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Home My WebLink AboutLimited Procedures Review - TOT � , � CITY OF PALM DESERT FINANCE DEPARTMENT STAFF REPORT REQUEST: RECEIVE AND FILE THE LIMITED PROCEDURES REVIEW OF VARIOUS PALM DESERT OPERATORS FOR COMPLIANCE WITH THE CITY OF PALM DESERT'S TRANSIENT OCCUPANCY TAX ORDINANCE FOR THE 2007 CALENDAR YEAR, APPROVE REIMBURSEMENT TO OPERATORS FOR OVERPAYMENT OF TRANSIENT OCCUPANCY TAX TOTALING $581.43, AND AUTHORIZE THE COLLECTION OF $66.63 FROM OPERATORS FOR UNDERPAYMENT OF TRANSIENT OCCUPANCY TAX SUBMITTED BY: PAUL S. GIBSON, FINANCE DIRECTOR DATE: FEBRUARY 12, 2009 CONTENTS: LIMITED PROCEDURES REVIEW OF VARIOUS PALM DESERT OPERATORS FOR COMPLIANCE WITH THE CITY OF PALM DESERT'S TRANSIENT OCCUPANCY TAX ORDINANCE FOR THE 2007 CALENDAR YEAR Recommendation: That the City Council: 1. Receive and file the Limited Procedures Review of various Palm Desert operators for compliance with the City of Palm Desert's Transient Occupancy Tax ordinance for the 2007 calendar year; 2. Approve reimbursement to operators for overpayment of Transient Occupancy Tax totaling $581.43; and 3. Authorize collection from operators for underpayment of Transient Occupancy Tax totaling $66.63. Background: The City of Palm Desert hired the CPA firm of Lance, Soll & Lunghard, LLP to conduct audits on Transient Occupancy Tax. This year, six operators were audited; three operators had an overpayment, and one had an underpayment during the 2007 calendar year. Attached are the six reports and a summary of the auditor's findings. � � Staff Report Limited Procedures Review & Transient Occupancy Tax Collection and Reimbursement February 12, 2009 Page 2 of 2 Original copies have been provided to the City Attorney's office. On January 9, 2009 operators received a copy of their respective audits and were asked to respond with any concerns within a thirty day period. In the interest of maintaining confidentiality among those operators who may wish to respond, it is suggested that instead of speaking during the public Council meeting, a separate meeting be established between the operator and the Finance Director, City Manager, Mayor and Mayor Pro-Tempore, all of whom serve on the Audit, Investment and Finance Committee. The Audit, Investment and Finance Committee received the report at their January 27, 2009 meeting, and it was recommended that it be received and filed by the City Council. Approval of staff's request will allow for reimbursement of tax overpaid to the City and collection of underpaid tax from the appropriate operators. Submitted by: ' C1TY COUNCILACTION �� a AP93I20VF,I) 1)I;l�l�l) ; ` . ',/� R�;CI:NI:D �. �. (' t3"�€a��:�Z �_� `_ Paul S. Gibson, Finance Director MF,ET[NG DATE � : �a_ � �!_�_.__�.---- Approval: A�'F,s: �� s �� . __ ___ NOEfi: ��,---Y i A I3S[:NT: �45�/) --__,.._ /�//� A I3�7'A 1 N: ---�--_-- � � VERIF'IF.D I3Y: n ohlmuth, Clty M er ��'jginal on File with City Gerk'a Uffice nmo G:\Finance\Niamh Ortega\Staff ReportsWudit Staff Reports 2008\Council report audit 2008 TOT.docx T.O.T AUDIT FINDINGS Period January 1, 2007 — December 31, 2007 Operator#1 —The City of Palm Desert owes this company $71 18 for overpayment of Transient Occupancy Tax. Operator#2 —The City of Palm Desert owes this company $49.13 for overpayment of Transient Occupancy Tax Operator#3 —There were no findings. Operator#4—This company owes the City of Palm Desert $66.63 for underpayment of Transient Occupancy Tax. Operator#5 —There were no findings. Operator#6—The City of Palm Desert owes this company $461.12 for overpayment of Transient Occupancy Tax. CITY OF PALM DESERT LIMITED PROCEDURES REVIEW OF OPERATOR#1 FOR COMPLIANCE WITH TRANSIENT OCCUPANCY TAX ORDINANCE FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 ClTY OF PALM DESERT JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 TABLE OF CONTENTS Page Number INQEPENDENT ACCOUNTANTS' REPORT C7N APPLYING AGREED-UPON PROCEDURES ........................................................................................................... 1 SUMMARY OF PROCEDURES..............................................................................................................2 SUMMARYOF FINDINGS...................................................................................................................... 3 COMPUTATION OF UNDER/OVER PAYMENT OF TRANSIENT OCCUPANCY TAX.........................4 Brandon W'.Rurrows Lance Donald I,.Parker M1lichael K.Chu �� David E.Hale L u n g h a rd �Pr<fexsinrtal CnrporuCinn Uonald G.Sl�ter LLP Richard K.Kikuchi Certified Picblic Accountarzts Rer,rea Robert C.Lance 141��1'N1J Richard C.Snll E7ed J•Lunghard,Jr. �92%-IV99 INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of the City Cauncil City of Palm Desert, Califomia We have performed the procedures enumerated herein, which were agreed to by the management of the City of Palm Desert, California (the Gity) salely to assist the City in verifying the accuracy of the transient occupancy tax returns submitted by Operator#1 (the Hotel) to the City for the period January 1, 2007 through December 31, 2007. The engagement to apply agreed-upon procedures was performed in accordance with attestation standards estabMished by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the City of Palm Desert. Consequently, we make no representations regarding the sufficiency of the procedures described herein either for the purpose for which this report has been requested or for any other purpose. We were not engaged to, and did not perform,an audit of the transient occupancy tax returns of the Hotel,the objective of which would be the expression of a certified opinion on the transient occupancy tax payments made by the Hotel to the City. 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 the City. This report is intended solely for the use of the Ciry and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures. However, if this report is made a matter of public record, its distribution will not be limited. �, .�� , �'�� , �� July 18, 2008 75 Y�ARS 1929 2004 D� E��,ccce 2(13 ti 13rea k31�d..5uitr?03 •8rca.('A 9?h21-41ISCi•(714i 1�7�-Ilf)22 •Frax �71-�i hi2-(l;.l •�y_«�ti.1s��S..�.�IL OPERATOR#1 PALM DESERT SUMMARY �F PROCEDURES (Unaudited} We performed the following procedures on the books and recards of Operator#1 (the Hotel}, as agreed upon by the rnanagement of the City of Palm Desert: 1. We reviewed the City Municipal Code and related ordinances and resolutions related to transient occupancy tax. 2. We verified the mathematical accuracy and timeliness of transient occupancy reports filed with the City for the calendar years 2007. 3. We traced the gross revenues reported on the transient occupancy tax returns prepared by the Hotel ta gross revenues recorded in the Hotel's accounting records and verified that these were in accordance with the City's ordinance. 4. We selected a sampie of rental transactions during the review period and for each transaction selected, we verified tax computations and traced the amounts of rental revenues and transient occupancy tax collected to the books and records of the hotel. 5. We reviewed the internal control procedures of the Hotel to determine the following: a. How"gross rents" and "uncollected rents"were accounted for and reported to the City b. What procedures were in place to identify transient and non-transient guests. c. How exemptions, including complimentary rooms, were documented and reported to the City. 6. We reviewed the supporting documentation for exemptions claimed on the transient occupancy tax returns. 7. We inquired how the Hotel handles reservations and payments made on line through a third party such as Expedia.com and how the transient occupancy tax was collected and reported to the City on these transactions. 8. We examined the Hotel's"Transient Occupancy Registration PermiY'and determined whether it was posted in a conspicuous place. 9. We performed additional procedures that we cansidered necessary to venfy the reasonableness of reported revenues of the Hotel operator. See Independent Accountants' Report On Applying Agreed-Upon Procedures 2 OPERATOR#1 , PALM DESER7 SUMMARY OF FINDINGS (Unaudited) 1. Based on our procedures,amounts reported on the return af transient occupancy tax appear to agree with the hotel accounting records. Our re-computations of the tax agree with the amounts paid to the City except for the balances listed below and payments to the City appear to have been made timely. Recomputed Taxes Taxes Owed Paid to Under(Over) Month to the City the City Payments March 2007 $ 22,732.20 $ 22,744.61 $ 12.41 Apri12007 16,638.05 16,691.22 53.17 May 2007 5,968.77 5,974.37 5.60 $ 71.18 Per our inquiry with (Accounting Clerk), these over payments are the result of incorrect computation of the transient occupancy tax. Certain guests were incorrectly assessed a 10%transient occupancy tax instead of the 9°Jo appiicable to the City of Palm Desert. Since the hotel collected more than it should have been, the excess was paid to the City. 2. Per our inquiry with ;Accounting Cierk), Operator#1 does not conduct business with on {ine third parties. All rent payments are collected in full and in advance. See fndependent Accountants' Report On Applying Agreed-Upon Procedures 3 y �. � W 00 00 OJ 00 CO d� CO CO > j ,�' � � �7' � T ty0 0 d N C�O t` I� I� t� h I+ I� r. � � � V ..� �.. ..� v ..� .... � ..� � ' = a U � y3 � r= o � '»3' � � v '- �° � � � � , � , C C�7 M V y � y v � O L E ~ � c�c c a � � x a F� tD V � N f� 00 f� 1� � M t!') M � N M CD N c") �- O � tn O I� O V �ci ai v v �ri �i ri ri ca �ri v (� tp � Q � � (T 1� � e- N N M i� �Y Z O d .0 1�' M O f� tD � �- O M V O O a N f� a V <1' 6) N Cfl � N � <'� N 00 O � r U e^+ e» OW Fm Z � �- W W CO '7 O � h- 00 1� I� UJ M � M � y � (f� U y o N M N O 1� O t!) 6C3 O I� O O � W Z Q k � tf) O] N O� 00 tn N C7 M CO tC) 7 Q• � � QQQ l6 � O � M C') CO � �- N N M i� �' N W I- � M O I� (O O� �- O M rt O O . � y O � _ � � �t � N CD � N e- N 00 O y O g �- � ° o � a JOO �' � � Q � � c = az = o a w � ^ � � r � � � � � V' N �Y N U7 O O O O Q � � � Q N � N I� � N I'� O N O O O � N � ` � C4 ch O� 1� Q� CD M � t� O O C � a/ � ,p C M O I� (�D � ln I� � fD M O y Q � oJ � CO M ch c`� M � O I� CO � Q � Y' % � I� N �t Cfl 'V' � �- ('7 I`� � +- C � � ; (� � V' O N CO CO N .- N aO � y � Q �a �y T a � � � a � z c a a W � ai c Ooo � o z0 00000c� 00000000 � � y � c� ov; c� 00000000 � W � o d� � w ri ui o u�i � c�i r` ui t� a0 t� CO t� h� O f� CO N tn Q a 3 V N �Y .- � �- t� O cV N O O� (O Z W � � t� N f M N � h `- � O N � � � Q y M N N � � Q � r0 � � o. � N it: M CQ (`�! <Y N Lf? �'.,�` �'J' �"�' O O . tn h �1 N I`- O N O O O �.C7 N V n: r� r� �ri t�i c� co o� r� oi r- �ci N .✓ � tC'7 h� 'V' et � M CO O� r (D N � C O N CD N CO M � � � t`') � f0 N () � [t M sY N �- r- EF3 ti t+ A �� r�. r. a+ (J p r, r�" � CS N N C'i p N N � h- �- Q �,,,, O N �N QJ N S`. 'L�, @ cV � p� � o N 'f� � � .L3 � _ ` N N �, � � �� b N � � .Q .� y, C y., J: C1 > U � fd Q1 � CL � ] � � N U O 47 I � :L � Q � "7 � Q � 0 Z � CITY OF PALM DESERT UMITED PROCEDURES REVIEW OF OPERATOR#2 FOR COMPLfANCE WITH TRANSIENT OCCUPANCY TAX ORDINANCE FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 CITY OF PALM DESERT JANURRY 1, 2007 THROUGH DECEMBER 31, 2007 TABLE OF CONTENTS Page Number INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES ........................................................................................................... 1 SUMMARYOF PROCEDURES.............................................................................................................. 2 SUMMARYOF FINDINGS...................................................................................................................... 3 COMPUTATION OF UNDER/OVER PAYMENT OF TRANSIENT OCCUPANCY TAX.........................4 (3r�ndon�Y.Burroas Lance Donald L.Parker S�� Michael K.Chu �avid E.Halc L u n g h a rd .,Prnjevainnal Curpnrulin�� Donald G.Slater �,Lp Kichard K.Kikuchi Certified Pa�blic Accauntants ��"'e� Robert C.Lance I914-1994 Kichurd C.SoU Fred J.I.unghard„ir. 14Z%•144Y INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of the City Counci{ City of Pafm Desert, California We have performed the procedures enumerated herein, which were agreed to by the management of the City of Palm Desert, California (the City) soMely to assist the City in verifying the accuracy of the transient occupancy tax returns submitted by Operator#2 (the Hotel) to the City for the period January 1, 2007 through December 31, 2007. The engagement to apply agreed-upon procedures was performed in accordance with attestation standards estabiished by the American Institute of Certified Pubiic Accountants. The sufficiency of the procedures is solely the responsibility of the management of the City of Palm Desert. Consequently, we make no representations regarding the sufficiency of the procedures described herein either for the purpose for which this report has been requested or for any other purpose. We were not engaged to, and did not perform, an audit of the transient occupancy tax returns of the Hotel,the objective of which would be the expression of a certified opinion on the transient occupancy tax payments made by the Hotei to the City. Accordingty,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 the City. 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 the procedures. However, if this report is made a matter of public record, its distribution wikl not be limited. �, .,,��-� , �'a'�° �� July 18, 2008 r"5 YEr1RS �� 1929 , ;, 2004 �� C� 203!�. F.3rea Blvc3..Suite 2Q3�£�rca,CA 92521-4(156•r714)t�'12-002�•f�.ix f714)h72-r1.331 •www.lsic��i�.cc�nt OPERATOR#2 PALM DESERT SUMMARY OF PROCEDURES (Unaudited) We performed the following procedures on the books and records of Operator#2 (the Hotel), as agreed upon by the management of the City of Palm Desert: 1. We reviewed the City Municipal Code and related ordinances and resolutions related ta transient occupancy tax. 2. We verified the mathematicai accuracy and timeliness of transient occupancy reports filed with the City for the calendar year 2007. 3. We traced the gross revenues reported on the transient occupancy tax returns prepared by the Hotel to gross revenues recorded in the Hotel's accounting records and verified that these were in accordance with the City's ordinance. 4. We selected a sample of rental transactions during the review period and for each transaction selected, we verified tax computations and traced the amounts of rental revenues and transient occupancy tax collected to the books and records of the hotel. 5. We reviewed the internai control procedures of the Hotei to determine the following: a. How"gross rents"and "uncollected rents"were accounted for and reported to the City. b. What procedures were in place to identify transient and non-transient guests. c. How exemptions, including complimentary rooms, were documented and reported to the City. 6. We reviewed the supporting documentation for exemptions claimed on the transient occupancy tax returns. 7. We inquired how the Hotel handles reservations and payments made on line through a third party such as Expedia.com and how the transient occupancy tax was collected and reported to the City on these transactions. 8. We performed additional procedures that we considered necessary to verify the reasonableness of reported revenues af the Hotel operator, See Independent Accauntants' Report On Applying Agreed-Upan Procedures 2 OPERATOR#2 , PALM DESERT SUMMARY OF FINDINGS (Unaudited) 1. Based on our procedures, amounts reported on line 1 of the return of transient occupancy tax for gross rent for occupancy of all rooms appear to agree with the hotePs accounting records, except for the follawing periods: Gross Rent per our Review Gross Rent of the Hotel's Gross Rent Reported by Accaunting (Under)/Over the Hotel Records Reported February 2007 � 6,957.88 � 6,302.96 $ 654.92 November 2007 2,467.00 2,576.00 (109.00) Per our inquiry with the Vice President of Finance &Accounting the variances were the result of clerical errors. 2. Based on the above findings and our re-computations of the tax, the hotel overpaid its transient occupancy tax by$49.13. Payments to the City appear to have been made timely. 3. Based on our inquiry with (Vice President of Finance&Accounting at'company receives rentai revenues plus transient occupancy taxes from online third parties and remit them to the City with the monthly tax returns. See Independent Accauntants'Report On Applying Agreed-Upon Procedures 3 � � N v v�v�v�v v � � � rn rn rn rn � rn rn rn rn R O c ' � m � � � � � � � � � � �� v � � � E � �j c a � � � a� y > C i � i i � i � � � � � � •�+ O � „�� O �. E F- m � �a x = a �» ¢ � � � V t�• �n � �n rn v u� c� c,p r� v Z O (O N � r- O O O CO O Cp � M CO I� f� OD O � � �' � (`V CO n. N d " O N N V (O V N CO N V � r" x 'O � CO O CO N N V M N a U � � Ow � m � Z � WWW � ayi � v� W N u-> r- v oo �r �n r� cfl v r� p, � � Z O G1 0 (p N C' r O O i O (p 00 Cp � .� J Q � � M f� f� f� OO O tY O � O� � G1 a � f" `� � � O (VO Cfl cJ' N t0 N N C1 C7 H1 O a. LL � M � � � a � � Q 0 r C � � F- cfi = O W �"' v � c� � � cvcfl voo 000rn a d � � Qc� d cornornoo 000 �.r3 „ ` � ae= � " ��no � rn � � c�o � � � � C1 0 � }. X N �- M � �- t� �t N Cfl � I� = Q � W C� t4 � •- (£j .- i� N N � C � Q � � Q,'� W �� EA � � a � z c a � W � �, Q ZO °' � � O � � � o � � � � � � � � � � � , O a o � w _ �o p � ap c� a � � o � �- cvct> �- voo 000rn d cornornoo 000u� �. r" N CD O t0 tfJ 1� V" CO N O N y,, tY) O .- Q� tn V' CC� � h� 4i� U o C •- c�, c_ r- ti v r� co �n r. ,,� � �- c9 �- I� N N � � �} r` 1`� h- O i�- � � � h- O O C � O � N O N CV � t� F� �' r, O v � N � � O � � N ..Q N .C� ..Q a a � � � � � p � � � � a � a��i � 'n t6 `^� CII � � � � U O N � ti � d � � -� Qt!} CJ � O z CITY OF PALM DESERT LIMITED PROCEDURES REVIEW OF OPERATOR#3 FOR COMP�IANCE WITH TRANSIENT OCCUPANCY TAX ORDINANCE FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 CITY OF PALM DESERT JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 TABLE OF CONTENTS Page Number INDEPENDENT ACCOUNTANTS' REPORT ON APPl.Y1NG AGREED-UPON PROCEDURES............................................................................................................1 SUMMARYOF PROCEDURES..............................................................................................................2 SUMMARYOF FINDINGS ......................................................................................................................3 COMPUTATION OF UNDER/OVER PAYMENT OF TRANSIENT OCCUPANCY TAX.........................4 �randon W.Burrnws Lance llonald L.Parker 5�� o[ Davhd F,H le U L u n g h a rd ,,1'�rrfrssionnl C'nrporuJirrn Donald G.Slater t„�p Richard K.Kikuchi Certi�ed Public Accourita�nts Het'r°d RaberE C.Lance 19W-1994 Richard C'.Snll �red J.Lunghard,Jr. ivzx-ivyv INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honoreble Mayor and Members of the Gity Council City of Palm Desert, California We have pertormed the procedures enumerated herein, which were agreed to by the management of the City of Palm Desert, California (the City) solely to assist the City in verifying the accuracy af the transient occupancy tax returns submitted by Operator#3 �Hotel}to the City for the period January 1,2007 through December 31, 2007. The engagement to appiy agreed-upon procedures was performed in accordance with attestatian standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the City of Palm Desert. Consequentiy,we make no represe�tations regarding the sufficiency of the procedures described herein either for the purpose for which this report has been requested or for any other purpose. We were not engaged to,and did not pertorm,an audit of the transient occupancy tax returns of the Hotel,the objective of which would be the expression of a certified opinion on the transient occupancy tax payments made by the Hotel to the City. Accordingly,we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that wouid have been reported to the City. This report is infended solely for the use of the City and should nat be used by those who have not agreed to the pracedures and taken responsibility for the sufficiency of the procedures. However, if this report is made a matter of public record, its distribution will not be limited. �, .�� , ��,� �� July 21, 2008 7S�'�;At2S r9�� zoo� V� Fa,C�C.C�IiLE' �O3 ti l3rca Bl�t:l..St�it,,?(13 •F3rc,�.(`A')��+'i-30�(i*�?14)h7�-(1(1�' •Pax �?1-ta h7�-O;;I •��u.�v,ltil as. Lnti OPERATOR#3 , PALM DESERT SUMMARY OF PROCEDURES (Unaudited) We performed the following procedures on the books and records of Operator#3 (the Hotel), as agreed upon by the management of the City of Palm Desert: 1. We reviewed the City Municipal Code and reiated ordinances and resolutions related to transient occupancy tax. 2. We verified the mathematical accuracy and timeliness of transient occupancy reports filed with the City for the calendar years 20d7. 3. We traced the gross revenues reported on the transient accupancy tax returns prepared by the Hotel to gross revenues recorded in the Hotel"s accounting records and verified that these were in accordance with the City's ordinance. 4. We selected a sample of rental transactions during the review period and for each transaction selected, we verified tax computations and traced the amounts of rental revenues and transient occupancy tax coilected to the books and records of the hotel. 5. We reviewed the internal control procedures of the Hotel to determine the fo(lowing: a. How"gross rents"and "uncollected rents"were accounted for and reported to the City. b. What procedures were in place to identify transient and non-transient guests. c. How exemptions, including complimentary rooms,were documented and reported to the City. 6. We reviewed the supporting documentation for exemptions claimed on the transient occupancy tax returns. 7. We inquired how the Hotel handles reservations and payments made on line through a third party such as Expedia.com and how the transient occupancy tax was collected and reported to the City on these transactions. 8. We examined the Hotel's"Transient Occupancy Registration PermiY'and determined whether it was posted in a conspicuous piace. 9. We performed additional procedures that we considered necessary to verify the reasonableness of reported revenues of the Hotel operator. 5ee lndependent Accauntants' Report On Applying Agreed-Upon Procedures 2 OPERATOR#3 , PALM DESERT SUMMARY OF FINDINGS (Unaudited} 1. Based on our proced�res,amounts reported on the return of transient occupancy tax appear tn agree with the hotei accounting records. Our recomputations of the tax agree with the amounts paid to the City and payments to the City appear to have been made timely. 2. Per Director of Rental Operations, Operator#3 does not take reservation through on line third party such as Expedia.cam. See fndependent Accountants' Report On Appiyir�g Agreed-Upon Pracedur�s 3 � d � � c � � ` � � � � � � � , , o � E �' �o �a c a �, � I� h- (fl t`J t(') h O O O W � N O c`') N N � t'") O O tit r- OJ t�. y� � CD t'') CO W N O � CO � N N y O �i' O !� I�- (D N 0.7 O M c*� yf � aa O r CD O N �- r V' I� � � a V � N N � M �--� H3 � f- � � ti Z � Q N N P- !� CD N � I� O O O N � N _ � � e O M N N � M O O V �- N �+ U � � � W M �- CD 00 N O I� CO � N N O d� O 1� t�- <D N � OJ O M M � p .- CO O N .-- �f' f� 67 � �JJ n3 � r- N N � M <- m ~ � F- � 69 W W � N � � fn W Q � fnQ � Q.' � W � 2 u � � � w � � � � ootir- � 00000chcor- � d Jp � �nc� o» oa000 � �ncn � � ...+ 00 � N N tti M O O O cD CO � C O aZ = � c r� 000� rnooc� v � � � a y �-- 0� Q) � O CO O M � � C' � O � (!) � G {Xp Q .r- N N i� M N � � dr' N V .II V W } 0 � Q � H Q N Efl r.+ d W a � d Q 0 W 4.' a0 � � '�, z � � 'Q d � r- rnv <- �n0000aom � Q' OW -> � cqmorncn �n �n4nr. aoc� ya ta. � � � w rn .= cYirnricococDn: ooco m c � � 3 � � oo `r°i_ °' o� � v � vwch � O � � � N h. O � O N � O t1') N CO t� O a a Q � N � CD V N N N CV M c� Z 02 � � Q � rp � � a �.r� cfl .- rn �n0000rzcou� .� N (.� Q7 C+� CO U? t.!') tt'S t�- Ct tfT M C7 00 CD cf) N CO U> CO CO h-� cD CO U N .... r� o r� oaoo �a- r- orn Q C d � 07 h- N tn M h- �.CS fT M f� � d.' n a � N � N tV N N N � t� H9 h` t` I� �'J .-, f�. p O !� r�'..i p .'�w d C7 I`- � � C N N C N N '��,.y' �O p O I� N ,C] N fU QS 0 �, �N � d O C' .L� A g cv i'`3 0 � E °' � E � � U .=. N 4} N � � p 4? N � .Ct � -L.. � � >• d7 C1 .w > U `t lL � 'Q � '� "7 Q U7 � �` C� CITY OF PALM DESERT LIMITED PROCEDURES REVIEW OF OPERATOR#4 FOR COMPLIANCE WITH TRRNSIENT OCCUPANCY TAX ORDINANCE FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 CITY OF PALM DESERT JANUARY 1, 2Q07 THROUGH DECEMBER 31, 2007 TABLE OF CONTENTS Page Number INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREEQ-UPON PROCEDURES............................................................................................................1 SUMMARYOF PROCEDURES..............................................................................................................2 SUMMARYOF FINDINGS ......................................................................................................................3 COMPUTATION OF UNDERlOVER PAYMENT OF TRANSIENT OCCUPANCY TAX.........................4 Brandon W.Burrnws Lance I)onaid L.Parker SOI� Q_ \lichael K.Chu o� David F.Hale Lunghard .,�'�nfrssiona(Cnrpnrorrun Donald G.Slater LLP Richard R.Kikuchi Certif'ied Pieblic Accountants rrer;rPd Robert C.Lance 1914.1�4 Richard C.5011 Fred J.Lunghard,Jr. 192H-1999 INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of the City Council City af Palm Desert, California We have perfarmed the procedures enumerated herein, which were agreed to by the management of the City of Palm Desert, California (the City) solely to assist the City in verifying the accuracy of the transient occupancy tax returns submitted by Operator#4 (the Hotel) to the City for the period January 1, 2007 through December 31, 2007. The engagement to apply agreed-upon procedures was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the City of Palm Desert. Consequently, we make na representations regarding the sufficiency of the procedures described herein either for the purpose for which this report has been requested or for any other purpose. We were not engaged to, and did not perform,an audit of the transient occupancy tax returns of the Hotel,the objective of which wauld be the expression of a certified opinion on the transient occupancy tax payments made by the Hotel to the City. 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 the City. 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 the procedures. However, if this report is made a matter of public record, its distribution wili not be limited. �, ��-� , �'�,� �� ' July 21, 2008 75 YEARS 1929 2004 V�! F '�it'8 ?O3,'�. Brea F31vc1.,Suite?(1.i .E3rea.C'A 9?Yi�l-4(15h•(?14)h72-O(1_'?•F'tax t?Idl(i7�-il"t:;l •}��_w_Isli i£iici>rr� OPERATOR#4 , PALM DESERT SUMMARY dF PROCEDURES (Unaudited) We performed the following procedures on the books and records of Operator#4 (the Hotel), as agreed upon by the management of the City of Palm Deserf: 1. We reviewed the City Municipal Code and related ordinances and resolutians related to transient occupancy tax. 2. We verified the mathematical accuracy and timeliness of transient occupancy reports filed with the City for the calendar years 2007. 3. We traced the gross revenues reported on the transient occupancy tax returns prepared by the Hotel to gross revenues recorded in the Hotel's accounting records and verified that these were in accordance with the City's ordinance. 4. We selected a sample of rental transactions during the review period and for each transaction selected, we verified tax computations and traced the amounts of rental revenues and transient occupancy tax callected to the books and records of the hotel. 5. We reviewed the internal control procedures of the Hotel to determine the following: a. How"gross rents"and "uncoilected rents"were accounted for and reported to the City. b. What procedures were in place to identify transient and non-transient guests. c. Now exemptions, including complimentary rooms, were documented and reported to the City. 6. We reviewed the supparting documentation for exemptions claimed on the transient occupancy tax returns. 7. We inquired how the Hotel handles reservations and payments made on line through a third party such as Expedia.com and how the transient occupancy tax was collected and reported to the City on these transactions. 8. We examined the Hotel's"Transient Occupancy Registration PermiY'and determined�vhether it was posted in a conspicuous place. 9. We performed edditional procedures that we considered necessary to verify the reasonableness of reported revenues af the Hotel operator. See Independent Accauntants' Report On Applying Agreed-Upon Procedures z OPERATOR#4 PALM DESERT SUMMARY OF FINDINGS (Unaudited} 1. Based on our procedures, amounts reported on the return of transient occupancy tax appear to agree with the hatel's accounting records, except for the following periods Gross Rent per our Review Gross Rent of the Hotel's Gross Rent Reported by Accounting (Under)/Over the Hotel Records Reported June 2007 $150,114.03 $ 150,571.03 $ (457.00} 2. Based on the finding above and our independent computation of the transient occupancy tax as shown on page 4 of this report, the hotel has underpaid its transient occupancy taxes by$41.13 for the period January 2007 through December 2007. The applicable penalty and interest computed in accordance to Ordinance 3.28.080 up to August 1, 2008, amount to$20.56 and $4.94 respectively. Therefore, the totai owed to the City as of August 1�' is $66.63 including the underpayment, the penalty and the interest. 3. Per our inquiry with ,the hotel manager,the hotel also conducts business with online third parties such as Expedia.com.The hotel receives the room rate plus the transient occupancy tax from these third parties.The hotel reports and remits the tax to the City when the monthiy returns are filed. 4. The hotel does not have a Transient Occupancy Tax Certificate. See Independent Acco�mtants" Repart On Applying Agreed-Upon Pracedures 3 d N i� � � c`� N CO I� 00 1Jl O �" f") M c'7 S 61 CO e- (D N f� .- i/'J � ("') M1. CV CO �D (O (D W � _ � r � � � � O O Cn M 'V' V' [t � tn CO CD CO CO CA � ro c �n �n �n co �u �o m c� � � cn co co ro � O � R 7 m U � y � c� r� a �n co r� m rn o .- <v v v v > Ey v, w �vmocwrvco Enrnrnrno> t0 `I ,�,�. E 3 � r I � � O O � � N N N M t'7 C' V' V V' V' V 7 « G K O E C � �0 Q � � � v � i� V O 7 ?, O V �t �t V' V V: < <t C t d o � � � � � O O O O Gi O lO O O Q O d O O O y O C ` _ � � N c`7 C' lC3 (O CD G'3 t0 (O (D CO CD (O CO j y � y '- N C") V �l1 t11 ln 1n 1C1 LL� u"� u'1 u7 Ki N M � V' N N tD O O O C O O O O 6 6 O �p q c 3 � � N N N N N N N N N fV N � c a� o E d � m � � a � �, � �o � , , � , � � � � � v v � � , , , � , , U ~ °' � Z o a �n Q N a - � a7 ^ M t�1 C7 M M M C") M t") M (") t7 C") c7 c7 UM y y � � � � � , O W io O a�i v v v v v v v c c v v v c v c �p � E F- E � � � W W U � a cn C h yinw a5 � zo � s ; w , , , � , � , � , , , � � � � o�i � I— V' m O d it � f � � � 1 N O � a` a 0 � ~ � m :° c. aZ = � a �, � a w � � � � � � o n v � cv co �f c� co �- r� v v � �t Q N V tA f�'1 O Q> N Q> h. O> V �- aJ , a 0`d1 a0 '7 O th c0 C CJ t7 00 I� O� (D � a ' N .�. ^ N V � O W f� O n � Q ^ d .a �.' (D N M c0 h � N O O� �n CO � Q7 ~ W � A N C1 f�- � � N C'1 O �- � O L") CO a � , �,,, a N N 7 M N � � N N � � C W � z '� va � � Q c a � W � o � � � N � � N � ^ � da ZO y � v �nchornr� rn � c> v m , , y C p xe mvoc� co .- r� r� ao � aico tn0 � ea ` �n c� v u� o �n m r� o .- n � 2' F � cC� tV c� W u� O? o� o rn �n co � W R 7 N N V' M N � � � � � N � a o 0 O = F � F- t- � O M 4 fD N C7 !") (D O t� N N 1� O 6� O� cO O O I� N N �t7 c- v a6t' � c�o �n c�.� o � � v c�-> � o N � � � � � , � , � � � C /� � N f�- .-- �Cl O QJ h- M M u': O X d " 6'> N � O N � �fi N r- I� U 6} � O ("l Q' M N � � � .�- N CO W H M � N 4 O O O C O O O O .0 O . � 0 � � � � � � � , � � � � . , , � � ' m tl r� � U 1+ tn C'S � � � � Q OV9 M V CO N Ch M t(: t� i� N U1 f� O :7> C> CO C1 � I�- N N �I'� — V � � �U cD � V c0 h. 7 M �," 4 V' �N .. , . � � � � �� y G h- s+7 V' �ti o OY C1 t�'S (O �t5 p .� r- O; aC t�"1 O CV �- � N �- f�- � 6 N � �0 h ^ � � F M cD o� (7 �"') ^'J V c") N N N ., M I r" i�• I� t� ,."'^�. n O d � � C� p n t� N C� N N � ,�-, t0 � C O �p � ^ �" � y �J .� G• �:A � � "�` � N . 0 G� r� O j N D � .L .�Q �, '��' ' � � O O O� � ctf O � O � OJ � '.. j P. V O v � fC � ` N N � {V � 4! .� �11 Ci C� ` �' • � m a°i `° n m � i� �r a�i � a a�i m v m a m � > > -> u.. � Q `� -s -± Q :n O Z G� � � � C � -; � d CITY OF PALM DESERT LIMITED PROCEDURES REVIEW OF OPERATOR#5 FOR COMPLIANCE W ITH TRANSfENT OCCUPANCY TAX ORDINANCE FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 CITY OF PALM DESERT JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 TABLE OF CONTENTS Page Number INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES............................................................................................................ 1 SUMMARYOF PROCEDURES..............................................................................................................2 SUMMARYOF FINDINGS ......................................................................................................................3 COMPUTATION OF UNDER/OVER PAYMENT OF TRANSIENT OCCUPANCY TAX.........................4 Brandon��'.Burrows Lance Donald L.Parker C�"O�' & '�tichael K.Chu Lunghard n��E.Hale .1 Prrrfe�a�i.onalCnrpnranon Bonald G.Slater LLP Richard K.Kikuchi Certified Priblic Accoacntants x�rrred Robert C.I,ance ��ia-iv�ia Richard C.Soll E'red J.Lunghard.,tr. tv2x-�vvv INDEPENDENT ACCOUNTAN7S' REPORT ON APPLYING AGREED-UPON PROGEDURES To the Honorable Mayor and Members of the City Council City of Palm Desert, California We have performed the procedures enumerated herein, which were agreed to by the management of the City of Palm Desert, California (the City} so{ely to assist the Citv in verifying the accuracy of the transient occupancy tax returns submitted by Operator#5 (the Hotel) to the City for the period January 1, 2007 through December 31, 2007. The engagement to apply agreed-upon procedures was perFormed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the City of Palm Desert. Consequently, we make no representations regarding the sufficiency of the procedures described herein either for the purpose for which this report has been requested or for any other purpose. We were not engaged to,and did not perform,an audit of the transient occupancy tax returns of the Hotel,the objective of which would be the expression of a certified opinion on the transient occupancy tax payments made by the Hotel to the City. 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 the City. 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 the procedures. However, if this report is made a matter of public record, its distribution will not be limited. �, .��-� , �'�°� �� July 15, 2oas 75 �'E:1KS � _�,..,x .,. Ig29 2004 V� Fx['�x.cFsliCe ?(l:? N. E3rea Bivd.. Suitc ?O? •Firra.(`=l 9^�i2I��1t);f�•(71�ti h?�-(}i)?? •1'ax(?l l)��?'_ 0�:31 •ti�_�w�,w. cici a5.cum OPERATOR#5 , PALM DESERT SUMMARY OF PROCEDURES (Unaudited) We performed the following procedures on the books and records of Operator#5 (the Hotel), as agreed upon by the management of the City of Paim Desert: 1. We reviewed the City Municipal Code and related ordinances and resolutions related to transient occupancy tax. 2. We verified the mathematical accuracy and timeliness of transient occupancy reports filed with the City for the calendar years 2007. 3. We traced the grass revenues reported on the transient occupancy tax returns prepared by the Hotel to gross revenues recorded in the Hotel's accounting records and verified thaf these were in accordance with the City's ordinance. 4. We selected a semple of rental transactions during the review period and for each transaction selected, we verified tax computations and traced the amounts of rental revenues and transient occupancy tax coliected to the books and records of the hotel. 5. We reviewed the internal controi procedures of the Notel to determine the following: a. How"gross rents"and"uncoilected rents"were accounted for and reported to the City. b. What procedures were in piace to identify transient and non-transient guests. c. How exemptions, including complimentary rooms, were documented and reported to the City. 6. We reviewed the supporting documentation for exemptions ciaimed on the transient occupancy tax returns. 7. We inquired how the Hotel handles reservations and payments made on line through a third perty such as Expedia.com and how the transient occupancy tax was coflected and reported to the City on these transactions. 8. We performed additional procedures that we considered necessary to verify the reasonabieness of reported revenues of the Hotel operator. See Independent Accountants' Report On Applying Agreed-Upon Procedures 2 OPERATOR#5 , PALM DESERT SUMMARY OF FINDINGS (Unaudited) 1. Based on our procedures, amounts reported on the return of transient occupancy tax appear to agree with the hotel accounting records. Our recomputations of the tax agree with the amounts paid to the City and payments to the City appear to have been made timely. 2. Per our inquiry with our contact person at Operator#5 , the hotel provides timeshare exchange by selling exeess room inventory and does not do business with third party on line reservation companies such as Expedia,com. 5ee fndependent Accauntants" Report On Applying Agreed-Upon Procedures 3 � m � .. , , � . , , � � � , � , O � d � � m � �° a c � � vcD � .- �- o � � oocva� rn r� o �n c� r� �r w n o c� o co � � rn � � ct� � a � v � � o � � � = � (h Ch +- OD O O C`7 r N � O Ri fSy V � C3 I� � O N N N O N V � F- (L N M M �t ct V M � N N � � H � ti V O Z O Q N a' ^ N � CO O(7 e- O � d' N N C� !T � M C1 v t� O � N f� � (D f� O N O CD V Q_' � °� �1' � CO I� tn 00 00 N N O � V V,J � � � t� tC) Cfl (D O tn d' 00 00 O tf') � Q m �- M M .- CO O O C'7 c- N � O Rf � � M h- � O N N N O N �t tn WZ W O O N M M �t V� rt M ch N CV .- � N Q W U F' Efl � d � W a � aQ2 � G�i a � C9 � � � � a` u- O � O Q' O C`') M N I� N !� .- N � O> «+ C F = y oc+� c�? incacflc� r� �- .- coco � pa Z ~ � C 00 CO � � a0 N � � N � O�d N � � � W O X G� M I� O O h- M C'J �t tn CO N Q � � � p N � �t � lf') tn �t CD (� � tf� I� CD r. O Q N F- � �n M �n co ca �n r> v r. ca N '�! �t �t d' '� Ch M N N �- '�'' � � a � � � a� W W � d C O O � � � z °' 0 � °i � c a Z 0 .c o � � � � � � � � � � , � c°'i c � � 3 � � O 0 W o � z0 W a p � — _ a ~ � � � o aLL �L O M M N h� N I� .- Ci� Q) p) Q O C`? M t.!) lD CO CL) I� r r W CO V u7n �ritr �.ricflaocvricirnrn yr.+ 00 (O 07 N 00 N .-- tn N CO cil tV C c'7 h O e- O h. r'7 c*7 et if'i (1� N � � V' � � tC7 CO P- � tfl f+- C6 t� � �' N � M � Cp CD tf') C7 �' i� lS) C�1 V rf' d' �I' �ct M M N N � Efl r` 1'� h� t� � �� G7 � � t� O O C7 w O N h� � ` Q N N � h �"` �.. Q fU N ��,. O � `N OQ O 0 p N 1] ` � � � @ � L N N N � in � � � � O � �i � �C � -�i -�i Q V1 0 Z 0 CITY OF PALM QESERT LIMITED PROCEDURES REVIEW OF OPERATOR#6 FOR COMPLIANCE W ITH 7RANSIENT OCCUPANCY TAX ORDINANCE FOR THE PERIOD JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 CITY OF PALM DESERT JANUARY 1, 2007 THROUGH DECEMBER 31, 2007 TABLE OF CONTENTS Page Number INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES............................................................................................................1 SUMMARYOF PROCEDURES..............................................................................................................2 SUMMARYOF FINDINGS......................................................................................................................3 COMPUTATION OF UNDER/OVER PAYMENT OF TRANSIENT OCCUPANCY TAX.........................4 E3randon 11'.Qurrows Lance Donald L.Parker SO" D_ titichael K.Chu a� David F..Hule Lu n g h a rd ,Professinnal Cerrpnradnrt Uonald G.Slater LLP Rirhard T{.Kikuchi Ccjrtified Public Accor�ntants Ketired Robert C.Lance iv�a.ivvt Richard C.Soll Fred J.Lunghard.Jr. ivzs-ivvv INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of the City Councii City of Palm Desert, Celifornia We have perfarmed the procedures enumerated herein, which were agreed to by the management of the City of Palm Desert, California (the City) solely to assist the Citv in verifying the accuracy of the transient occupancy tax returns submitted by Operator#6 (the Notel) to the City for the period January 1, 2007 through December 31, 2007. The engagement to apply agreed-upon procedures was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the management of the City of Palm Desert. Consequently, we make no representations regarding the sufficiency of the procedures described herein either for the purpose for which this report has been requested or for any other purpose. We were not engaged to,and did not perform,an audit of the transient accupancy tax returns of the Hotel,the objective of which would be the expression of a certified opinion on the transient occupancy tax payments made by the Notei to the City. 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 the City. This report is intended solely for the use of the City and shouid not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures. However, if this report is made a matter of pubiic record, its distribution wili not be limited. �, .��.� , ��,� .� ��.� July 21, 2008 "r5�'f;AR5 rg29 200¢ Q�J �XC�C�fit:(, ?t)i?�i. E�rea Blvd.. St�ite 2Ui•Bre,t.(':1�J2H21-�k()5(i+(714i h7� 00?? •F��x t71-li Fi7'�-t):;�t •w_ww..l,it��<i�.cuiTi OPERATOR#6 , PALM DESERT SUMMARY OF PROCEDURES (Unaudited) We performed the following procedures on the books and records of Operator#6 _ (the Hotei), as agreed upon by the management of the City of Palm Desert: 1. We reviewed the City Municipai Code and related ordinances and resolutions related to transient occupancy tax. 2. We verified the mathematical accuracy and timeliness of transient occupancy reports filed with the City for the calendar years 2d07. 3. We traced the gross revenues reported on the transient occupancy tax returns prepared bythe Hotel to gross revenues recorded in the Hotel's accounting records and verified that these were in accordance with the City's ordinance. 4. We selected a sampie of renta! transactions during the review period and for each transaction selected, we verified tax computations and traced the amounts of rental revenues and transient occupancy tax collected to the books and records of the hotel. 5. We reviewed the internal control procedures of the Hotel to determine the following: a. How"gross rents"and "uncollected rents"were accounted for and reported to the City. b. What procedures were in place to identify transienf and non-transient guests. c. How exemptions, incfuding complimentary rooms, were documented and reported to the City. 6. We reviewed the supporting documentation for exemptions c{aimed on the transient occ�pancy tax returns. 7. We inquired how the Hotel handles reservations and payments made on line through a third party such as Expedia.com and how the transienf occupancy tax was collected and reported to the City on these transactions. 8. We examined the Hotei's"Transient Occupancy Registration Permit"and determined whether it was posted in a conspicuous place. 9. We performed additional procedures that we considered necessary to verify the reasonableness of reported revenues af the Notel operator. See lndependent Accountants' Report On Applying Agreed-Upon Procedures 2 OPERATOR#6 PALM DESERT' SUMMARY OF FINDINGS (Unaudited} 1. Based on our procedures,amounts reported on the return of transient occupancy tax appear to agree with the hotel's accounting records, except for the foilowing period: Gross Rent per our Review Gross Rent of the Hotel's Gross Rent Reported by Accounting (Under)/Over the Hote4 Records Reported Period 7-2007 $ 2,659,807.00 $ 2,654,683.46 � 5,123.54 Per our inquiry with Assistant Controiler, the amount originally reported on the retum incorrectly included the parking gate revenue. This happened at the time the hotel installed the gate and first started to charge for parking. 2. Based on the above findings and our recomputations of the tax, the hotel overpaid its transient occupancy tax to the City by$461.12 as shown on page 4 of this report. Payments to the City have been made timely. 3. Per our inquiry with , Assistant Controiler, the hotel does take on line third party reservations.The revenues along with the taxes are reported based on the rate the hotel charges the third party. 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