Code may only be used for facilities provided for the exclusive use b
pedestrians and bicycles or bicycle safety education programs. y
4. TRANSPORTATION UNIFORM MITIGATION FEE PROGRAM
As required under Measure A, Measure A monies cannot be allocated to individual cities in the
Coachella Valley unless they participate in the Transportation Uniform Mitigation Fee (TUMF)
program necessary for implementation of the planned Regional Arterial System. The City
collected TUMF fees totaling .approximately $551,801 and $1,274,000 in 2003 and 2002,
respectively, which were remitted to the Coachella VallerAssociation of Governments (CVAG).
9
1
1
City of Palm Desert Transportation Funds
Notes to Financial Statements, Continued
For the years ended June 30, 2003 and 2002
5. MAINTENANCE OF EFFORT
In accordance with the laws and regulations of Measure A, the City is required to maintain its
continuous commitment of local discretionary expenditures for streets and roads. The base year
calculation of local discretionary expenditures (Base Year) represents the three-year average of
discretionary streets and roads expenditures incurred by the City for 1986 through 1988. During
2003 and 2002, the City's local discretionary expenditures for streets and roads, as calculated
below, indicates the City is in compliance with this requirement. The City has a total cumulative
excess of local expenditures of S45,716,989 at June 30, 2003.
Current year local discretionary expenditures
Less: Base Year
Excess of current year expenditures over Base Year
Excess local expenditures at beginning of year
2003 2002
$ 8,912,733 $ 7,387,640
(904,798) (904,798)
8,007,935
37,709,054
6,482,842
31,226,212
Excess local expenditures at end of year $ 45,716,989 $ 37,709,054
10
CAL
Caporicci & Larson
Certified Public Accountants
INDEPENDENT AUDITOR' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER
FINANCIAL REPORTING OF THE MEASURE A AND TDA SECTION 99234 TRANSPORTATION FUNDS
BASED ON AN AUDIT OF THE MEASURE A AND TDA SECTION 99234 TRANSPORTATION FUNDS'
FINANCIAL STATEMENTS IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
of the City of Palm Desert
Palm Desert, California
We have audited the financial statements of the Measure A and Transportation Development Act ("TDA") Section
99234 Transportation Funds ("Transportation Funds") of the City of Palm Desert, California ("City"), as of and for
the year ended June 30, 2003, and have issued our report thereon dated October 29, 2003. We also audited the
accompanying financial statements of the TDA Section 99234 Transportation Fund as of and for the year ended
June 30, 2002. We conducted our audit in accordance with generally accepted auditing standards in the United
States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the Transportation Funds' financial statements are free
of material misstatement, we performed tests of their compliance with certain provisions of laws, regulations,
contracts and grants, including the requirements governing the Transportation Development Act funds as
prescribed in §6666 of Title 21, Chapter 3, Subchapter 2, Article 5.5 of the California Code of Regulations and
Measure A (Ordinance No. 88-1 of the County of Riverside), noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit of the Transportation Funds and,
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance
that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit of the Transportation Funds, we considered the City's internal control
over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion
on the Transportation Funds' financial statements and not to provide assurance on the internal control over
financial reporting. Our consideration of the internal control over financial reporting would not necessarily
disclose all matters in the internal control over financial reporting that might be material weaknesses. A material
weakness is a condition in which the design or operation of one or more of the internal control components does
not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to
the Transportation Funds' financial statements being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned functions. We noted no matters
involving the internal control over financial reporting and its operation that we consider to be material
weaknesses.
This report is intended solely for the information and use of the City's management, the City Council, the
Riverside County Transportation Commission and the California State Controller's Office and is not intended to
be and should not be used by anyone other than these specified parties.
San Diego, California
October 29, 2003
Toll Free Ph: (877) 862-2200
Oakland
180 GrandAve., Suite 1365
Oakland, California 94612
Orange County
3184-DAirway Avenue
Costa Mesa, California 92626
Toll Free Fax: (866) 436-0927
Sacramento
777 Campus Commons Rd., Suite 200
Sacramento, California 95825
San Diego
600 "B" Street, Suite 1900
San Diego, California 92101