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Home My WebLink AboutAudit Rprt - Special Gas Tax St Imprvmnt Fund CITY OF PALM DESERT FINANCE DEPARTMENT Staff Report REQUEST: RECEIVE AND FILE THE STATE CONTROLLER'S AUDIT REPORT ON THE SPECIAL GAS TAX STREET IMPROVEMENT FUND FOR THE PERIOD OF JULY 1, 2007 THROUGH JUNE 30, 2008 DATE: JUNE 22, 2010 CONTENTS: STATE CONTROLLER'S AUDIT REPORT ON THE SPECIAL GAS TAX STREET IMPROVEMENT FUND FOR THE PERIOD OF JULY 1, 2007 THROUGH JUNE 30, 2008 Recommendation By Minute Motion, that the City Council receive and file the audit report on the Special Gas Tax Street Improvement Fund for the period of July 1, 2007 through June 30, 2008. Committee Recommendation The Audit, Investment and Finance Committee received the State Controller's Audit Report on the City's Special Tax Street Improvement Fund for the period of July 1, 2007 through June 30, 2008 at its regular meeting of June 22, 2010, and recommends that the report be received and filed by the City Council. Backqround The State apportions funds monthly from the highway users tax account in the transportation tax fund to cities and counties for the construction, maintenance, and operation of local streets and roads. The highway users taxes derive from state taxes on the sale of motor vehicle fuels. In accordance with Article XIX of the California Constitution and Streets and Highways Code section 2101, a city must deposit all apportionments of highway users taxes in its Special Gas Tax Street Improvement Fund, and must expend gas tax funds only for street-related purposes. The State Controller's Office audited the City's Special Gas Tax Street Improvement Fund for the period of July 1, 2007 through June 30, 2008. They also audited the Traffic Congestion Relief Fund allocations recorded in the Special Gas Tax Street Improvement Fund for the period of July 1, 2003 through June 30, 2008. The audit disclosed that the City accounted for and expended its fund in compliance with requirements, and that no adjustment to the fund is required. G:\Finance\Niamh Ortega\Staff ReportsWudit staff reportsWudit Staff Reports 2009\DR-Council Special Gas Tax Street Improvement Fund for YE June 30 2008.docx � , Staff Report Audit Report— Special Gas Tax Street Improvement Fund June 24, 2010 Page 2 of 2 Fiscal Impact � There is no fiscal impact resulting from this action. Submitted by: Approval: ;� � Paul S. Gibson, Finance Director/City Treasurer J hn M. Wohlmuth, City Manager C[TY COiJNCILACTION AI'I'Rt)VF,D 9)�:1�'IF,I) RrCTIVEI� � F� �- OTHE;iZ M�;f'TIN(. DATE -��-��'/U A�'[:s: ��svnf F�r^��uso rKe�,7.��i�T�; Fir��r y ]!'()6?�: _N t�vl� � AI3SENT: N�'n�- A��STAIN: ti �ne- V[;RIIatF;i) d3Y:- �� I-Q Ori�inal on F'i1e with City Clcrk's Office G:\Finance\Niamh Ortega\Staff ReportsWudit staff reportsWudit Staff Reports 2009\DR-Council Special Gas Tax Street Improvement Fund for YE June 30 2008.docx CITY OF PALM DESERT � Audit Report SPECIAL GAS TAX STREET IMPROVEMENT FUND July 1, 2007, through June 30, 2008 � THE CO O �uREKA � Nj' � �� V < 4 f o � �� * � � . : � �j, .y� .,, 2 9� � �� Q F .. �F CA�� JOHN CHIANG California State Controller May 2010 ,. ` Nf • ~�1 .� !� C ]OHN CHIANG (1��tlifurnitt �ttTtE �D2ttxDI�PT May 19, 2010 _ The Honorable Cindy Finerty Mayor of the City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260-2578 Dear Mayor Finerty: The State Controller's Office audited the City of Palm Desert's Special Gas Tax Street Improvement Fund for the period of July 1, 2007, through June 30, 2008. We also audited the Tr�c Congestion Relief Fund(TCRF) allocations recorded in the Special Gas Tax Street Improvement Fund for the period of July 1, 2003,through June 30, 2008. Our audit disclosed that the city accounted for and expended its Special Gas Tax Street Improvement Fund in compliance with requirements, and that no adjustment to the fund is required. If you have any questions,please contact Steven Maz, Chief, Local Government Audits Bureau, at(916) 324-7226. Sincerely, Y V. BROWNFIELD hief,Division of Audits JVB/sk cc: Paul S. Gibson, Director of Finance City of Palm Desert City oJPalm Desert Specinl Gos Tiu Strtet lmpraveniutt Fund Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective,Scope, and Methodolog,y................................................................................. 1 Conclusion.......................................................................................................................... 2 Follow-Up on Prior Audit Findings................................................................................. 2 Views of Responsible Official.....:..................................................................................... 2 RestrictedUse.................................................................................................................... 2 Schedule 1—Reconciliation of Fund Balance...................................................................... 3 City of Palm Desert Special Gas Tax Street Improvement Fund � Audit Report . Summary The State Controller's Office audited the City of Palm Desert's Special Gas Tax Street Improvement Fund for the period of July 1, 2007,through June 30, 2008. We also audited the Traffic Congestion Relief Fund (TCRF) allocations recorded in the Special Gas Tax�treet Improvement Fund for the period of July l,2003,through June 30,2008. Our audit disclosed that the city accounted for and expended its Special Gas Tax Street Improvement Fund in compliance with requirements, and that no adjustment to the fund is required. BaCkgPoutld The State apportions funds monthly from the highway users tax account . in the transportation tax fund to cities and counties for the construction, maintenance,and operation of local streets and roads. The highway users taxes derive from state taxes on the sale of motor vehicle fuels. In accordance with Article XIX of the California Constitution and Streets and Highways Code section 2101, a city must deposit all apportionments of highway users taxes in its Special Gas Tax Street Improvement Fund. A city must expend gas tax funds only for street-related purposes. We conducted our audit of the city's Special Gas Tax Street Improvement Fund under the authority of Government Code section 12410. Government.Code section 14556.5 created a Traffic Congestion Relief Fund in the State Treasury for allocating funds quarterly to cities and counties for street or road maintenance, reconstruction, and storm damage repair. Cities must deposit funds received into the city account designated for the receipt of state funds allocated for transportation purposes. The city recorded its TCRF allocations in the Special Gas Tax Street Improvement Fund. We conducted our audit of the city's TCRF allocations under the authority of Revenue and Taxation Code section 7104. Objective, Scope, Our audit objective was to determine whether the city accounted for and and Methodology expended the Special Gas Tax Street Improvement Fund in compliance with Article XIX of the California Constitution, the Streets and Highways Code, and Revenue and Taxation Code section 7104. To meet the audit objective,we determined whether the city: • Properly deposited highway users tax apportionments and other appropriate revenues in the Special Gas Tax Street Improvement Fund; • Expended funds exclusively for authorized street-related purposes; and � Made available unexpended funds for future expenditures. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to -1- City ojPalm Desert Special Gns Tnx Street Improventtnt F'und provide a reasonable basis for our findings and conclusions based on ow audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on ow audit objectives. We did not audit the city's financial statements. We limited our audit scope to planning and performing the audit procedures necessary to obtain reasonable assurance that the city accounted for and expended the Special Gas Tax Street Improvement Fund in accordance with the requirements of the Streets and Highways Code and Revenue and Taxation Code section 7104. Accordingly, we examined transactions, on a test basis, to determine whether the city expended funds for street purposes. We considered the city's internal controls only to the extent necessary to plan the audit. CoIlClusion Our audit disclosed that the City of Palm Desert accounted for and expended its Special Gas Tax Street Improvement Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code for the period of July 1,2007,through June 30,2008. Our audit also disclosed that the city accounted for and expended its TCRF allocations recorded in the Special Gas Tax Street Improvement Fund in compliance with Article XIX of the California Constitution, the Streets and Highways Code, and Revenue and Taxation Code section 7104 for the period of July 1,2003,through June 30,2008. FOIIOW-Up on Prior Our prior audit report, issued on September 5, 2003, disclosed no Audit Findings findings. VIeWS Of We discussed the audit results with city representatives during a phone Responsible exit conference on April 8, 2010. Jose Luis Espinoza, Assistant Finance Director,agreed with the audit results. Mr.Espinoza further agreed that a �fflClal draft audit report was not necessary and that the audit report could be issued as final. Restricted Use This report is intended for the information and use of the City of Palm Desert and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report,which is a matter of public record. JEFFREY V. BROWNFIELD Chief, Division of Audits May 19,2010 -2- City of Pa/m Desert Special Gas Tax Street Irnprovement Fund Schedule 1— Reconciliation of Fund Balance July 1, 2007, through June 30, 2008 Special Gas Tax Street Improvement Fund Highway Users Tax TCRF Allocation � Allocation 2 Totals Beginning fund balance per city $ 86,149 $ — $ 86,149 Revenues 920,764 — 920,764 Total funds available 1,006,913 — 1,006,913 Expenditures 925,823 — 925,823 Ending fund balance per city 81,090 — 81,090 SCO adjustment — — — Ending fund balance per audit $ 81,090 $ — $ 81,090 � The city receives apportionments from the state highway users tax account, pursuant to Streets and Highways Code sections 2105,2106,2107, and 2107.5. The basis of the apportionments for sections 2105,2106, and 2107 varies, but the money may be used for any street purpose. Streets and Highways Code section 2107.5 restricts apportionments to administration and engineering expenditwes, except for cities with populations of fewer than 10,000 inhabitants.Those cities may use the funds for rights-of-way and for the construction of street systems. Z Government Code section 14556.5 created a Traffic Congestion Relief Fund (TCRF) in the State Treasury for allocating funds quarterly to cities and counties for street and road maintenance,reconstruction, and storm damage repair. The TCRF allocations were recorded in the Special Gas Tax Street Improvement Fund. The audit period was July 1,2003,through June 30,2008. -3- State Controller's Office Division of Audits Post Office Boz 942850 Sacramento,CA 94250-5874 � http://www.sco.ca.gov C09-GTA-045