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Home My Public Portal AboutAudit Standing Committee - Minutes - 2014-09-05 (June 30, 2014 Financial Audit)CITY OF TEMPLE CITY ENTRANCE CONFERENCE JUNE 30, 2014 FINANCIAL AUDIT Date: September 05, 2014 (11:00 a.m.) Vasquez & Co. Team • Gilbert Vasquez, Managing Partner • Peggy McBride, Engagement Partner • Cristy Canieda, Quality Control Partner • Mark Siegfried, Audit Manager • Arlene Pingul, Audit Supervisor • Marcy Caragan, IT Supervisor • Jack Bautista, Audit Senior City of Temple City Audit Committee • Tom Chavez, Mayor Pro -tem • Vincent Yu, Councilmember • Steve Carron, Planning Commission Member ATTACHMENT A Finance Team • Donald E. Penman, City Manager • Tracey Hause, Administrative Services Director • Lee Ma, Accountant Engagement Objectives, as Outlined in Engagement Letter dated April 24, 2014 • Express an opinion on the City's financial statements • Meet the requirements of the Single Audit Act through: expression of opinion on the City's compliance with Federal laws and regulations and grantor -specific requirements (the Single Audit) reporting on our evaluation of the City's internal control systems over the administration of Federal grant awards • Meet the requirements of Generally Accepted Governmental Auditing Standards through: • reporting on our testing of the City's compliance with laws and regulations that could have a material effect on the financial statements reporting on our consideration of the City's internal control systems over financial reporting • Express an opinion on the City's compliance with AQMD requirements • Report on procedures performed to test compliance with the GANN limit • Prepare the State Controller's Reports for the City and the Financing Authority • Identify and communicate in a Management Letter opportunities for enhanced internal controls, economies, efficiencies and effectiveness as noted during the conduct of the engagement. Vasquez Deliverables • City's Comprehensive Annual Financial Report {CAFR) • Single Audit Reports and related filings with the Federal agencies • State Controller's Report (City and Financing Authority) • AQMD Compliance Report, if applicable • GANN Limit Report • Management Letter, if applicable • Written Communications to those Charged with Governance regarding the planned scope and timing of the audit and, after completion of the audit, the audit results (SAS 114) Areas of Audit Emphasis • New initiatives, programs, major commitments or identified areas of financial/legal risk occurring during FY 2014 • Changes in the City's control environment (e.g., management, structure, internal control systems, personnel policies, code of conduct, Audit Committee activities and charter, etc.) • Related Party Transactions, if any • Fund Balance (Net Position) classifications • Interfund transfers • Citywide — new grants,leases, bond issues or other funding sources • Successor Agency — significant transactions between the City and Successor Agency New GASB Pronouncements Effective FY 13-14 • Statement 66 —Amendment of GASB 10 and 62 —not effective for FY 2014 • Statement 67 — Financial Reporting for Pension Plans— not applicable to the City • Statement 68 —Accounting and Financial Reporting for Pensions — not effective for FY 2014 • Statement 69 —Government Combinations and Disposals of Government Operations — not effective for FY 2014 • Statement 70—Accounting and Financial Reporting for Nonexchange Financial Guarantees Scope and Fieldwork Timing (including Reporting)—see attached timeline • Financial Statements —Auditors' Reports and completion of the CAFR • Single Audit Reports • AQMD, if applicable • State Controller Reports Fraud -related Audit Procedures • Discussion of the consideration of fraud in a financial statement audit • The Board and Management's views regarding the risks of fraud (concerns, role in mitigating fraud risk, directions to and interactions with management regarding controls to mitigate against fraud) • Fraud inquiries with governing body and City Manager. Other Matters • Senate Bill No. 341: Additional legislation relating to redevelopment requiring Successor Housing Entities to submit an independent financial audit of the entity's Low and Moderate Income Housing Asset Fund to its governing body by December 31st on an annual basis. • No separate report necessary if CAFR is issued by December 31"t • Status of interim fieldwork and any observation —see attached status report • Areas of concern or emphasis requested by the Council or Management, if any Concluding Comments/Discussion CITY OF TEMPLE CITY INTERIM AUDIT - STATUS OF INTERNAL CONTROL TESTING FY2013-2014 Compliance Areas % completed Pending ItemsMork Results of Testing Planned Corrective Action Cash Receipts Testing 1006/0 Completed No exceptions noted. Cash Disbursements Testing 100% Completed No exceptions noted. Payroll Testing 100% Completed No exceptions noted. Investment Compliance Concentration of Credit The City is in the process of Risk: Per Investment Testing implementing the following Policy, the authorized limit corrective actions:(a) Refrain from in negotiable Certificate of making any new investments in Deposits is only 30% of negotiable certificates of deposits total investments. During (b) when an NCD matures, the our audit, we noted that the reinvestment of the proceeds is City had investments in either in another type of investment 100% Completed negotiable certificates of instrument or utilized for liquidity deposits that were in purpose, and (c) sell current excess of the 30% limit NCD's in the portfolio prior to (Quarter ending September maturity at par or at a small gain. 2013 and March 2014). Moreover, for the succeeding months (Le,, April 2014 onwards) the percentages are well within the State limit. Bid Testing 100% Completed No exceptions noted. Budget Testing 100 % Completed No except noted. Related Party Testing 100% Completed No exceptions noted. Appropriations Limit /Gann Testing 100% Completed No- exceptions noted. CITY OF TEMPLE CITY AUDIT TIMELINE Description Responsiblity Scheduled Date Interim Fieldwork V & Cc Completed Entrance Meeting V & Co/City 9/5/2014 Final fieldwork V & Co 9/8/2014 Final TB and all audit schedules provided to Vasquez & Company (see request list for final fieldwork) City 9/8/2014 End of fieldwork V & Co 9/26/2014 Filing of State Controller's Report V & Cc 10/17/2014 CAFR worksheets provided to the City V & Co 11/7/2014 Preliminary draft Single Audit Report provided to the City V & Co 11/17/2014 MD&A and Statistical Section provided to V& Co. City 11/17/2017 Preliminary draft financial statements and footnotes (CAFR) provided to the City V & Co 11/24/2014 Exit conference V & Co/City TBD Review notes and changes to the CAFR provided to V & Co. City 12/5/2014 Final review of the CAFR V & Co/City 12/5/2014 Original signed management representation letter City 12/12/2014 Final CAFR V & Cc 12/12/2014 Final Single Audit Report V & Co 12/12/2014 Presentation to Audit Committee and/or City Council "7& Cc TBD * We will provide the CAFR worksheets in advance to provide the city sufficient timeto work on MD&Aand statistical section.