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HomeMy WebLinkAboutIndependent Accounts Report - Measure A Transportation Fund FYE 06/30/2011CITY 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, 2011 DATE: April 26, 2012 SUBMITTED BY: Paul S. Gibson, Finance Director CONTENTS: Independent Accountants' Report on Agreed -Upon Procedures 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, 2011. Committee Recommendation The Audit, Investment and Finance Committee received the Independent Accountants' Report at their April 24, 2012 meeting, and it was recommended that the report for the fiscal year ended June 30, 2011 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. Macia, Gini & O'Connell, LLP, 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, 2011. 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, 2011. G:Tinanceftamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2011\SR - Council audit 2011 Measure A.docx Staff Report Approval of Report on Procedures for Measure A Fund for Fiscal Year ended June 30, 2011 April 26, 2012 Page 2 of 2 Fiscal Impact There is no fiscal impact associated with this action. Submitted by: Approval: Paul S. Gibson o n . Wohlmuth Finance Director/City Treasurer Ci y Manager CITY COUNCIL ACTION APPROVED _._._., DENIED RECEIVED_ Fi IPr —OTHER MEETING DATE C t AYES:- �scn.��nFr� NOES: N Cnr ABSENT: Nwc, ABSTAIN: _ N cn!� VERIFIED BY.--- ko1-1 i-a Original on File with City Clerk's Office G:\Finance\Niamh Ortega\Staff Reports�Audit staff reports\Audit Staff Reports 2011\SR - Council audit 2011 Measure A.docx Certifted Public Accountants. Ssa<,.e 3d. yin « No Out i^ ,0 , a " ! vti #�¢S�r "c 5+-.�=`<-(�.� � {',c� - N,a a Poq F3t^s O - °>ia:4 i ,vy, The Board of Commissioners Riverside County Transportation Commission Riverside, California Independent Accountant's Report On Applying Agreed -Upon Procedures mgocpa.com, 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, 2011. 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 these 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. Our procedures and findings are as follows: We obtained 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). Finding: No exceptions were noted as a result of applying this procedure. Furthermore, the City participates in the TUMF program administered by the CVAG. We obtained the City's approved Five -Year Capital Improvement Plan (CIP) from RCTC for the fiscal year ended June 30, 2011. Finding: No exceptions were noted as a result of applying this procedure. We obtained a detailed general ledger and balance sheet from the City for the fiscal year ended June 30, 2011. a. We identified the amount of Measure A cash and investments recorded at June 30, 2011. Finding: The City recorded Measure A cash and investments in the amount of $20,078,640 as of June 30, 2011. b. We identified amounts due from other funds. Finding: There was no amount due from other funds as of June 30, 2011. ()(X) Sit^.. 5 �121 N C ; 3 is N1.. "'Or, 'a 144, Ste vt 2029 i.,,,r ,vy P,,rk %nt 1?1V5 4:S�s��. x';4i�,sr: i, t �5 :"104) y:.a� Sth 7 m? , °� to NW silty U0 Suite T ISQ .irszr re•:**utn t n(r,sa C:we 4,, r',xb, Iles, S&I CA 9T,silt 6 !,.'e to 3., 96 CA. °i�X 67 CA 92660 CA W 1,4S t. 4. C. We identified reservations or designations of ending fund balance for the Measure A activity. Finding: The City reported the following fund balances related to Measure A activity as of June 30, 2011. Reserved for street construction and improvements $ 20,361,592 d. We identified the existence of any restatement of Measure A fund balance and inquired of management as to the reason for any restatement. Finding: The City has not restated Measure A fund balance. We obtained an operating statement for the Measure A activity for the fiscal year ended June 30, 2011 (see Exhibit A), including budget amounts. a. We reviewed the revenues in the operating statement. i. 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, 2011 and documented what the total revenues were for the fiscal year. Finding: The City accounts for Measure A revenues received from RCTC in its Measure A Fund (Fund # 213). The City has recorded total revenues in the amount of $3,000,737 for the fiscal year ended June 30, 2011. ii. We obtained a listing of Measure A payments made from RCTC to the City. We compared the Measure A revenues recorded by the City to the listing of payments made by RCTC. Finding: We identified the following variance between the Measure A revenues recorded by the City in comparison to the RCTC Measure A payment schedule. Measure A payments made by RCTC $ 2,061,817 Measure A revenues recorded by City 1,875,080 Variance $ 186,737 Per management, subsequent to June 30, 2010, RCTC calculated a clean-up adjustment reducing the 2010 allocation by $123,406. The City had already closed its 2010 accounting records when the $123,406 adjustment was finalized, thus the adjustment was reported as a reduction to its 2011 allocation. The RCTC payment schedule that totals $2,061,817 does not include the $123,406 clean-up adjustment. Further, additional allocation and payment for 2011 of $63,331 was made after the City has already closed its 2011 accounting records, thus, the payment was recorded in 2012. The RCTC payment schedule that totals $2,061,817 includes the $63,331 additional allocation. iii. We determined the amount of interest allocated to the Measure A activity for the fiscal year ended June 30, 2011. Finding: The City allocated interest in the amount of $123,196 in the Measure A Fund for the year ended June 30, 2011. 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, 2011. Finding: The City accounts for Measure A expenditures in its Measure A Fund (Fund # 213). The City has recorded total Measure A expenditures in the amount of $864,272 for the fiscal year ended June 30, 2011. ii. We judgmentally selected at least 20% of the total Measure A expenditures for testing. Finding: The City recorded Measure A expenditures in the amount of $864,272. We selected $359,316 (41.6%) for testing. 1. For the expenditures selected for testing, we compared the dollar amount recorded in the general ledger to the supporting documentation. Finding: No exceptions were noted as a result of this procedure. 2. For the expenditures selected for testing, we reviewed the Five -Year CIP and noted whether the projects claimed were included in the Five -Year CIP and whether they constitute allowable costs. Finding: The expenditures selected for testing were included in the Five -Year CIP and were allowable costs. No exceptions were noted as a result of applying these procedures. iii. We inquired of management as to the nature of any transfers recorded in the Measure A Fund. Finding: Per discussions with management, there were no transfers recorded for the fiscal year ended June 30, 2011. iv. We inquired of management as to the amount of indirect costs, if any, included in expenditures. Finding: Per discussions with management, there were no indirect costs recorded for the fiscal year ended June 30, 2011. Gel 7 We compared the budgeted expenditures to actual amounts and inquired of management as to the nature of significant budget variances. Finding: The following schedule compares the budgeted expenditures to actual amounts. Construction and Maintenance Budget $ 27,905,841 Actual $ 864,272 Variance $ 27,041,569 Per management, the City indicated that it is required in the early stages of its projects to accumulate 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. We obtained a listing of jurisdictions who participate in the Western County or Coachella Valley TUMF programs from ROTC. a. If the jurisdiction is a participant in the TLTMF program, we selected one disbursement for validation as to the amount remitted to WRCOG or CVAG, as applicable. Finding: We selected one sample with an amount of $3,675. The payments selected for testing indicated that TUMF is collected and remitted to CVAG, as required. b. We noted the total amount of TUMF fees collected and remitted during the fiscal year ended June 30, 2011. Finding: The total amount of TUMF fees collected and remitted during the fiscal year ended June 30, 2011 were $269,770 and $250,774 respectively. The balance of $18,996 was due to CVAG as of June 30, 2011. 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. Finding: 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. Finding: The City is not a participant in the Western County MSHCP program. C. We noted the total amount of Western County MSHCP fees collected and remitted during the fiscal year. Finding: 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. Finding: No exceptions were noted as a result of applying this procedure. b. We compared the amount of discretionary funds spent per the Street Report to the MOE base requirement. Finding: No exceptions were noted as a result of applying this procedure. 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. Finding: MOE activity is summarized as follows: MOE excess at July 1, 2010 $ 120,211,183 Current year local discretionary expenditures 4,688,794 Less: MOE base year requirement 904,798 Excess MOE for fiscal year ended June 30, 2011 3,783,996 MOE excess at June 30, 2011 $ 123,995,179 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 Board of Commissioners of the RCTC and the City and is not intended to be and should not be used by anyone other than this specified party. aft.. ,( 0 i Z e to Newport Beach, California December 15, 2011 Exhibit A CITY OF PALM DESERT Operating Statements For the Fiscal Year Ended June 30, 2011 (Unaudited) Revenues: Measure A Reimbursements from other agencies Interest Total revenues Construction and maintenance Excess (deficiency) of revenues over (under) expenditures Budizet $ 1,800,000 $ 11,841,390 250,000 13,891,390 Actual Variance 1,875,080 $ 75,080 1,002,461 (10,838,929) 123,196 (126,804) 3,000,737 (10,890,653) 27,905,841 864,272 27,041,569 $ (14,014,451) $ 2,136,465 $ 16,150,916