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HomeMy Public PortalAbout09) 7D Audit ReportsAGENDA ITEM 7.0. ADMINI S TRATIVE SE RVI CES DEP ARTM E NT M E MO RANDUM DATE: February 4, 2020 T O : The Honorable City Council FROM: ,. . . Bryan Cook, City Manager . _::.:·· ···:···,Via : Susan Paragas, Administrative Services Director · · · · · By : Lee Ma , Accountant ' ! :i ·. . S UBJECT: AljDIT RE PORTS FOR PROPOSITION A, PROPOSITION C , MEASURE R, TRAN SPORTATION DEVELOPM ENT ACT ARTI C LE 3 AND M EASURE M '\ .:· FOR FI SCAL Y EAR (FY) 2018-19 R ECOMME NDATION: The City Council is requested to receive and file FY 2018-19 Proposition A, Proposition C, M_easure R, 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, Measure R, 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 basis . 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 4, 2020 Page 2 of 3 5. In October 2019, 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 15, 2020, 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 (LACMTA) Funding and Allocation Guidelines. The following reports are presented for your review. Proposition A During FY 2018-19, the City received a total of $788,568 in revenues for Proposition A funds which includes bus pass sales revenues of $43,916 and interest income of $14,103. The total expenditures for FY 2018-19 were $497,638. 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 2018-19, the City received $632,016 of revenues for Proposition C which also includes interest income of $26,046. FY 2018-19 expenditures for Proposition C were $260,000 for the Dial-A-Ride Program. MeasureR The City received a total of $467,139 in revenues for Measure R funds which includes interest income of $12,531. There were no expenditures during FY 2018-19. City Council February 4, 2020 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 returned the $62,351 draw down from the fund reserve in May 2018 with the $1,006 in interest to Metro due to the Sidewalks and Curbs Ramps ADA Improvement Project was not able to get started in FY 2018-19. Measure M The City received a total of $519,542 in revenues for Measure M funds which also includes interest income of $7,381. The expenditures for MeasureR were $3,605 for the Pavement Management Street Resurfacing Project in FY 2018-19. Auditor Findings The auditors identified seven deficiencies in internal control. Four of the findings were related to missed submission deadlines of required forms that were because of the timing of an employee turnover. These responsibilities have now been re-assigned to another employee who will ensure the deadlines are met. The other three findings are for: (1) exceeding the allotted administration costs; (2) lack of vendor contracts; and (3) lapsed funds. The City is addressing and resolving these issues by sending the newly assigned employee to the LACMTA training workshops to ensure that these findings are resolved and for the City to be in compliance. 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, 2019 to further City's Strategic Goal to promote Good Governance. FISCAL IMPACT: This agenda item does not have a fiscal impact on the FY 2019-20 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 MEASURERLOCALRETURNFUND MEASURE M LOCAL RETURN FUND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND FOR THE FISCAL YEARS ENDED JUNE 30, 2019 AND 2018 Metro Simpson & Simpson, LLP Certified Public Accountants ATTACHMENT A • • 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 Measure R 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 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 Transportation Development Act Article 3 Fund: Financial Statements: Balance Sheets Statements of Revenues, Expenditures and Changes in Fund Balance Supplementary Information: Schedule of Transportation Development Act Allocation for Specific Projects Notes to Financial Statements 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 Government Auditing Standards PAGE 1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 26 COMPLIANCE SECTION CITY OF TEMPLE CITY TABLE OF CONTENTS (Continued) Independent Auditor's Report on Compliance Compliance Matrix Schedule of Findings and Recommendations EXIT CONFERENCE ii 28 31 35 42 FINANCIAL SECTION SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNT ANTS FOUNDING PARTNERS BRAINARD C. SI MPSON, 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 Transportation 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.slm psonandsi mpsonc pas.com We have audited the accompanying fmancial statements of the Proposition A Local Return Fund (PALRF), Proposition C Local Return Fund (PCLRF), Measure R Local Return Fund (MRLRF), Meas ure M Local Return Fund (MMLRF), 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, 2019 and 2018, and the rel at ed notes to the financial statements, as lis ted in the table of contents . Management's Responsibility for the 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. Auditor's Responsibility Our respons ibility is to express opinions on these fmancial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the U ni ted States of America and the standards applicable to fin ancia l audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those s tandard s require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of m aterial misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of m aterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor cons iders 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 evalu ating 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 . The CPA. Never Underestimate The Value~· Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the P ALRF, PCLRF, MRLRF, MMLRF and TDAA3F of the City of Temple City, California, as ofJune 30,2019 and 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 di scussed in Note 2, the fi nancial statements present only the PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F of the City and do not purport to, and do not, present fairly the financial position of the City of Temple City, California, as ofJune 30,2019 and 2018, 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. Supplementary Information Our audits were conducted for the purpose of forming 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 part of the financial statements . The supplementary information is the responsibility of management and was derived from 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 certain 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 our 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 Government Auditing Standards In accordance with Government Auditing Standards , we have issued our report dated November 2 1,2019, on our consideration of the City's internal control over the Funds' financial reporting and on our tests of its compliance with certain provi sions 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 compl iance. 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 reporting and compliance. Los Angeles, Californ ia November 21, 2019 2 CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND BALANCE SHEETS June 30 2019 ASSETS Cash and investments $ 1,238,184 $ Other receivable 7,227 Total assets $ 1,245,411 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 64,046 $ Total liabilities 64,046 Fund Balance Restricted 1,181,365 Total fund balance 1,181,365 Total liabilities and fund balance $ 1,245,411 $ The accompanying notes are an integral part of the financial statements. 3 2018 984,420 7,227 991,647 101,212 101,212 890,435 890,435 991,647 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 2019 REVENUES Proposition A $ 730,549 $ Project generated revenue (Note 8) 43,916 Interest income 14,103 Total revenues 788,568 EXPENDITURES Various projects 497,638 Total expenditures 497,638 Excess of revenues over expenditures 290,930 Fund balance at beginning of year 890,435 Fuud balance at end of year $ 1,181,365 $ The accompanying notes are an integral part of tbe financial statements. 4 2018 681,478 73,388 12,926 767,792 740,309 740,309 27,483 862,952 890,435 Project Code 130-01 130-05 140-02 170-04 250-03 270-02 480-05 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, 2019 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2018) 2019 Variance Metro Favorable Project N arne Budget Actual (Unfavorable) Special Service Paratransit $ 525,000 $ 266,631 $ 258,369 $ Dial-A-Ride 265,000 265,000 Recreational Transit 68,000 61,873 6,127 Bus Shelter Maintenance 17,000 12,525 4,475 User-Side Subsidy 111,030 61,974 49,056 San Gabriel Valley Council of Governments Membership 11,500 10,880 620 Direct Administration 63,765 * 83,755 (19,990) Total expenditures $ 1,061,295 $ 497,638 $ 563,657 $ * Metro subsequently approved the budget increase to $83,755. The accompanying notes are an integral part of the financial statements. 5 2018 Actual 477,246 60,674 8,920 94,606 10,720 88,143 740,309 Date Acquired None CITY OF TEMPLE CITY PROPOSITION A LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS June 30, 2019 Description Balance 7/1/2018 Additions Deletions Balance 6/30/2019 $ ___ $ ___ $ ___ $ ___ _ Total $====$ $ $==== The accompanying notes are an integral part of the financial statements. 6 CITY OF TEMPLE CITY PROPOSITION C LOCAL RETURN FUND BALANCE SHEETS June 30 2019 ASSETS Cash and investments $ 1,759,584 $ Total assets $ 1,759,584 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ $ Total liabilities Fund Balance Restricted 1,759,584 Total fund balance 1,759,584 Total liabilities and fund balance $ 1,759,584 $ The accompanying notes are an integral part of the financial statements. 7 2018 1,387,568 1,387,568 1,387,568 1,387,568 1,387,568 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 2019 REVENUES Proposition C $ 605,970 $ Interest income 26,046 Total revenues 632,016 EXPENDITURES Various projects 260,000 Total expenditures 260,000 Excess of revenues over expenditures 372,016 Fund balance at beginning of year 1,387,568 Fund balance at end of year $ 1,759,584 $ The accompanying notes are an integral part of the financial statements. 8 2018 566,343 16,824 583,167 203,442 203,442 379,725 1,007,843 1,387,568 Project Code 130-05 440-01 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, 2019 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2018) 2019 Variance Metro Favorable Project N arne Budget Actual (Unfavorable) Dial-A-Ride $ 260,000 $ 260,000 $ Temple City Boulevard Upgrades and Safety Improvements Total expenditures $ 260,000 $ 260,000 $ The accompanying notes are an integral part of the financial statements. 9 $ $ 2018 Actual 203,442 203,442 Date Acquired None CITY OF TEMPLE CITY PROPOSITION C LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS June 30, 2019 Description Balance 7/1/2018 Additions Deletions Balance 6/30/2019 $ ______ $ ______ $ ______ $ ____ __ Total $ $ $ $ ====== ====== The accompanying notes are an integral part of the financial statements. 10 CITY OF TEMPLE CITY MEASURER LOCAL RETURN FUND BALANCE SHEETS June 30 2019 ASSETS Cash and investments $ 1,043,109 $ Total assets $ 1,043,109 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ $ Total liabilities Fund Balance Restricted 1,043,109 Total fund balance 1,043,109 Total liabilities and fund balance $ 1,043,109 $ The accompanying notes are an integral part of the financial statements. 11 2018 575,970 575,970 575,970 575,970 575,970 REVENUES MeasureR Interest income Total revenues EXPENDITURES CITY OF TEMPLE CITY MEASURER LOCAL RETURN FUND STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June 30 $ 2019 454,608 $ 12,531 467,139 Street repair and maintenance Total expenditures Excess (deficiency) of revenues over (under) expenditures 467,139 Fund balance at beginning of year 575,970 2018 423,380 6,059 429,439 750,000 750,000 (320,561) 896,531 Fund balance at end of year $ 1,043,109 $ =~5;;,;7,;;,5•;;;9,;,;70;., The accompanying notes are an integral part of the financial statements. 12 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 Jnne 30,2019 (With Comparative Aetna! Amount for the Fiscal Year Ended Jnne 30, 2018) 2019 Variance Metro Favorable Project N arne Budget Aetna! (Unfavorable) Pavement Management: Street Resurfacing $ 750,000 $ $ 750,000 Street Repair and Maintenance Total expenditures $ 750,000 $ $ 750,000 The accompanying notes are an integral part of the financial statements. 13 $ $ 2018 Aetna! 750,000 750,000 Date Acquired None CITY OF TEMPLE CITY MEASURER LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS Description June 30, 2019 Balance 7/1/2018 Additions Deletions Balance 6/30/2019 $ ___ $ ____ $ ___ $ __ _ Total $ $ $ $ ====== ====== The accompanying notes are an integral part of the financial statements. 14 CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND BALANCE SHEETS June 30 2019 ASSETS Cash and investments $ 673,046 $ Due from Metro 41,376 Total assets $ 714,422 $ LIABILITIES AND FUND BALANCE Liabilities Accounts payable $ 274 $ Total liabilities 274 Fnnd Balance Restricted 714,148 Total fund balance 714,148 Total liabilities and fund balance $ 714,422 $ The accompanying notes are an integral part of the financial statements. 15 2018 198,211 198,211 198,211 198,211 198,211 CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the Fiscal Years Ended June 30 2019 REVENUES MeasureM $ 512,161 $ Interest income 7,381 Total revenues 519,542 EXPENDITURES Various projects 3,605 Total expenditures 3,605 Excess of revenues over expenditures 515,937 Fund balance at beginning of year 198,211 Fund balance at end of year $ 714,148 $ The accompanying notes are an integral part of the financial statements. 16 2018 383,679 1,377 385,056 186,845 186,845 198,211 198,211 Project Code 1.05 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, 2019 (With Comparative Actual Amount for the Fiscal Year Ended June 30, 2018) 2019 Variance Metro Favorable Project N arne Budget Actual (Unfavorable) Pavement Management: Street Resurfacing $ 400,000 $ 3,605 $ 396,395 Street Resurfacing per Pavement Management Plan Total expenditures $ 400,000 $ 3,605 $ 396,395 The accompanying notes are an integral part of the financial statements. 17 $ $ 2018 Actual 186,845 186,845 Date Acquired None CITY OF TEMPLE CITY MEASURE M LOCAL RETURN FUND SUPPLEMENTARY INFORMATION SCHEDULE OF CAPITAL ASSETS June 30, 2019 Description Balance 7/1/2018 Additions Deletions Balance 6/30/2019 $ ______ $ _______ $ ______ $ ______ _ Total $ $ $ $==== The accompanying notes are an integral part ofthe financial statements. 18 ASSETS Due from Metro Total assets CITY OF TEMPLE CITY TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND (PURSUANT TO PUBLIC UTILITIES CODE SECTION 99234) BALANCE SHEETS June 30 2019 $ $==== LIABILITIES AND FUND BALANCE Liabilities $ $ 2018 62,351 62,351 Accounts payable $ ____ $ ___ _ Total liabilities Fund Balance Restricted Total fund balance 62,351 62,351 Total liabilities and fund balance $==== $ ===6='2,;,;,35;,;1= The accompanying notes are an integral part 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 2019 REVENUES TDA3 $ $ Interest income 1,006 Total revenues 1,006 EXPENDITURES Various projects Total expenditures OTHER FINANCING USE Funds returned to Metro 63,357 Total other financing use 63,357 (Deficiency) excess of revenues (under) over expenditures and other financing use (62,351) Fund balance at beginning of year 62,351 Fund balance at end of year $ $ The accompanying notes are an integral part of the financial statements. 20 2018 62,351 62,351 62,351 62,351 Project Description Local allocations None Interest income 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, 2019 Program Year Allocations Expenditures Unexpended Allocations 2018-19 $ $ $ Total $ $ $ 1,006 Fund balance at beginning of year Funds returned to Metro 62,351 (63,357) Fund balance at end of year $ The accompanying notes are an integral part of the financial statements. 21 Project Status CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2019 and 2018 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fund Accounting The operations of the Proposition A Local Return Fund (P ALRF), Proposition C Local Return Fund (PCLRF), Measure R Local Return Fund (MRLRF), Measure M Local Return Fund (MMLRF), and Transportation Development Act Article 3 Fund (TDAA3F) (collectively, the Funds) are accounted for in separate sets of self-halancing accounts that comprise their assets, liahilities, fund balance, revenues and expenditures. P ALRF 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 transportation purposes. MMLRF is derived from 17% 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 transportation purposes. 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 reported 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 Budgetary Accounting The budgeted amounts presented in this report 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 30,2019 and 2018 (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 1 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 2019 Comprehensive Annual Financial Report for detailed disclosures regarding the City's investment 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 reported in governmental funds. The PALRF, PCLRF, MRLRF, MMLRF, and TDAA3F report the following fund balance classification as ofJune 30,2019: • 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 1 to the City's Comprehensive Annual Financial Report. 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, Transportation Development Act Article 3 and the Los Angeles County Metropolitan Transportation Authority Funding and Allocation Guidelines for Transportation Development Act Article 3 Bicycle and Pedestrian Funds. 23 CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2019 and 2018 (Continued) NOTE 3 -PROPOSITION A AND PROPOSITION C LOCAL RETURN COMPLIANCE REQIDREMENTS 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 REQIDREMENTS 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 REQIDREMENTS On June 23, 2016, 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. See accompanying Compliance Matrix. NOTE 6-TRANSPORTATION DEVELOPMENT ACT COMPLIANCE REQIDREMENTS 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 account was separately maintained and interest income was apportioned to the participating funds based on the relationship of their average quarterly 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, 2019 and 2018 consisted of the following: Bus Pass Sales $ Total $ 2019 2018 43,916 $ 73,388 ---,....,...,~ 43,916 $ 73,388 ~~~~ 24 CITY OF TEMPLE CITY NOTES TO FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2019 and 2018 (Continued) NOTE 9-TRANSPORTATION DEVELOPMENT ACT FUND REVENUE ALLOCATION The revenue allocation for the years ended June 30, 2019 and 2018 consisted of the following: 2019 2018 FY 2014-15 allocation $ $ 15,273 FY 2015-16 allocation 23,034 FY 2016-17 allocation 24,044 Total payment requested $ $ 62,351 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, 2019 and 2018, the City has funds on reserve as follows: 2019 2018 FY 2015-16 allocation $ 23,034 $ FY 2016-17 allocation 24,044 FY 2017-18 allocation 23,802 23,802 FY 2018-19 allocation 24,676 Available reserve balance $ 95,556 $ 23,802 The fiscal year 2014-15 allocation of$15,273 was not spent as ofJune 30,2019 and therefore, lapsed and returned to Metro for future reallocation. See Finding No. 2019-007 on the Schedule of Findings and Recommendations. NOTE 11-SUBSEQUENT EVENTS The City has evaluated events or transactions that occurred subsequent to June 30, 2019 through November 21, 2019, 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 CERTI FIED PUBLIC ACCOUNT ANTS U.S. BANK TOWER 633 WE ST 5TH STREET, SUITE 3320 LOS AN GELES, CA 9007 1 (213) 736·6664 TELEPHONE (213) 736-6692 FAX www .simpsonandsimpsoncpas.com FOUNDING PARTN ERS BRAINARD C. Sll.f'SON, CPA MELBA W. SIMPSON, CPA 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 Government 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 Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the P r oposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, Measure M Local Return Fund, and Transportation 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, 2019, and the related notes to the fina n cial statements, and have issued our report thereon dated November 21,2019. 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 pr ocedures 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 d esign or operation of a control does not allow management or employees, in the normal course of performing their assigned func tions, to prevent, or detect and correct, misstatements on a timely basis. A mate rial 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 corrected on a timely basis. A significant d eficiency is a deficiency, or a combination of deficiencie s, in internal control that is less severe th an a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first p aragraph of this section and was not designed to identify all deficiencies in internal control that might be materia l weaknesses or significant deficiencies. Given these limitations, during our audit we did n ot identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The CPA. Never Underesllmale The Value:" 26 Compliance and Other Matters As part 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 Transportation Development Act Article 3 Fund financial statements are free from material misstatement, we performed tests of its compliance with certain 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 Government Auditing Standards. Purpose of this Report The purpose of this report 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 internal control or on compliance. This report is an integral part 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 November 21, 2019 27 COMPLIANCE SECTION SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUt-11 AlliS FOUNDING PARTN ERS BRAINARD C. SIIII'SON, CPA MELBA W. SIIII'SON, CPA Independent Auditor's Report on Compliance To the Honorable Members ofthe City Council of the City of Temple City, California and the Los Angele s County Metropolitan Transit Authority Report on Compliance U.S. BANK TOVvt:R 633 Vvt:ST 5TH STREET, SUITE 3320 LOS ANGE LES, CA 9007 1 (2 13) 736-6664 TELEPHON E (213) 736-6692 FAX WWN .slmpsonandslmpsoncpas .co m We have audited the compliance of the City of Temple City , California (the City) with the Propos ition A and Proposition C Local Return Guidelines, MeasureR Local Return Guidelines, Measure M Local R eturn Guidelines, Transportation Development Act Article 3, and the Los Angeles County Metropolitan Transportation Authority's Funding and Allocation Guidelines for t he Transportation Development Act Article 3 Bicycle and Pedestrian Funds (collectively, the Guidelines) for the year ended June 30, 2019. 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 type s of compliance requirements referred to above that could h ave 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, an d Tran sportation Development Act Article 3 Program occuned. An audit includes examining, on a test basis, evidence about the City's compliance with tho se requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis fo r our opinion on compliance w ith the Guidelines. However, our audit does not provide a l egal determination of the City's c ompliance with the Guidelines. Opinion 011 Each Local Return Program a11d Transportation Development Act Article 3 In our opinion, except as noted in the Compliance Matrix and the Schedule of Findings and Recommendations, the City complied, in all material respects, with the compliance requirements of the Guidelines for the year ended June 30, 2019. (CPA) The CPA. Never Underestimate The Value:· 28 Other M alters The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with the Guidelines and which are described in the accompanying Schedule of Findings and Recommendations as Finding Nos. 2019-001, 2019-002, 2019-003, 2019-004, 2019-005, 2019-006, and 2019-007. Our opinion on each local return program and Tra nsportation Development Act Article 3 program is not modified with respect to these matters . The City 's re sponses to the noncompliance findings identified in our audit are described in the accompanying Schedule of Findings and Recommendations. The City's responses were not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses. Report on Internal Control Over Compliance Management 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 contro l 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. Our consideration of internal contro l over compliance was for the limited purpose described in the fJist 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, we identified certain deficiencies in internal control over compliance that we consider to be a material weakness and a significant deficiency. A deficiency in internal 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, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over complian ce 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. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Recommendations as Finding No. 2019-003 to be a material weakness. 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. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Recommendations as Finding 2019-005 to be a significant deficiency. 29 The City's responses to the internal control over compliance findings identified in our audit are de scribed in the accompanying Schedule ofFindings and Recommendations. The City's responses were not subj ected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the responses . 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 November 21,2019 30 CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30, 2019 -c.:~:-.. ::,,--~.~m,::l~~:iJ;;;iEf;:=:· -~----1--------~~-----~-~--~--------~-~--~---~-----~--~---~-------~~--~-y-e;;-~-,-~No-----N, A -----------~---~----------~-------------~- ~-~ ---~---~----~----~-----~------~--~-~------~--~-----------~--~-~ --~~~----"C ... ~--~-------~------------·------------------ A, Proposition A and Proposition C Local Retnrn Funds -~-~-~--~-----------------------------~-------------~-------------------------~--~----------~~--~----- 1. Uses the State Controller's Uniform System of X None Accounts and Records. _ ~:-_Ti111_ely~ll~_()f fi:lt1ds._ __ ----------~--_______ ~~ ___ :X_~-----~~ ______ ~~~ __ 1'/o_ll': __ ~~----~-----~--------~ ____ _ 3. Funds expended were approved and have not X None been substituted for property tax. 4. Expenditures that 25% of approved project budget have approved amended project Description Form (Form A). X None See Finding No. 2019- 00 I on Schedule of Findings and Recommendations. 5. Administrative expenses are within the 20% cap X None of the total annual Local Return Expenditures. ------· .. -·~·----""" _____ , ______ , __ ~---------·-----~ .. ------------------·---.. ------------··-·----------·--------------·-···---~------------····-···-····· 6. All on-going and carryover projects were reported in Form B. X ---;:,-~ -~~--~---------~-~------~-------~-----------~----~-----------~~ 7. Annual Project Summary Report (Form B) was submitted on time. None X None See Finding No. 2019- 002 on Schedule of Findings and Recommendations. -~"-------------~---------~-----~--------~----~------~----~J-·::-~~J-------~--~-----------------------------------------~~-- 8. Annual Expenditure Report (Form C) was X None submitted on time . . ---·----------·--·-···--------------·-----------·--"-·----------------··------------·-----------·-"""""" ____ --------·-----~--------· 9. _ c:;_~~~()_f_c_~~ll_e_gl!~[ll<:J1l~a_re_ lll_'lint!litl':~:-_ r--.~-- 10. Accounting procedures, record keeping and documentation are adequate. 11. Pavement Management System (PMS) is in place and being used for Street Maintenance or Improvement Projects Expenditures. 12. Local Retnrn Account is credited for reimbursable expenditures. X X ···-----·-·-·--·-----·------------·--""""'_______________________________ --------~~··,~· ,_,_ 13. Self-Certification was completed and submitted for Intelligent Transportation Systems projects or elements. 14. Sigoed Assurances and Understandings form was X on file. 1-·:--::------~-------~-------------~-~---~---------------------~--- _1_5:_l_':und exchange_s_:-vere appr():lf_ed bi: M~tr_o._ ___ ~ _____ _ 16. Recreational transit form was submitted on time. 31 X X X X None None ·::·:-----I None None None None See Finding No. 2019- 003 on Schedule of Findings and Recommendations. X None None See Finding No. 2019- 004 on Schedule of Findings and Recommendations. Compliance Requirement CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30, 2019 (Continued) In Compliance Q t . d If no, provide details ues tone C t and management OS S I Yes No -c=c-+---------~ -~-----_t:~,_o,ccn=s~e~, __ _ N/A B. MeasureR Local Return Fund I. Funds were expended for transportation purposes. ·------------------+---------------------1 X None ----·-·-······-----~------------------------------------------------+------+- 2. Funds were used to augment, not supplant, X None existing local revenues being used for transportation purposes unless there is a funding shortfall. 3. Signed Assurances and Understandings form was on file. 1-------· ----------------------------------------------------- 4. Separate MeasureR Local Return Account was established. 5. Revenues received including allocations, project generated revenues and interest income was properly credited to the Measure R Local Return Account. -------------------~ ----------------------------------- X None X None X None --~ ----------·-·--·----------··---------------------------------- 6. Funds were expended with Metro's approval. X None 1-~-------~---------------~----------------------------- -----------------------------lcc----c--c-c---------- 7. Expenditure Plan (Form One) was submitted on X None See Finding No.2019- time. 005 on Schedule of Findings and Recommendations. 8. Expenditure Report (Form Two) was submitted on time. X 9. Timely use of funds. X 1-: ~--------------·------·-····-·----- --···-·····--·-···· --------------------------- I 0. Administrative expenditures are within the 20% cap. lc·c----------~----·---------------------- 11. Fund exchanges were approved by Metro. 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. 32 None None X None X -1-----==---1--·---------------------~------- X None X None Compliance Requirement CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30,2019 (Continued) In Compliance If uo, provide details Questioned Costs and management response. 1------,------··-------·------·-------··-----·----------------·+-----r·---··-T---·----~ -------------------· ·-- I---·--L------·----------··---·---·--·--··-----------·--+·_Y,_e~~s. __ 1 __ N,_,_o~--f-'Nj_ A __ --------·-·-·-----------·----_ --··-- C. Measure M Local Return Fund 1. 14~~,;~·-·-···---·:----·-----·-------······-·--···:----· ----1-::c-···-1 ----1----·····-······l--,-:;------1-----~---·--··-···--··-······--· 2. Funds were used to augment, not supplant X None existing local revenues being used for transportation purposes unless there is a fund shortfall. 3. Signed Assurances and Understandings was on file. 4. Separate Measure M Local Return Acconnt was established. 5. Revenue received including allocations, project generated revenues and interest income was properly credited to the Measure M Local Return Account. X X X X -;s.--· li~ci~~;;;.e.;~;;;;~deci ~iiliiVretra;8;;;;;;;.~~~~.- --,-·--··-·-·-··--·--·-·--·-----·-···--···---·--·-·-·--------------···-··--· I 7. Expenditure Plan (Form M-One) was submitted on time. 8. X None None None None X None None See Finding No. 2019- 006 on Schedule of Findings and Recommendations. Expenditure Report (Form M-Two) was submitted on time. ''~-··-·---·--·-------------__ ,,,, __________ " _________________ --·--· --f.-------1------+---------·-·-----.... -·-·-·-·-·--·----··-·-·- 9. Timely use of fuods. 10. Administrative expenses are within the 20% cap. - -" -." -------------------------------------·---·· .. ··-····------~--------------- 11. Fund exchanges were approved by Metro. · 12:-Asei~;.;;t;;-~~c-aao!~a8e8t;;i,lishecir0~ capital X None X None X None X None reserve funds and Capital reserve was approved by Metro. 1·--·-1-,--:_____ c ·· ·---··---· ·-c··-c·--------~·--c--·-c··-,----,----,L ________ -1 -1·-------·--·-· --- 13. Recreational transit form was submitted timely. X None 33 Compliance Requirement I CITY OF TEMPLE CITY COMPLIANCE MATRIX Year Ended June 30,2019 (Continued) In Compliance Yes No N/A D. Transportation Development Act Article 3 Fnnd I. Timely use of funds. X ____ ,_ 2. Expenditures were incurred for activities relating X to pedestrian and bicycle facilities and amenities. 34 --··--~----------·-·-·----··--·····------- ~ If no, provide details Costs and management response. ---------·----~----··-······--·---- -------"----""-"" _______ $15,273 See Finding No. 2019- 007 on Schedule of Findings and Recommendations. --------------·----------- None CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2019 PALRF: Finding No. 2019-001 Compliance According to Proposition A and Proposition C Local Return Guidelines, Section I (C), Reference "Jurisdictions shall submit for approval a Project Description Form prior to the expenditure of funds for: 5) a 25 percent or greater change in an approved Local Return project budget or scope on all operating or capital Local Return projects." Condition The City exceeded more than 25 percent ofLACMTA's approved budget on PALRF Project Code 480.05, Direct Administration, in the amount of $4,049. However, the City submitted a Project Description Form (Form A) to obtain a budget increase from LACMTA and received subsequent approval on December 6, 2019. Cause The preparation and submission of the form was assigned to a new employee who was not aware of the deadline. Effect The City's PALRF project expenditure exceeded 25 percent ofLACMTA's approved budget without LACMTA 's approval and the City did not comply with the Guidelines. Recommendation We recommend that the City establish procedures to ensure that project expenditures are within the 25 percent cap of the LACMTA's approved budget and an amended Form A (Project Description Form) is properly prepared and submitted prior to the expenditure of funds which would result in a 25 percent or greater change in an approved Local Return project budget or scope on all operating Local Return projects. Management's In FY 2019-20, the newly assigned employee has been made aware of the reporting Response deadline and has attended the necessary LACMTA traioing workshops. Finding Corrected LACMTA Program Manager granted retroactive budget approval in the amount of During the Audit $83,755 of the said expenditures on December 6, 2019. No follow-up is required. 35 CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2019 (Continued) PALRF and PCLRF: Finding No. 2019-002 Compliance According to Proposition A and Proposition C Local Return Guidelines, Section I. C, Reference "Jurisdictions shall submit on or before August 1 of each fiscal year an Annual Project Update to provide current information on all approved on-going and carryover LR projects." Condition The City did not meet the August 1, 2018 deadline for submission of the Annual Project Update (Form B). However, the City submitted the Form Bon August 8, 2018. Cause The preparation and submission of the form was assigned to a new employee who was not aware of the deadline. Effect The City's Form B was not submitted timely as required by Proposition A and Proposition C Local Return Guidelines. Recommendation We recommend that the City establish procedures to ensure that the Form B is properly prepared and submitted before the due date of August 1st so that the City's expenditures of the Proposition A and Proposition C Local Return Funds will be in accordance with LACMTA's approval and the Guidelines. Furthermore, we recommend the City to retain a confirmation of receipt by LACMTA to indicate the form was submitted in a timely manner. Management's In FY 2019-20, the newly assigned employee has been made aware of the reporting Response deadline and has attended the necessary LACMTA training workshops. Finding Corrected The City subsequently submitted the Form B on August 8, 2018. No follow-up is During the Audit required. 36 CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2019 (Continued) PALRF: Finding No. 2019-003 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 P ALRF, non-payroll expenditures should be supported by properly executed contracts, invoices, and payment vouchers. Although payments to vendors were allowable and were properly supported by invoices and cancelled checks, the expenditures for Recreational Transit Project Code 140-02 were not supported by an existing contract or purchase order form for the following vendors: a) Thirteen (13) payments made to Fast Deer Bus Charter, Inc. in the total amount of$20,376; b) Two (2) payments made to Catalina Channel Express in the total amount of $11,114. This is a repeat finding from the prior two fiscal years. Canse Contracts agreements with the transportation companies were not previously enforced by the City. Effect No contract or purchase order form to support the payments made to the vendors, Fast Deer Bus Charter, Inc. and Catalina Channel Express, indicates a weakness in the City's internal control. Recommendation 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 Currently, the City department receives services from different bus charter vendors Response and prepares the necessary contracts for each vendor. 37 CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30,2019 (Continued) PALRF: Finding No. 2019-004 Compliance Reference According to Proposition A and Proposition C Local Return Guidelines, Section II.A.l.3, Recreational Transit Service, "Jurisdictions shall submit a Listing of Recreational Transit Services no later than October 15 after the fiscal year." Condition The City did not meet the October 15, 2019 deadline for submission of the Listing of Recreational Transit Services. However, the City submitted the listing on November 6, 2019. Cause The preparation and submission of the form was assigned to a new employee who was not aware of the deadline. Effect The City's Listing of Recreational Transit Services was not submitted timely as required by the Guidelines. Recommendation We recommend that the City establish procedures to ensure that the Recreational Transit Services Listing is properly prepared and submitted before the due date of October 15th so that the City's expenditures of the Proposition A Local Return Fund will be in accordance with LACMTA's approval and the Guidelines. Furthermore, we recommend that the City retain a confirmation of receipt by LACMTA to indicate the form was submitted in a timely manner. Management's In FY 2019-20, the newly assigned employee has been made aware ofthe reporting Response deadline and has attended the necessary LACMTA training workshops. Finding Corrected The City submitted the form to LACMTA on November 6, 2019. No follow-up is During the Audit required. 38 CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2019 (Continued) MRLRF: Finding No. 2019-005 Compliance According to MeasureR Local Return Guidelines, Section B (II.l), Expenditure Plan Reference (Form One): "Jurisdictions shall submit to LACMTA an Expenditure Plan, annually, on or before August 1st of each fiscal year." Condition The City did not meet the August 1, 2018 deadline for submission of Form One. However, the City submitted the Form One on August 7, 2018 . This is a repeat finding from the prior fiscal year. Cause The preparation and submission of the form was assigned to a new e mployee who was no t aware of the deadline. Effect The City's Form One was not submitted timely as required by MeasureR Local Return Guidelines. Recommendation We recommend that the City establish pro cedures to ensure that the Form One is properly prepared and submitted before the due date of August 1st so that the City's expenditures of the Measure R Local Return Funds will be in accordance with LACMTA's approval and the Guidelines. Furthermore, we recommend the City to retain a confirmation of receipt by LACMTA to indicate the form was submitted in a timely manner. Management's In FY 2019-20, the newly assigned employee has been made aware of the reporting Response deadline and ha s attended the necessary LACMTA training workshops. Finding Corrected The City subsequently submitted the Form One on August 7, 2018. No follow-up is During the Audit required. 39 CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30, 2019 (Continued) MMLRF: Finding No. 2019-006 Compliance According to Measure M Local Return Guidelines, Reporting Requirements Section Reference XXV, Expenditure Plan (Form M-Oue), "To maintain legal eligibility and meet Measure M LR Program compliance requirements, Jurisdictions shall submit to Metro an Expenditure Plan (Form M-Oue), annually, by August I of each year." Condition The City did not meet the August 1, 2018 deadline for submission of Form M-Oue. However, the City submitted the Form M-Oue on August 7, 2018. Cause The preparation and submission ofthe form was assigned to a new employee who was not aware of the deadline. Effect The City's Form M-Oue was not submitted timely as required by Measure M Local Return Guidelines. Recommendation We recommend that the City establish procedures to ensure that the Form M-Oue is properly prepared and submitted before the due date of August 1st so that the City's expenditures of the Measure M Local Return Funds will be in accordance with LACMTA's approval and the Guidelines. Furthermore, we recommend the City to retain a confmnation of receipt by LACMT A to indicate the form was submitted in a timely manner. Management's In FY 2019-20, the newly assigned employee has been made aware of the reporting Response deadline and has attended the necessary LACMTA training workshops. Finding Corrected The City subsequently submitted the Form M -One on August 7, 2018. No follow-up During the Audit is required. 40 CITY OF TEMPLE CITY SCHEDULE OF FINDINGS AND RECOMMENDATIONS June 30,2019 (Continued) TDAA3F: Finding No. 2019-007 Compliance According to LACMTA's Funding and Allocation Guidelines for the TDA Article Reference 3 Bicycle and Pedestrian Funds, "TDA Article 3 local funds may be placed on reserve for up to three years (i.e. no longer than the fourth June 30 after they were made available by Metro Board action). Agencies may accumulate three years worth of reserved TDA Article 3 local funds before being required to obligate them or return them to the TDA Article 3 fund. Any funds left on reserve by the local agency longer than three years are subject to lapse and future reallocation. For FY 2018-2019, any TDA Article 3 funds left on reserve for FY 2014-2015 are subject to lapse if not claimed by the agency by May 31, 2019." Condition At June 30, 2019, the City had lapsed fuuds of $15,273 from the June 30, 2015 allocation. Cause The planned project for TDA Article 3 funds did not commence in FY 2018-19 as anticipated by the City. Effect Untimely review of the funding status from the prior year allocation could result in losing the funding. Recommendation We recommend that the City implement internal control procedures to track the TDA Article 3 reserve balance to ensure that all TDA Article 3 funds are claimed and expended within the required timeline per the TDA Article 3 Guidelines. Management's In the future, the City will ensure that the TDA Article 3 funds are expended for Response qualified projects within the period allowed for the timely use of funds. 41 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, 2019 An exit conference was held on December II, 2019, with the City of Temple City. Those in attendance were: Simpson & Simpson Representative: John Longoria, Auditor City's Representative: Lee Ma, Accountant Matters Discussed: Results of the audit disclosed one(!) material weakness, one (1) significant deficiency and seven (7) non-compliance issues with Metro Guidelines. A copy of this report was forwarded to the following City representative(s) for their comments prior to the issuance of the final report: Lee Ma, Accountant 42 Simpson & Simpson, LLP 633 West 5'h Street, Suite 3320 Los Angeles, CA 90071 RE: CITY OF TEMPLE CITY ANNUAL FINANCIAL REPORT OF THE PROPOSITION A LOCAL RETURN FUND, PROPOSITION C LOCAL RETIJRN FUND, MEASURER LOCAL RETURN FUND, MEASURE M LOCAL RETURN FUND, AND TRANSPORTATION DEVELOPMENT ACT ARTICLE 3 FUND FOR THE FISCAL YEARS ENDED JUNE 30, 2019 AND 2018 I have received the annual financial report of the Proposition A Local Return Fund, Proposition C Local Return Fund, Measure R Local Return Fund, Measure M Local Return Fund, and Transportation Development Act Article 3 Fund for the years ended June 30, 2019 and 2018 for the City of Temple City and agree with the contents of the report except as indicated below: (Attach additional pages if necessary) Very truly yours, Name Title Date