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HomeMy WebLinkAboutIndependent Accountants' Report - Measure A - Transportation FundCITY OF PALM DESERT FINANCE DEPARTMENT STAFF REPORT REQUEST: RECEIVE AND FILE THE INDEPENDENT ACCOUNTANTS' REPORT ON AGREED -UPON PROCEDURES PERFORMED ON THE MEASURE A TRANSPORTATION FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2010 DATE: July 14, 2011 SUBMITTED BY: Paul S. Gibson, Finance Director CONTENTS: Independent Accountants' Report on Agreed -Upon Procedures Performed on the Measure A Transportation Fund for the Fiscal Year Ended June 30, 2010 Recommendation By Minute Motion, that the City Council receive and file the Independent Accountants' Report on Agreed -Upon Procedures Performed on the Measure A Transportation Fund for the Fiscal Year Ended June 30, 2010. Committee Recommendation The Audit, Investment and Finance Committee received the Independent Accountants' Report at their June 28, 2010 meeting, and it was recommended that the report for the fiscal year ended June 30, 2010 be received and filed by the City Council. Background The Measure A Fund is a special revenue fund that was created to keep track of funds received by the Riverside County Transportation Commission. In 1988, Riverside County voters approved a half cent sales tax, known as Measure A, to fund a variety of highway improvements, local streets and roads maintenance, commuter assistance and specialized transit projects. Mayer Hoffman McCann PC, CPA, performed the procedures which were agreed to by the Riverside County Transportation Commission, Riverside, California (RCTC) solely to assist RCTC with respect to an evaluation of the City of Palm Desert's Measure A Transportation Fund and degree of the City's compliance with RCTC requirements for the year ended June 30, 2010. Mayer Hoffman McCann PC, CPA, finished their field work on October 25, 2010. We have corresponded with the auditors and RCTC staff regarding the delay of the final report as detailed in the attached e-mails. No reason was given for their delay in producing the report. G TinanceW iannh Ortega\Staff ReporWAudit staff reports\Audit Staff Reports 2010\SR -Council audit 2010 Measure A.docx Staff Report Approval of Report on Procedures for Measure A Fund for Fiscal Year ended June 30, 2010 July 14, 2011 Page 2 of 2 Staff requests that the Council receive and file the Independent Accountants' Report on Agreed -Upon Procedures Performed on the Measure A Transportation Fund for the Fiscal Year Ended June 30, 2010. Fiscal Impact There is no fiscal impact associated with this action. Submitted by: Approval: �9� 1/1/' C P ul S. Gibson, Finance Director/City Treasurer o n . Wohlmuth, City Manager CITY COUNCIL ACTION APPROVED DENTED RECEIVED 0 OTHER MEEI'll DATE , _ �— AYES: T tnl.Y - NOES: y1j� ABSENT: ABSTAIN:-' VERIFIED BY: Original on File with City Clerk G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR - Council audit 2010 Measure A.docx Mayer Hoffman McCann P.C. An Independent CPA Firm 2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com May 26, 2011 Mr. Jose Luis Espinoza, Assistant Finance Director City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260-2578 RE: FINAL MEASURE A REPORTS Dear Mr. Espinoza: Enclosed is a bound copy of the following final reports: ➢ City of Palm Desert , California— Report on Agreed -Upon Procedures Applied to the Measure A Local Streets and Roads Program Should you have any questions or need additional information, please give me a call at (949) 474-2020. Sincerely, - V Sam Perera, CPA, CFE Senior Manager Enclosures ,cihrtrof;' e, ;trr; i crretior 3l -, ,'L;i eJi eCaoik of )r.lp'Iid,:i,jce_. �t Ft !;rrr CITY OF PALM DESERT, CALIFORNIA Report on Agreed -Upon Procedures Applied to the Measure A Local Streets and Roads Program Year Ended June 30, 2010 Mayer Hoffman McCann P.C. An Independent CPA Firm Mayer Hoffman McCann P.C. An Independent CPA Firm 2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com Board of Commissioners Riverside County Transportation Commission Riverside, California INDEPENDENT ACCOUNTANTS' REPORT ON APPLYING AGREED -UPON PROCEDURES We have performed the procedures enumerated below, which were agreed to by the Riverside County Transportation Commission (RCTC), solely to assist RCTC in determining whether the City of Palm Desert, California (City) was in compliance with the Measure A Local Streets and Roads Program grant terms and conditions for the year ended June 30, 2010. The City's management is responsible for the accounting records. This agreed -upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of those parties specified in the report. Consequently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested or for any other purpose. The procedures performed and the results of those procedures were as follows: We reviewed the 2009 Measure A (Ordinance 02-001) compliance requirements. Western County jurisdictions are required to participate in the Transportation Uniform Mitigation Fee (TUMF) program and in the Multi -Species Habitat Conservation Plan (MSHCP), which are administered by the Western Riverside Council of Governments (WRCOG) and the Western Riverside County Regional Conservation Authority (RCA), respectively. Coachella Valley jurisdictions are required to participate in the TUMF program administered by the Coachella Valley Association of Governments (CVAG), Results: No exceptions were noted as a result of our procedures. 2. We obtained the City's approved Five -Year Capital Improvement Plan (CIP) from RCTC for the fiscal year ended June 30, 2010. Results: No exceptions were noted as a result of our procedures. 3. We obtained a detailed general ledger and balance sheet from the City for the fiscal year ended June 30, 2010. a. We identified the amount of Measure A cash and investments recorded at June 30, 2010. Member of Kreston International - a global network of independent accounting firms Board of Commissioners Riverside County Transportation Commission Riverside, California Results: The City recorded Measure A cash and investments in the amount of $17,537,845 as of June 30, 2010. b. We identified amounts due from other funds. Results: There were no amounts due from other funds as of June 30, 2010. C. We identified reservations or designations of ending fund balance for the Measure A activity. Results: The City reported the following fund balances related to Measure A activity as of June 30, 2010. Reserved for encumbrances $ 253,986 Reserved for continuing appropriations 17,971,141 Total fund balance $18.225.127 d. We identified the existence of any restatement of Measure A fund balance and inquired of management as to the reason for any restatement. Results: The City has not restated the Measure A fund balance. 4. We obtained an operating statement for Measure A activity for the fiscal year ended June 30, 2010 (see Exhibit A), including budget amounts. a. We reviewed the revenues in the operating statement. We inquired of management as to what fund is used to record Measure A revenues received from RCTC for the fiscal year ended June 30, 2010, and documented what the total revenues were for the fiscal year. Results: The City accounts for Measure A revenue received from RCTC in its Measure A Fund (Fund #213). The City has recorded total revenues in the amount of $3,499,967 for the fiscal year ended June 30, 2010. We obtained a listing of Measure A payments made from RCTC to the City. We compared the Measure A revenue recorded by the City to the listing of payments made by RCTC. Results: We identified the following variance between the Measures A revenues recorded by the City in comparison to the RCTC Measure A payment schedule. K If Board of Commissioners Riverside County Transportation Commission Riverside, California Measure A payments made by RCTC $1,959,635 Measure A revenue recorded by City 2,110,411 Variance $U0.7761 The variance was a result of the following: Net adjustment and clean-up payment as calculated by RCTC $(123,405) June 2009 allocation recorded by City in 2009-10 (21,476) 2008-09 clean-up payment recorded by City in 2009-10 (18,401) 1989 closeout payment recorded by City in 2010-11 12,506 Variance $(150.776) iii. We determined the amount of interest allocated to the Measure A activity for the fiscal year ended June 30, 2010. Results: The City allocated interest in the amount of $302,571 to the Measure A activity for the fiscal year ended June 30, 2010. b. We reviewed the expenditures in the operating statement. i. We inquired of management as to what fund is used to record Measure A expenditures and what the total expenditures were for the fiscal year ended June 30, 2010. Results: The City accounts for Measure A expenditures in its Transportation/Measure A Fund (Fund #213). The City has recorded total Measure A expenditures in the amount of $455,284 for the fiscal year ended June 30, 2010. ii. We judgmentally selected at least 20% of total Measure A expenditures for testing. Results: The City recorded Measure A expenditures in the amount of $455,284. We selected $112,796 (24.77%) for testing. 1. For the expenditures selected for testing, we compared the dollar amount recorded in the general ledger to the supporting documentation. Results: No exceptions were noted as a result of our procedures. t l� Board of Commissioners Riverside County Transportation Commission Riverside, California I 2. For the expenditures selected for testing, we reviewed the 5-Year CIP and noted whether the projects claimed were included in the 5-Year CIP and whether they constitute allowable costs. Results: The expenditures selected for testing were included in the 5-year CIP and were allowable costs. No exceptions were noted as a result of our procedures. iii. We inquired of management as to the nature of any transfers recorded in the Measure A Fund. Results: Per discussions with management and our review of the costs recorded in the general ledger, there were no transfers recorded for the fiscal year ended June 30, 2010. iv. We inquired of management as to the amount of indirect costs, if any, included in expenditures. Results: Per discussions with management and our review of the costs recorded in the general ledger, there were no indirect costs recorded for the fiscal year ended June 30, 2010. 5. We compared the budgeted expenditures to actual amounts and inquired of management as to the nature of significant budget variances. Results: The following schedule compares the budgeted expenditures to actual amounts. Budget Actual Variance Construction $ 2.711.125 $4$ $22,255,841 The City indicated that it is required in the early stages of its projects to amass the funds and cannot proceed to the subsequent stages until the funds are on hand. Therefore, there will be significant carryovers each year. The average life of a capital improvement project is greater than five years necessitating the carryover of the secured funding. 6. We obtained a listing of jurisdictions who participate in the Western County or Coachella Valley TUMF programs from RCTC. a. If the jurisdiction is a participant in the TUMF program, we selected at least two disbursements for validation as to the amount remitted to WRCOG or CVAG, as applicable. Results: The payments selected for testing indicated that TUMF is collected and remitted to CVAG, as required. 4 Board of Commissioners Riverside County Transportation Commission Riverside, California b. We noted the total amount of TUMF fees collected and remitted during the fiscal year. Results: The total amount of TUMF fees collected and remitted during the fiscal year ended June 30, 2010 were $222,405 and $213,218 respectively. The balance of $9,187 was due to CVAG as of June 30, 2010. 7. We obtained a listing of jurisdictions who participate in the Western County MSHCP program from RCTC. a. If the jurisdiction is a participant in the Western County MSHCP program, we selected at least one disbursement for validation as to the amount remitted to RCA. Results: The City is not a participant in the Western County MSHCP program. b. We inquired with management as to the existence of any fees collected in prior years and not remitted to RCA at the end of this fiscal year. Results: The City is not a participant in the Western County MSHCP program. C. We noted the total amount of MSHCP fees collected and remitted during the fiscal year. Results: The City is not a participant in the Western County MSHCP program. 8. We obtained the maintenance of effort (MOE) base year requirement from RCTC. a. We obtained a copy of Schedule 3 from the annual Street Report. Results: No exceptions were noted as a result of our procedures. b. We compared the amount of discretionary funds spent per the Street Report to the MOE base requirement. Results: No exceptions were noted as a result of our procedures. C. Using the prior year's report, we added any current year MOE excess or deducted any current year MOE deficiency to the prior year carryover. Results: MOE activity is summarized as follows: 5 Board of Commissioners Riverside County Transportation Commission Riverside, California MOE excess at July 1, 2009 $115,769,030 Current year local discretionary expenditures 5,346,951 Less: MOE base year requirement (904,798) Excess MOE for fiscal year ended June 30, 2010 4,442,153 MOE excess at June 30, 2010 $ 20,211,183 We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion on the accounting records. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the Riverside County Transportation Commission and is not intended to be and should not be used by anyone other than this specified party. ILT- �Jj' A-�' Irvine, California October 25, 2010 0 EXHIBIT A CITY OF PALM DESERT, CALIFORNIA Summary of Revenues and Expenditures Year Ended June 30, 2010 (Unaudited) Budget Actual Variance Revenues: Measure A $ 2,102,000 $ 2,110,411 $ 8,411 Reimbursements from other agencies 14,428,616 1,086,985 (13,341,631) Interest 237,000 302,571 65,571 Total revenues Expenditures: Construction Total expenditures Excess (deficiency) of revenues over (under) expenditures 16,767,616 3,499,967 (13,267,649) 22,711,125 455,284 22,255,841 22,711,125 455,284 22,255,841 $ (5,943,509) $ 3,044,683 $ 8,988,192 Note: The above numbers were taken directly from the financial records of the City of Palm Desert and were not audited. 7 � C)� =S = %� E 7G = =mEn5 o¥�J < /�3 «/(m o02 / ]U) g emwCr s $ � a3 %< e7 b/ \� & _f� 2 ®ƒ q :3 \u \ / / k g=3© LL k a « b k CL LU S \ / § ƒ } El ■ LS IV, E k E 6 \ � $ � < 7 < £ % 4 m Q \ }� / o >. / k� k �/ \ 25 4\© k « f §CL �12 D � m e 5§ 2\ m(_ E 8< -0- �� @m «�E n �§ °/ \�\ CO mc CL $=t �0 3�\E2{ gE� k f\$ 2 2 M A N 0WW f&@£oc �2/ 2k�d\$ oE±ECE / �$ . k m / E % k\7 © ® R c u � / t ° « � } k J �v t ai > U.U) �a U) co E 0 \ E U R 0) � E k A / D 7 cam' o 7 c 7 / o § k ® > G b Q_ 9 a 0 0 CZ k- I C3 - 0k c 2 m (N ��CLUW¢/ k .= b 0 / >-N t ® E (z ce) 2 a 2 e � m m()06 DLL a � % \/ 2/ /\ E e §\ ko �\ /E c (D e- =I o» k\ 0E k/ 2E 33 \k �u £3 2E k/ /\ /ca \ @� k� �I mg \\ k 2§ ¥5 e S kk w \( cn cn/ EE �\ §% ___ �e 6§ o� _U) \-E 2k $- «� a0 ca CIS � j /% % CO m a= 70 00 �s 2k \ �t 77 \W �\ ± » .- S � % »o E2 // & ®� co o f §\ b7 E2t, 2Z5 ca e = Et eta 6 Cf3 Eƒ !E = 9 m � \ CD 0 \} �k) (t° _®$ §§ @E_ \ � = z; =f m-- F— <a� E d c c ro U U QS E E O ¢ 2 0— �U CIS m U) c O Q U_ (D cd � O o C Q CD C -_ N U a) t L � Rf J L J CO a) U = L (n N ai U m L rn c o �y �a EM a) c0 O (Da a � c _ m � o a, as d) L 7 CZ c E — a) mcn L L a3 c E .N � 0 L .0 CO0 E.2 O C t. 7 cti E c E E U E L 0 0 N