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Home My Public Portal About07) 7D Audit Reports for Fiscal Year 2017-18AGENDA ITEM 7.0. ADMINISTRATIVE SERVICES DEPARTMENT DATE: TO: FROM: MEMORANDUM February 19 , 2019 The Honorable City Council Bryan Cook, City Manager /1/J Via: Susan Paragas, Administrative Services Directo f1( · Bx: Lee Ma, Accountant SUBJECT: AUDIT REPORTS FOR PROPOSITION A, PROPOSITION C, MEASURER, . TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 AND MEASURE M FOR FISCAL YEAR (FY) 2017-18 RECOMMENDATION: The City Council is requested to receive and file FY 2017-18 Proposition A, Proposition C, MeasureR, Transportation Development Act Article 3 and Measure M Audit Reports. BACKGROUND: 1. Effective July 1, 1982, Proposition A, passed by the electorate, increased the County Sales Tax by one-half cent to provide for public transportation projects. Twenty-five percent of these funds are allocated to municipalities based on population. Cities have the year of receipt plus three additional years to expend the funds. 2. Effective November 6, 1990, Proposition C, again passed by the electorate, increased the County Sales Tax by one-half cent to provide funds for public transportation projects . Twenty percent of these funds are allocated to municipalities based on population . Cities have the year of receipt plus three additional years to expend the funds. 3 . Effective November 4, 2008, MeasureR, approved by the electorate, increased the County Sales Tax by one-half cent to provide for public transportation projects. Fifteen percent of these funds are allocated to municipalities based on a per capita ba,sis. Cities have the year of receipt plus three additional years to expend the funds . 4 . Effective November 8, 2016, Measure M, approved by the electorate, increased the County Sales Tax by one-half cent to provide for public transportation projects . Seventeen percent of these funds are allocated to municipalities based on a per capita basis . Cities have the year of receipt plus three additional years to expend the funds. City Council February 19,2019 Page 2 of 3 5. In October 2018, the firm of Simpson & Simpson LLP conducted field work for the annual audits of Proposition A, Proposition C, Measure R, Transportation Development Act Article 3 and Measure M. A separate audit of the City of Temple City's Proposition A, Proposition C, Measure R, Transportation Funds and Measure R is required on an annual basis by an independent audit firm (Simpson & Simpson LLP) contracted and hired by the Los Angeles County Metropolitan Transportation Authority. 6. On January 18, 2019, the City received the final audit (Attachment "A") from Simpson & Simpson LLP. ANALYSIS: The City is in compliance with all requirements of the Los Angeles County Metropolitan Transportation Authority's Funding and Allocation Guidelines. The following reports are presented for your review. Proposition A During FY 2017-18, the City received a total of $767,792 in revenues for Proposition A funds which includes bus pass sales revenues of $73,388 and interest income of $12,926. The total expenditures for FY 2017-18 were $740,309. The City of Temple City utilized Proposition A funds for the following items: • Special Service Paratransit; • Recreation Transit; • Bus Shelter Maintenance; • Bus Pass Subsidy; • Portion of San Gabriel Valley Council of Governments Membership (60%); and • Direct Administration. Proposition C During FY 2017-18, the City received $583,167 of revenues for Proposition C which also includes interest income of $16,824. FY 2017-18 expenditures for Proposition C were $203,442 for the Temple City Boulevard Upgrade and Safety Improvements. MeasureR The City received a total of $429,439 in revenues for Measure R funds which includes interest income of $6,059. The expenditures for MeasureR were $750,000 for the Street Resurfacing per the Pavement Management Plan Project in FY 2017-18. City Council February 19,2019 Page 3 of 3 Transportation Development Act Article 3 Transportation Development Act Article 3 provides for construction of pedestrian and bicycle facilities including ADA wheelchair ramps. The City requested a $62,351 draw down from the Transportation Development Act Article 3 fund reserve in May 2018 to be used for FY 2018-19 Sidewalks and Curbs Ramps ADA improvements Project. There were no expenditures during FY 2017-18. Measure M The City received a total of $385,056 in revenues for Measure M funds which also includes interest income of $1,377. The expenditures for MeasureR were $186,845 for the Street Resurfacing per the Pavement Management Plan Project in FY 2017-18. CITY STRATEGIC GOALS: The City Council is requested to receive and file the Proposition A, Proposition C, Measure R, Transportation Development Act Article 3 and Measure M Audit Reports for the year ending June 30, 2018 to further City's Strategic Goal to promote Good Governance. FISCAL IMPACT: This agenda item does not have a fiscal impact on the FY 2018-19 City Budget. ATTACHMENT: A. Annual Financial Report of Proposition A, Proposition C, Measure R, Transportation Development Act Article 3 and Measure M Funds CITY OF TEMPLE CITY ANNUAL FINANCIAL REPORT OF THE PROPOSITION A LOCAL RETURN FUND PROPOSITION C LOCAL RETURN FUND MEASURER LOCAL RETURN FUND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND FOR THE FISCAL YEARS ENDED JUNE 30, 2018 AND 2017 AND MEASURE M LOCAL RETURN FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2018 ATTACHMENT A Metro Simpson & Simpson, LLP Certified Public Accountants FINANCIAL SECTION Independent Auditor's Report Proposition A Local Return Fund: Financial Statements: Balance Sheets CITY OF TEMPLE CITY TABLE OF CONTENTS Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information: Schedule of Expenditures-Actual and Metro Approved Project Budget Schedule of Capital Assets Proposition C Local Return Fund: Financial Statements: Balance Sheets Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information: Schedule of Expenditures-Actual and Metro Approved Project Budget Schedule of Capital Assets MeasureR Local Return Fund: Financial Statements: Balance Sheets Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information: Schedule of Expenditures-Actual and Metro Approved Project Budget Schedule of Capital Assets Measure M Local Return Fund: Financial Statements: Balance Sheet Statement of Revenues, Expenditures and Change in Fund Balance Supplementary Information: Schedule of Expenditures-Actual and Metro Approved Project Budget Schedule of Capital Assets Transpotiation Development Act Article 3 Fund: Financial Statements: Balance Sheets Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information: Schedule ofTranspotiation Development Act Allocation for Specific Projects Notes to Financial Statements Independent Auditor's Report on Internal Control Over Financial Repotting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards PAGE 3 4 5 6 7 8 9 10 II 12 I3 14 I5 16 17 18 19 20 21 22 26 COMPLIANCE SECTION CITY OF TEMPLE CITY TABLE OF CONTENTS (Continued) Independent Auditor's Repmt on Compliance Compliance Matrix Schedule of Findings and Recommendations EXIT CONFERENCE 11 28 30 34 35 FINANCIAL SECTION SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNT ANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MElBA W. SIMPSON, CPA Independent Auditor's Report To the Honorable Members of the City Council of the City of Temple City, California and the Los Angeles County Metropolitan Transpottation Authority Report on the Financial Statements U.S. BANK TOWER 633 WEST 5TH STREET, SUITE 3320 LOS ANGELES, CA 90071 {213) 736-6664 TELEPHONE (213) 736-6692 FAX www.simpsonandsimpsoncpas.com We have audited the accompanying financial statements of the Proposition A Local Return Fund (PALRF), Proposition C Local Return Fund (PCLRF), Measure R Local Return Fund (MRLRF), and Transportation Development Act Article 3 Fund (TDAA3F) (collectively, the Funds), of the City of Temple City, California (the City) as of and for the years ended June 30, 2018 and 2017, and Measure M Local Return Fund (MMLRF) (the Fund) of the City of Temple City, California (the City) as of and for the year ended June 30,2018, and the related notes to the financial statements, as listed in the table of contents. Management's Responsibility for tlte Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Atulitor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the PALRF, PCLRF, MRLRF and TDAA3F of the City of Temple City, California, as of June 30,2018 and 2017, and MMLRF of the City of Temple City, California, as of June 30, 2018, and the respective changes in their financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 2, the financial statements present only the PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F of the City and do not purpoti to, and do not, present fairly the financial position of the City of Temple City, California, as of June 30, 2018 and 2017, and the changes in its financial position for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. S upplementWJ' lt~formation Our audits were conducted for the purpose offonning opinions on each of the Funds' financial statements. The accompanying supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required pmt of the financial statements. The supplementaty information is the responsibility of management and was derived fi·om and relates directly to the underlying accounting and other records used to prepare the Funds' financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and cettain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the Funds' financial statements or to the Funds' financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In om opinion, the supplementary information is fairly stated, in all material respects, in relation to each of the Funds' financial statements as a whole. Other Reporting Required by Govemment Auditing Standards In accordance with Government Auditing Standards, we have issued our report dated October 31, 2018, on our consideration of the City's internal control over the Funds' financial reporting and on our tests of its compliance with cettain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over the Funds' financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over the Funds' financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over the Funds' financial repotting and compliance. Los Angeles, California October 3 I, 20 18 2 CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND BALANCE SHEETS June 30 2018 ASSETS Cash and investments $ 984,420 $ Accounts receivable 7,227 Total assets $ 991,647 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 101,212 $ Total liabilities 101,212 Fund Balance Restricted 890,435 Total fund balance 890,435 Total liabilities and fund balance $ 991,647 $ The accompanying notes are an integral patt ofthe financial statements. 3 2017 922,649 922,649 59,697 59,697 862,952 862,952 922,649 CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June 30 REVENUES Proposition A Project generated revenue (Note 8) Interest income Total revenues EXPENDITURES Various projects Total expenditures Excess of revenues over expenditures Fund balance at beginning of year $ 2018 681,478 73,388 12,926 767,792 740,309 740,309 27,483 862,952 $ Fund balance at end of year $ 890,435 $ The accompanying notes are an integral patt of the financial statements. 4 2017 661,923 87,486 944 750,353 683,605 683,605 66,748 796,204 862,952 Project Code !30-0 I !40-02 !70-04 250-03 270-02 480-05 CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET For the Fiscal Year Ended June 30, 20I8 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 20I7) 20!8 Variance Metro Favorable Project Name Budget Actual (Unfavorable) Special Service Paratransit $ 485,000 $ 477,246 $ 7,754 $ Recreational Transit 50,000 60,674 Bus Shelter Maintenance I6, I4 7 8,920 User-Side Subsidy I22, !80 94,606 San Gabriel Valley Council of I 0,300 !0,720 Governments Membership Direct Administration 80,490 88,I43 Total expenditures $ 764, Il7 $ 740,309 See accompanying independent auditor's report. 5 (!0,674) 7,227 27,574 (420) (7,653) $ 23,808 $ 20!7 Actual 4!6,560 48, !02 7,752 Il4,769 I0,274 86,!48 683,605 Date Acquired None CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS June 30,2018 Description Balance 7/1/2017 Additions Deletions Balance 6/30/2018 $ _______ $ _______ $ _______ $ ______ _ Total $ $ $ $ ====== ====== See accompanying independent auditor's report. 6 CITY OF TEMPLE CITY PROPOSITION C LOCAL RETURN FUND BALANCE SHEETS June 30 2018 ASSETS Cash and investments $ 1,387,568 $ Total assets $ 1,387,568 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ $ Total liabilities Fund Balance Restricted I ,387,568 Total fund balance 1,387,568 Total liabilities and fund balance $ 1 ,3 87,568 $ The accompanying notes are an integral part of the financial statements. 7 2017 1,007,843 1,007,843 1,007,843 1,007,843 1,007,843 CITY OF TEMPLE CITY PROPOSITION C LOCAL RETURN FUND STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June 30 REVENUES Proposition C Interest income Total revenues EXPENDITURES Temple City Boulevard Upgrades and Safety Improvements Total expenditures Excess of revenues over expenditures Fund balance at beginning of year $ 2018 566,343 $ 16,824 583,167 203,442 203,442 379,725 1,007,843 2017 547,945 484 548,429 548,429 459,414 Fund balance at end of year $ 1,387,568 $ ==1~,0;;,;0;,;,7;,;;,8~43~ The accompanying notes are an integral patt of the financial statements. 8 Project Code 440-0 I 440-02 CITY OF TEMPLE CITY PROPOSITION C LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET For the Fiscal Year Ended June 30,2018 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 20 17) 2018 Variance Metro Favorable Project Name Budget Actual (Unfavorable) Temple City Boulevard Upgrades and $ 629,790 $ 203,442 Safety Improvements Street Resurfacing per Pavement Management Plan (Phase 4) 600,000 Total expenditures $ 1,229,790 $ 203,442 See accompanying independent auditor's report. 9 $ 426,348 $ 600,000 $ 1,026,348 $ 2017 Actual Date Acquired None CITY OF TEMPLE CITY PROPOSITION C LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS June 30,2018 Description Balance 7/1/2017 Additions Deletions Balance 6/30/2018 $ _______ $ _______ $ ______ $ ______ _ Total $====$ $ $==== See accompanying independent auditor's repmt. 10 CITY OF TEMPLE CITY MEASURE R LOCAL RETURN FUND BALANCE SHEETS June 30 2018 ASSETS Cash and investments $ 575,970 $ Total assets $ 575,970 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ $ Total liabilities Fund Balance Restricted 575,970 Total fund balance 575,970 Total liabilities and fund balance $ 575,970 $ The accompanying notes are an integral patt of the financial statements. 11 2017 896,531 896,531 896,531 896,531 896,531 CITY OF TEMPLE CITY MEASURER LOCAL RETURN FUND STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June 30 2018 REVENUES MeasureR $ 423,380 $ Interest income 6,059 Total revenues 429,439 EXPENDITURES Various projects 750,000 Total expenditures 750,000 Deficiency of revenues under expenditures (320,561) Fund balance at beginning of year 896,53 I Fund balance at end of year $ 575,970 $ The accompanying notes are an integral part of the financial statements. 12 2017 411,885 4,068 415,953 845,158 845,158 (429,205) 1,325,736 896,531 Project Code 1.05 1.05 CITY OF TEMPLE CITY MEASURER LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET For the Fiscal Year Ended June 30,2018 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2017) 2018 Variance Metro Favorable Project Name Budget Actual (Unfavorable) Street Repair and Maintenance $ 750,000 $ 750,000 Repaving of Streets per Reassessment Pavement Management Total expenditures $ 750,000 $ 750,000 See accompanying independent auditor's rep011. 13 $ $ $ $ 2017 Actual 845,158 845,158 Date Acquired None CITY OF TEMPLE CITY MEASURE R LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS Description June 30, 20 I 8 Balance 7/l/2017 Additions Deletions Balance 6/30/2018 $ ______ $ _______ $ ______ $ ______ _ Total $===$ $ $==== See accompanying independent auditor's report. 14 ASSETS CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND BALANCE SHEET June 30 Cash and investments Total assets LIABILITIES AND FUND BALANCE Liabilities Accounts payable Total liabilities Fund Balance Restricted Total fund balance Total liabilities and fund balance $ $ $ 2018 198,211 198,211 198,211 198,211 $ ==;,;! 9,;;;8,;;;2,;,;1 I;., The accompanying notes are an integral pa1t of the financial statements. 15 CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE REVENUES Measure M Interest income Total revenues EXPENDITURES For the Fiscal Year Ended June 30 Street Resurfacing per Pavement Management Plan Total expenditures Excess of revenues over expenditures Fund balance at beginning of year $ 2018 383,679 1,377 385,056 186,845 186,845 198,211 Fund balance at end of year $ ===1~98~,2;,;1 ~I The accompanying notes are an integral part of the financial statements. 16 Project Code 1.05 CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF EXPENDITURES ACTUAL AND METRO APPROVED PROJECT BUDGET For the Fiscal Year Ended June 30, 2018 2018 Metro Project Name Budget Actual Street Resurfacing per Pavement Management Plan $ 178,048 $ Total expenditures $ 178,048 $ See accompanying independent auditor's report. 17 186,845 186,845 Variance Favorable (Unfavorable) $ (8, 797) $ (8,797) Date Acquired None CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS June30, 2018 Description Balance 7/1/2017 Additions Deletions Balance 6/30/2018 $ ______ $ ________ $ ______ $ ______ _ To tal $ $ $ $ ===== ====== See accompanying independent auditor's repott. 18 ASSETS CITY OF TEMPLE CITY TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND (PURSUANT TO PUBLIC UTILITIES CODE SECTION 99234) BALANCE SHEETS June 30 2018 2017 Due from Metro $ $ 62,351 $---- Total assets LIABILITIES AND FUND BALANCE Liabilities Accounts payable Total liabilities Fund Balance Restricted Total fund balance Total liabilities and fund balance $ $ 62,35 I $ 62,351 * 62,351 $ 62,35 I $ *Since the unspent fund balance of $62,351 is a receivable from Metro as of June 30, 2018, the City is not required to return the ending fund balance of $62,351 to Metro to be placed on reserve for the City. The accompanying notes are an integral pat1 of the financial statements. 19 CITY OF TEMPLE CITY TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June 30 2018 2017 REVENUES TDA3 $ 62,351 $ ----- Total revenues EXPENDITURES Construction/Maintenance Total expenditures Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year * 62,351 62,351 $ 62,351 $ ===== * Since the unspent fund balance of $62,351 is a receivable from Metro as of June 30, 2018, the City is not required to return the ending fund balance of $62,351 to Metro to be placed on reserve for the City. The accompanying notes are an integral pa1t of the financial statements. 20 Project Description Local allocations CITY OF TEMPLE CITY TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND SUPPLEMENTARY INFORMATION SCHEDULE OF TRANSPORTATION DEVELOPMENT ACT ALLOCATION FOR SPECIFIC PROJECTS For the Fiscal Year Ended June 30,2018 Program Unexpended Year Allocations Expenditures Allocations Sidewalk and Curb Ramp ADA Improvement Project 2017-18 $ 62,351 $ $ 62,351 Total Fund balance at beginning of the year Fund balance at end of year $ 62,351 $===== $ ==::;6,;,2 ';;;,3 5;,;1~ * *Since the unspent fund balance of$62,351 is a receivable from Metro as of June 30,2018, the City is not required to return the ending fund balance of $62,351 to Metro to be placed on reserve for the City. See accompanying independent auditor's rep01t. 21 Project Status Ongoing CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2018 and 2017 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fund Accounting The operations of the Proposition A Local Return Fund (PALRF), Proposition C Local Return Fund (PCLRF), Measure R Local Return Fund (MRLRF), Measure M Local Return Fund (MMLRF), and Transportation Development Act Atticle 3 Fund (TDAA3F) (collectively, the Funds) are accounted for in separate sets of self-balancing accounts that comprise their assets, liabilities, fund balance, revenues and expenditures. PALRF and PCLRF represent 25% and 20%, respectively, of the y, cent Proposition A and y, cent Proposition C sales taxes which are distributed to the jurisdictions within Los Angeles County based on population and must be used exclusively for transportation related programs and projects. MRLRF is derived from 15% of a county-wide Y, cent sales tax which is distributed to the jurisdictions within Los Angeles County based on a per capita basis and must be used exclusively for transp01tation purposes. MMLRF is derived from I 7% of a county-wide y, cent sales tax which is distributed to the jurisdictions within Los Angeles County based on a per capita basis and must be used exclusively for transpottation purposes. Transp01tation Development Act Article 3 Fund (TDAA3F) is a Special Revenue Fund that accounts for the City's share of the Transportation Development Act Article 3 allocations which are legally restricted for specific purposes. Basis of Accounting and Measurement Focus PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F are accounted for using the modified accrual basis of accounting whereby revenues are recognized when they become both measurable and available to finance expenditures of the current period and expenditures are generally recognized when the related fund liabilities are incurred. Special Revenue Funds are rep01ted on spending or "financial flow" measurement focus. This means that generally only current assets, current liabilities and deferred inflows and outflows of resources are included on their balance sheets. Statement of revenue, expenditures and changes in fund balance for Special Revenue Funds generally present increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Budgets and BudgetGJ)' Accounting The budgeted amounts presented in this repmt for comparison to the actual amounts are presented in accordance with accounting principles generally accepted in the United States of America. 22 CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2018 and 2017 (Continued) NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value Measurement In accordance with Government Accounting Standard Board (GASB) Statement No. 72, Fair Value Measurement and Application, which became effective for the fiscal year ended June 30, 2016, the City categorizes its fair value measurement within the fair value hierarchy that is based on the valuation inputs used to measure the fair value of the investment. Level I inputs are quoted prices in active markets for identical investments; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Accordingly, the City reports its investment at fair value and recognizes unrealized gain (loss) on investments. Refer to City's 2018 Comprehensive Annual Financial Report for detailed disclosures regarding the City's investments policy and fair value measurement. Fund Balance Reporting GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, establishes the fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of resources repotted in governmental funds. The PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F repott the following fund balance classification as of June 30,2018: • Restricted -Amounts that are constrained for specific purpose, which are externally imposed by providers, such as creditors, or amounts constrained due to constitutional provisions or enabling legislation. The uses of the funds' remaining fund balances are restricted for projects approved by Los Angeles County Metropolitan Transportation Authority (Metro). Information regarding the fund balance reporting policy adopted by the City is described in Note I to the City's Comprehensive Annual Financial Repott. NOTE 2-ANNUAL FINANCIAL STATEMENTS The financial statements reflect only the financial position and results of operations of the PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F and their compliance with the Proposition A and Proposition C Local Return Program Guidelines, Measure R Local Return Program Guidelines, Measure M Local Return Program Guidelines, Transpottation Development Act Atticle 3 and the Los Angeles County Metropolitan Transpottation Authority Funding and Allocation Guidelines for Transportation Development Act Atticle 3 Bicycle and Pedestrian Funds. 23 CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 20 !8 and 2017 (Continued) NOTE 3 -PROPOSITION A AND PROPOSITION C LOCAL RETURN COMPLIANCE REQUIREMENTS In accordance with Proposition A and Proposition C Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Proposition A and Proposition C Local Return approved programs. See accompanying Compliance Matrix. NOTE 4-MEASURER LOCAL RETURN COMPLIANCE REQUIREMENTS In accordance with Measure R Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Measure R Local Return approved programs. See accompanying Compliance Matrix. NOTE 5-MEASURE M LOCAL RETURN COMPLIANCE REQUIREMENTS On June 23, 20!6, the Metro Board of Directors approved the Los Angeles County Traffic Improvement Plan Ordinance, known as Measure M. In accordance with Measure M Local Return Program Guidelines, funds received pursuant to these guidelines may only be used for Measure M Local Return approved programs. The first revenue allocation was received in the current period. See accompanying Compliance Matrix. NOTE 6-TRANSPORTATION DEVELOPMENT ACT COMPLIANCE REQUIREMENTS In accordance with Public Utilities Code Section 99234, funds received pursuant to this Code's section may only be used for activities relating to pedestrians and bicycle facilities. See accompanying Compliance Matrix. NOTE 7 -CASH AND INVESTMENTS The PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F's cash and investment balances were pooled with various other City funds for deposit and investment purposes. The share of each fund in the pooled cash and investments account was separately maintained and interest income was apportioned to the participating funds based on the relationship of their average balances to the total of the pooled cash and investments. NOTE 8 -PROJECT GENERATED REVENUE-PALRF Project generated revenue for the years ended June 30, 2018 and 2017 consisted of the following: Bus Pass Sales Total $ $ 2018 2017 73 ,3 8 8 $ ___ 8_7_:_, 4-,-8 6-:-- 73,3 88 $ --~8;,..7,;..,4~86~ 24 CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 20 I 8 and 20 I 7 (Continued) NOTE 9-TRANSPORTATION DEVELOPMENT ACT FUND REVENUE ALLOCATION The revenue allocation for the years ended June 30, 20 I 8 and 20 I 7 consisted of the following: FY 20 I 4-I 5 allocation FY 20 I 5-I 6 allocation FY 2016-17 allocation Total payment requested $ 2018 15,273 23,034 24,044 62,3 5 I 2017 $ $ NOTE 10-TRANSPORTATION DEVELOPMENT ACT FUNDS RESERVED In accordance with TDA Article 3 (SB821) Guidelines, funds not spent during the fiscal year have been placed on reserve in the Local Transpottation Fund (L TF) account with the County Auditor-Controller to be drawn down whenever the funds become eligible for a specific project and an approved drawdown request is received by Metro. As of June 30, 20 I 8 and 2017, the City has funds on reserve as follows: 2018 2017 FY 20 I 4-I 5 allocation $ $ 15,273 FY 2015-16 allocation 23,034 FY 20 I 6-I 7 allocation 24,044 FY 2017-18 allocation 23,802 Available reserve balance $ 23,802 $ 62,35 I NOTE 11 -SUBSEQUENT EVENTS The City has evaluated events or transactions that occurred subsequent to June 30, 2018 through October 31, 2018, the date the accompanying financial statements were available to be issued, for potential recognition or disclosure in the financial statements and determined no subsequent matters require disclosure or adjustment to the accompanying financial statements. 25 SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNTANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MELBA W. SIMPSON, CPA U.S. BANK TOWER 633 WEST 5TH STREET, SUITE 3320 LOS ANGELES, CA 90071 (213) 736·6664 TELEPHONE (213) 736·6692 FAX www.simpsonandsimpsoncpas.com Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing Standards To the Honorable Members of the City Council of the City of Temple City, California and the Los Angeles County Metropolitan Transit Authority We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govemment Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, Measure M Local Return Fund, and Transpottation Development Act Article 3 Fund (collectively, the Funds) of the City of Temple City, California (the City), as of and for the year ended June 30, 2018, and the related notes to the financial statements, and have issued our report thereon dated October 31, 20 18. Internal Control Over Financial Reporting In planning and performing our audit of the Funds' financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the Funds' financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and conected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet impottant enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 26 Compliance and Other Matters As patt of obtaining reasonable assurance about whether the City's Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, Measure M Local Return Fund, and Transpottation Development Act Article 3 Fund financial statements are free from material misstatement, we performed tests of its compliance with cettain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audits, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Govemment Auditing Standards. Purpose of this Report The purpose of this repott is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity's intemal control or on compliance. This repott is an integral patt of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Los Angeles, California October 31, 2018 27 COMPLIANCE SECTION SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNTANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MELBA W. SIMPSON, CPA Independent Auditor's Report On Compliance To the Honorable Members of the City Council of the City of Temple City, California and the Los Angeles County Metropolitan Transit Authority Report on Compliance U.S. BANK TOWER 633 WEST 5TH STREET, SUITE 3320 LOS ANGELES, CA 90071 (213) 736-6664 TELEPHONE (213) 736·6692 FAX WWN.simpsonandsimpsoncpas.com We have audited the compliance of the City of Temple City, California (the City) with the Proposition A and Proposition C Local Return Guidelines, Measure R Local Return Guidelines, Measure M Local Return Guidelines, Transp01tation Development Act Atticle 3, and the Los Angeles County Metropolitan Transportation Authority's Funding and Allocation Guidelines for the Transpottation Development Act Article 3 Bicycle and Pedestrian Funds (collectively, the Guidelines) for the year ended June 30,2018. Management's Responsibility Management is responsible for the City's compliance with the Guidelines. Auditor's Responsibility Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the Guidelines referred to in the preceding paragraph. Those standards and the Guidelines require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on Proposition A Local Return Program, Proposition C Local Return Program, Measure R Local Return Program, Measure M Local Return Program, and Transpottation Development Act Article 3 Program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance with the Guidelines. However, our audit does not provide a legal determination of the City's compliance with the Guidelines. Opinion on Each Local Retum Program and Transportation Development Act Article 3 In our opinion, the City complied, in all material respects, with the compliance requirements of the Guidelines for the year ended June 30, 2018. 28 Other Matters The results of our auditing procedures disclosed an instance of noncompliance, which is required to be rep01ted in accordance with the Guidelines and which is described in the accompanying Schedule of Findings and Recommendations as Finding No. 2018-001. Our opinion on each local return program and Transportation Development Act Atticle 3 is not modified with respect to this matter. The City's response to the noncompliance finding identified in our audit is described in the accompanying Schedule of Findings and Recommendations. The City's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Managemynt of the City is responsible for establishing and maintaining effective internal control over compliance with the Guidelines referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in intemal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, ot· detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance under the Guidelines will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with the Guidelines that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that we consider to be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Guidelines. Accordingly, this report is not suitable for any other purpose. Los Angeles, California October 31,2018 29 Compliance Requirement I CITY OF TEMPLE CITY COMPLIANCE MA TIUX Year Ended June 30,2018 In Compliance A. Proposition A and Proposition C Local Return Funds Questioned Costs If no, provide details and management response. ·--:--·r:· ; · · c-c;c---c:.--··::--c-:-:--:co---;;c-···-.... -=--,,·--:-:--r-··-1---+··· -· ·-· ---------·-··· -· .. ·----.... · 1. Uses the State Controller's Uniform System of X None Accounts and Records. I 2. Timely use of funds. X None None 3. j F~d~-;;;:p~nd~d-~~;:;;-~ppt:~-~~d-~;;ct!~~-e-not beet;----X - _ 1 sub~till1((:~ fo~prope:~~ax_. -----··--·--.. 4. [ Expenditures that exceeded 25% of approved' ... --·-l--:cX;--i-·- project budget have approved amended project Description Form (Form A). ----. ........... -·---·----------· ....... _________ . _ .. _____ ---+-----------------.... -. __ ., ... -------... I' Administrative expenses are within the 20% cap of X None the total annual Local Return Expenditures. ' 5. ~--6~ All on-g~i~g~!1dcarryover proj~~~;;~;:;;-;~epo!t~d ·· X.. -----· 1 .,N,.o.n -·e··· ---+-----········ j _ _in F ot_·m_B_. ______ .... -. .. --··--------.. +--·-'--.. --+-----~·;--·---+-.. ----------······· ..... ... 1 7. Annual Project Summary Repott (Form B) was X None submitted on time. ,. ;;.··---------------------------·· .. ____ , _______________ , _____ , ______ _ 8. Annual Expenditure Repmt (Form C) was submitted on time. 9. Cash or cash equivalents are maintained. .... ,., -·--·--------------.. ---·------------.. 10. Accounting procedures, record keeping and documentation are adequate. . ......... ---------+··· '' .... ----+-------.. -·-· . X None X .... ------ X None ----------"~"""-"' _____ ~~-------"--··-··""'-''""-'"-" None See Finding No. 2018- 00 I on the Schedule of Findings and Recommendations . 11. Pavement Management System (PMS) in place and being used for Street Maintenance or Improvement Projects Expenditures. X . . .. ........ ----........ , ___ ....... ""-----·· ..... ··, None expenditures . .. --1-:-----...... . . -----..... -... -. ... ------· 13. Self-Certification was completed and submitted X for Intelligent Transpottation Systems projects or I--·· _ele_m_ents~-----.. ·------------------------.. ·-········-----______________ ... ..... 1 L 14. Assurances and Understandings form was on file. X None , llr··R~cl·~ati~~~~.E-~;:;~i!f~:;:;~;;:ass_u~111 it!~c);:;:ili~~~~:-~=~====~ ::===-= ::Eo~~~===-=====~=----:~:! -~z.--L:o~~~Ret~-rn-·A·c-cc_o_t_tn-t."is-ct-.e-,d"it-ed---,fo--t-. ~--eci·,--n·b:---ursab .. le·---i·-x--+-------·-·-N·o-n~---r--------·---··--·--·· ·1 I None 30 1. Compliance Requirement CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30,2018 (Continued) --------------------"" ,_,,, .. ,, __ ,,,,______ -----·---------------·-· "" "" -·--·-----------·--··" Funds were expended for transpottation X purposes, None -2:-------Funds were used to augment, not supp:-la-n-t,---+-:X-1--+----1--N~o-n--;;-- existing local revenues being used for transpmtation purposes unless there is a funding shortfalL --------------------------------;-;------------- 3_ Signed Assurances and Understandings on file. 4. Separate MeasureR Local Return Account was established. X None < ----------------·-------------------------------------------< --------------1---------------------------------: 5. Revenues received including allocations, project X None generated revenues and interest income was properly credited to the Measure R Local Return Account. ----------------c--:-:--:--:---:---:--~- 6. Funds were expended with Metro's approvaL X -~--1----t----,N-;;-~~------------ ------~-"" -----___________________ ,____ " -"' ----------~------------------------ 7_ Expenditure Plan (Form One) was submitted on X time. 8. Expenditure Repmt (Form Two) was submitted on time. X None ---------!-----------------------< None -------------------------------------,-----------------------------r-------------------- 9. Timely use of funds. L X None ----------< < ------------------------------------------------ 10. Administrative expenditures are within the 20% X None cap. -------------- 11. Funde_xc:h_an.g~_\\'ere_app_l'ove~ byl\lletro. ___ _ 12. A separate account was established for Capital reserve funds and Capital reserve was approved by Metro. 13. Recreational transit form was submitted on time. -----r--~X,-----~--~N~o-n __ e ___ ~--------------------------l ---------------------< X None ______ L_ _____________ '------------------------- 31 Compliance Requirement ! -I CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30,2018 (Continued) ~~---··-----~- In Compliance Yes No N/A ---~~------~,------~-------------------- Questioned If no, provide details Costs and management response. ~""--·-----·- -~-----···--·-- __ , _________ ""'" -------~-----~---....... ,, ____ ~------------- C. Measure M Local Return Fund --·---·-···------··--------·-·---------~~-~------.. ----------~-~ ------r----- I. Funds were expended for transportation X None purposes. ----------------------------------~--------- 2. Funds were used to augment, not supplant X None I existing local revenues being used for transp01tation purposes unless there is a fund sh01tfall. -----··-----~-~----------------------------------- _ Sign~-A_~stJI~ll<:<)S_~~_cl_l)_llde~stilJ~d~Jl¥~-()'~_fi~e. _ 3. X None ·-------------·· -~---· 4. Separate Measure M Local Return Account was X None established. ______ ,, ______ --------~----~-~------"~-~--------~-'" .. ------•--"--.------- 5. Revenue received including allocations, project X None I generated revenues and interest income was properly credited to the Measure M Local Return Account. ---------~----"'"--·----~--------... _, __________ , ________ ...• ,. .. _ ----------------___________ , ___ . .,.,, .. _ ---·· 6. Funds were expended with Metro's approval. X None ---------------·-___ , ___________ , _____ . """" " ....... ,_, ________________ ,,_ --··-· " --------------------------.... 7. Expenditure Plan (Form One) was submitted on X None time. ---, ... ,., .. ______ , ____ .,_,_,,~~~m--·---------~o~--~--~ ------ 8. Expenditure Repmt (FOI'm Two) was submitted X None on time. ---------··· Tirn~·I-y;;;-;;-~:rr;;nd~~--······---··········---------·· 9. X None ---c-~--------~ ------ 10. Administrative eo,:peme' are within the 20% cap. X None . ------ II. -!'_~ll_d_e)(chaJ:_~s wer~-~pproved by Metro. -·--X None f---------···---·-------------12. A separate account was established for Capital X None reserve funds and Capital reserve was approved by Metro. -----------"--___ , -··-·---.... --------------·--·--------- 13. Recreational transit form was submitted timely. X None ----. -------------------------------------------------------------------------------·-·-.... 32 I Compliance Requirement CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30,2018 (Continued) In Compliance Questioned Costs If no, provide details and management response. 1:::--~ ~----~-""-,-"--=---:---------:---:-"--:-c--::-::;----:---L"--~Y,_,e::cs -1 -N ()_fN/A-+-----""--"-"------1----------------"----"----"- D. Transportation Development Act Article 3 Fund fj-~:x;~~~~;:~~~~::~~-u;;;~1{;~~~v~~:;:~~~~:~il~~~-~ _-X~-_---~ ~=x -=--~:~::-:= ::::: _-:~~=:-~~----- 33 PALRF: Findmg CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 20I8 N 2 o. 018-001 Compliance Reference According to Proposition A and Proposition C Local Return Guidelines, Section II, "A proposed expenditure of funds shall be deemed to be for public transit purposes to the extent that it can reasonably be expected to sustain or improve the quality and safety of and/or access to public transit services by the general public or those requiring special public transit assistance" and Section V, "It is jurisdictions' responsibility to maintain proper accounting records and documentation ... " Condition To support the propriety of expenditures being charged to the Proposition A Local Return Fund, non-payroll expenditures should be suppotted by properly executed contracts, invoices, and payment vouchers. Although the payments to vendor, First Student Chmter Bus Rental, charged to PALRF's Recreational Transit Project Code 140-02 in the total amount of $4,693 were allowable and were properly supp01ted by invoices and cancelled checks, the expenditures were not supported by an existing contract or purchase order form. Cause Due to the urgency of the need to immediately procure a substitute bus transp01tation vendor when the City's contracted company suddenly became unavailable, the City staff responsible did not obtain an agreement nor purchase order. Effect No contract or purchase order form to suppott the payments made to the vendor, First Student Charter Bus Rental, indicates a weakness in the City's internal control. Recommendatiou We recommend that the City establish controls to ensure that the costs charged to the Local Return Funds, although allowable, are adequately supported by contracts, purchase orders, invoices, canceled checks or similar documentation so that Local Return expenditures are in compliance with the Guidelines. Management's Going forward, the City will ensure vendor payments will only be processed if Response covered by a Purchase Order or vendor agreement. 34 EXIT CONFERENCE CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND, PROPOSITION C LOCAL RETURN FUND, MEASURER LOCAL RETURN FUND, MEASURE M LOCAL RETURN FUND, AND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND EXIT CONFERENCE June 30, 2018 An exit conference was held on December 12, 2018 with the City of Temple City. Those in attendance were: Simpson & Simpson Representative: Oliver Rafols, Staff Auditor City's Representative: Lee Ma, Accountant Mailers Discussed: Results of the audit disclosed no significant control deficiencies and one (I) non- compliance issue with Metro Guidelines. A copy of this rep01t was forwarded to the following City representative(s) for their comments prior to the issuance of the final report: Lee Ma, Accountant 35 Simpson & Simpson, LLP 633 West 5'" Street, Suite 3320 Los Angeles, CA 90071 RE: CITY OF TEMPLE CITY ANNUAL FINANCIAL REPORT OF THE PROPOSITION A LOCAL RETURN FUND, PROPOS!TlON C LOCAL RETURN FUND, MEASURER LOCAL RETURN FUND, AND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND FOR THE FISCAL YEARS ENDED JUNE 30,2018 AND 2017, AND MEASURE M LOCAL RETURN FUND FOR THE FISCAL YEAR ENDED JUNE 30,2018 I have received the annual financial rep01t of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, and Transpottation Development Act Atticle 3 Fund for the years ended June 30, 2018 and 2017, and Measure M Local Return Fund for the year ended June 30, 2018 for the City of Temple City and agree with the contents of the rep01t except as indicated below: (Attach additional pages if necessary) Very truly yours, Name Title Date