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Home My WebLink AboutRprt - Cash & Invstmnts - FYE 06/30/07 � CITY OF PALM DESERT FINANCE DEPARTMENT Staff Report REQUEST: REVIEW AND FILE THE REPORT ON AGREED-UPON PROCEDURES OF CASH & INVESTMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 DATE: JANUARY 24, 2008 CONTENTS: INDEPENDENT AUDITORS REPORT FROM LANCE, SOLL & LUNGHARD, LLP Recommendation: By Minute motion, that the City Council receive and file the Report on Agreed-Upon Procedures of Cash and Investments for the fiscal year ended June 30, 2007. Backaround: An audit review of the cash and investments for the City, Redevelopment Agency and Housing Authority was perFormed at the same time as the regular audit. Attached is the report prepared by the audit firm showing each item they reviewed, and there were no findings. Staff reviewed the report with the Audit, Investment & Finance Committee at the January 22, 2008 meeting. The Committee approved forwarding the report to City Council for their review and filing. Sub � ted by: C�'�'� �;;�..�t�:ii::�s.: AC'�':l:Ui�v o �.'��tG3V�€7 , DENIED -- �3�C��JE�7��r. �TI�E� aul S. Gibson '��^py�7�t r __ _.__ 1 � � �,'i,dm4&S�.S.t�'�S iB�1.:', Finance Director/City Treasurer �w�� ei�c;�i nert � �e� �- C�c��Sz�n �v�'i�'�a"_��---- Approved by: ��o e_(��. �_ A�3ST�,IN o (��1� VERIFIE� 33Y• f' Origin�l on.File wit �ity Clerk' s Offi.ce Carlos L. Ortega City Manager G:IFinanceWiamh OrtegalStaff ReportslAudit Staff Reports 20071Cash&Investment Procedures 2007.Doc Brandon W.Burrows Lance Donald L.Parker Q Michael K.Chu 50�� p� David E.Hale Lunghard ""°'�55��°"�°,�'°"°° Donald G.Slater LLP Richard K.Kikuchi Certified Public Accounta�its Retired Robert C.Lance iv�a�v9a Richard C.Soll Fred J.I.unghard,Jr. 1928-1999 September 14, 2007 Paul S. Gibson, CCMT, Director of Finance/City Treasurer City of Palm Desert Palm Desert, California INDEPENDENT ACCOUNTANTS' REPORT We have performed the procedures enumerated below, which were agreed to by the City Treasurer's Office of the City of Palm Desert (the City), California, solely to assist the City in evaluating certain aspects of its cash and investment activities as of the date of our field work on June 18, 2007, for the year ended June 30, 2007. This engagement to apply agreed upon-procedures was performed in accordance with attestation standards established by the American Institute of Cert�ed Public Accountants. The sufficiency of these procedures is solely the responsibility of the City Treasurer's Office of the City of Palm Desert. 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. The procedures performed and the results obtained from the performance thereof were as follows: 1. Procedures Performed: We reviewed all investment transactions for the fiscal year up to the date of our field work on June 18, 2007, as listed in the'Trades"three-ring binders provided by the City, to verify that all transactions were in conformity with legal restrictions imposed by law, contract and the City's investment policy, including the limits on security types and concentrations. Findings: Based on our review, all investment transactions for the current fiscal year up to the date of our field work on June 18, 2007, as listed in the "Trade" three-ring binder provided by the City were in confo�nity with legal restriction imposed by law, contract, and the City's investment policy, including the limits on security types and concentrations. 2. Procedures Pertormed: We reviewed all investment transactions for the fiscal year, as listed in the "Trades" three-ring binder provided by the City, to determine if there was evidence of questionable transactions related to the "churning" of investments, the use of a particular broker or any excessive premium paid to brokers. Findings: Based on our review of all investment transactions as listed in the three-ring binders, all primary dealers and secondary brokers used by the City were listed in its investment policy. Each dealer and broker were used alternatively. No excessive use of a particular dealer/broker or premium paid was noted and no questionabie transactions related to the churning of investments was noted. 3. Procedures Performed: We randomly selected 24 bank wires from the bank statements and traced them to the outgoing wire log to determine if repetitive and non-repetitive wires were initiated, either by a City employee or by an authorized third party, and verified by a second City employee.We also scanned the outgoing wire log for unusual activities or patterns that should be reported to you. 75 YEARS 1929r��////�2�004 Q� L,�:l.�u�I[Ce 203 N.Brea Blvd.,Suite 203 • Brea,CA 92821-4056 •(714)672-0022 • Fax(714)672-0331 • www.lsl�pas.com Lance Soll s Lunghard LLP CERTIFIED PUBLIC ACCOUN7AN7S Paul S. Gibson, CCMT, Director of Finance/City Treasurer City of Palm Desert Palm Desert, California Findings: All 24 selected electronic debits described as wire transfers on the Union Bank of California general checking account statement were traced to the outgoing wire log without exception. All outgoing wires are initiated by the Deputy City Treasurer or the City Treasurer and verified by an employee other than the employee initiating the wire. Based on our review of the outgoing wire log, the outgoing wire activity appears reasonable. 4. Procedures PerFormed: We reviewed all investment transactions for the fiscal year up to the day of our field work on June 18, 2007, as listed in the "Trades"three-ring binder provided by the City, to determine if all executed trades were properly documented and cleared by an independent third party. Findings: Based on our review of the"Trades"three-ring binder, all investment transactions are filed by month and all documentation related to one transaction are stapled together and include the following: the trade ticket with the approval of either the City Treasurer or the Assistant Finance Director and with the deiivery instruction, the description of the investment, the competitive offering sheet, the trade confirmation form the dealer/broker, a print out from Union Bank website showing that the purchase was recorded by the custodian in the City's account, and the position report from the City's investment software. Overall, we found the documentation for the investment transactions well organized and easy to review. 5. Procedures Performed: We reviewed all investment transactions for the frscal year up to the date of our field work on June 18, 2007, as listed in the"Trades"three-rings binder provided by the City to verify that an employee other than the Deputy City Treasurer authorized trades and to review the recording of amounts in the accounting records for 15 trades by someone independent of the investment purchase function. Findings: Based on our review, all investment fransactions are initiated by the Deputy City Treasurer and approved by either the City Treasurer or the Assistant Finance Director.The 15 trades selected were traced to a journal enfry without exception and appeared to be properiy recorded in the general ledger. All journal entries and posting to the general ledger of the trades are done by someone independent of the initiation and approval of the trade transacfions. 6. Procedures PerFormed: We reviewed the sale of investments to determine if proper authorization was made in order to authorize the sale for any loss, and that the loss, if any,was reported to the Finance and Investment Committee. Findings: Based on our review of the"Trade"binder, no sale of investments were noted. Based on our inquiry, the Deputy City Treasurer confirmed that there were no sale of investments during the current fiscal year and that all investments were held to maturity. 7. Procedures Performed: We reviewed the investment reports to determine if all investment reports for the fiscal year were filed with the Finance and Investment Committee, the City Council, and the Calrfornia Debt and Investment Advisory Commission. Findings: As of the date of our fieldwork, investments reports were prepared monthly up to the month of April 2007 and were filed timely based on our inquiry with the Deputy City Treasurer. A copy of the � investment reports is kept in the Deputy City Treasurer's o�ce. 8. Procedures Pertormed: We reviewed the bank signafure cards and the signatures that the City made available, to verify if all bank cards were kept current, and if two signatures were required for each bank account. Findings: Based on our review of the signature cards fofder, signature cards have been updafed in the current fiscal year. Lance �I 6 Lunghard LLP CERIIFIED PUBLIC ACCOUNTANiS Paul S. Gibson, CCMT, Director of Finance/City Treasurer City of Palm Desert Palm Desert,California 9. Procedures Performed: We confirmed all investments on the City's books at June 30, 2007. Findings: Based on our confirmation at June 30,2007, all investments are recorded on the City's books. No exception noted. Conclusion We were not engaged to, and did not perform an audit of the City's cash and investments, the objective of which would have been the expression of an opinion on the City's cash and investments. 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 use of the City and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of these procedures. However, this report is made a matter of public record, and its distribution is not limited. � .�� -.� �'�� . ��,