HomeMy Public PortalAbout02 February 11, 2004 Budget & ImplementationRIVERSIDE COUNTY TRANSPORTATION COMMISSION
X7040
BUDGET AND IMPLEMENTATION COMMITTEE
AUDIT AD HOC COMMITTEE
AGENDA
11:00 A.M.
Wednesday, February 11, 2004
COUNTY OF RIVERSIDE ADMINISTRATIVE CENTER
4080 Lemon Street, 3rd Floor
Conference Room A
Riverside, California
1) Commission Audit Results
O vervie w
This item is for the Committee to:
1) Receive and file the Fiscal Year 2002-2003
Comprehensive Annual Financial Report;
2) Receive and file the Fiscal Year 2002-2003 Local
Transportation Fund Audited Financial Statements;
3) Receive and file the Fiscal Year 2002-2003 State Transit
Assistance Fund Audited Financial Statements;
4) Receive and file the FY 2002-2003 Compliance Report;
5) Receive and file the FY 2002-2003 Management Letter;
6) Receive and file the FY 2002-2003 Audit Results Report;
7) Forward to the Budget and Implementation Committee,
and
8) Forward to the Commission for final action.
2) TDA and Measure A Audit Results
O vervie w
This item is for the Committee to:
1) Receive and file the TDA and Measure A Audit Results
Report;
2) Forward to the Budget and Implementation Committee,
and
3) Forward to the Commission for final action.
AGENDA ITEM 1
RIVERSIDE COUNTY TRANSPORTA TION COMMISSION
DATE:
February 11, 2004
TO:
Audit Ad Hoc Committee
FROM:
Theresia Trevino, Chief Financial Officer
THROUGH:
Eric Haley, Executive Director
SUBJECT:
Fiscal Year 2002-2003 Commission Audit Results
STAFF RECOMMENDATION:
This item is for the Committee to:
1) Receive and file the Fiscal Year 2002-2003 Comprehensive Annual
Financial Report;
2) Receive and file the Fiscal Year 2002-2003 Local Transportation Fund
Audited Financial Statements;
3) Receive and file the Fiscal Year 2002-2003 State Transit Assistance
Fund Audited Financial Statements;
4) Receive and file the Fiscal Year 2002-2003 Compliance Report;
5) Receive and file the Fiscal Year 2002-2003 Management Letter;
6) Receive and file the Fiscal Year 2002-2003 Audit Results Report;
7) Forward to the Budget and Implementation Committee; and
8) Forward to the Commission for final action.
BACKGROUND INFORMATION:
In April 2003, McGladrey & Pullen LLP was selected to perform an audit of the
Commission's basic financial statements included in the Comprehensive Annual
Financial Report (CAFR), Local Transportation Fund, State Transit Assistance Fund,
and federal awards. The audit has been completed, and all reports have been issued
by McGladrey & Pullen.
The Commission's CAFR consists of three sections: introductory, financial, and
statistical. While the introductory and statistical sections were not audited by
McGladrey & Pullen, the financial section was audited by McGladrey & Pullen. The
Commission received an unqualified opinion on its basic financial statements from
McGladrey & Pullen, which is the highest form of assurance. The audit report also
includes an explanatory paragraph related to restatements of previously reported fund
balance and net asset amounts. Limited procedures were performed related to the
required supplementary information, including Management's Discussion and Analysis;
such information was not audited. The other supplementary information was subject
to the auditing procedures applied in the audit of the basic financial statements, and, in
the opinion of the auditors, it is fairly stated in relation to the basic financial
statements.
The basic financial statements reflect the new reporting model as required by the
Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial
Statements —and Management's Discussion and Analysis —for State and Local
Governments. The new reporting model was implemented in Fiscal Year 2001-2002.
The basic financial statements include government -wide financial statements and fund
financial statements. Additionally, Management's Discussion and Analysis is required
and provides a narrative overview and analysis of the Commission's financial activities
for the fiscal year.
As reported in Note 13 to the financial statements, there were two significant
restatements of beginning net assets and fund balances related to an equity interest in
the Southern California Regional Rail Authority (SCRRA) reported as capital assets and
to sales tax revenue. As a result of a continuing assessment of matters related to the
implementation of GASB 34, management has determined that the equity interest
previously reported as a capital asset cannot be computed properly on an annual basis.
Accordingly, net assets at the beginning of the year reported on the government -wide
financial statements were reduced by approximately $25.7 million. We believe this is
a conservative application of generally accepted accounting principles. The second
adjustment for sales tax revenue reflects a revised interpretation of the period for
which sales taxes should be accrued at year end. This resulted in an increase in
beginning of the year Measure A fund balances and government -wide net assets of
approximately $5.2 million and Local Transportation Fund fund balances of
approximately $6 million. Other transportation agencies made similar restatements for
sales tax revenues.
The audit reports related to the separately issued financial statements of the Local
Transportation Fund and the State Transit Assistance Fund also reflect unqualified
opinions from McGladrey & Pullen. These financial statements are required to be
issued separately under the Transportation Development Act; however, they are also
included in the fund financial statements in the CAFR.
The Compliance Report, often referred to as the Single Audit Report, includes the
reports on compliance and internal control over financial reporting and over federal
awards. These reports noted no matters considered to be material weakness in
internal control and no instances of noncompliance.
While the management letter is addressed to management, it has been Commission
practice to present it to the Committee and Board of Commissioners. The
management letter includes recommendations for improvements and operational
efficiencies related to internal control and other matters noted during the audit.
McGladrey & Pullen's management letter consists of one recommendation related to
the inclusion of the Gann Appropriation Limit calculation in the annual budget
preparation process. We concur with the recommendation and will implement the
suggestion during the preparation of the Fiscal Year 2004-2005 budget.
Professional auditing standards require the auditors to communicate to the audit
committee, or an equivalent group, to ensure that it is provided with additional
information regarding the scope and results of the audit that may assist the group in
overseeing management's financial reporting and disclosure process. Such required
communications will be discussed with the Committee in a presentation by McGladrey
& Pullen.
Attachments: Fiscal Year Ended June 30, 2003 Comprehensive Annual Financial
Report
June 30, 2003 Local Transportation Fund Financial and Compliance
Report
June 30, 2003 State Transit Assistance Fund Financial Report
June 30, 2003 Compliance Report
Management Letter dated October 15, 2003
Communications to the Audit Ad Hoc Committee
AGENDA ITEM 2
RIVERS/DE COUNTY TRANSPORTA TION COMMISSION
DATE:
February 11, 2004
TO:
Audit Ad Hoc Committee
FROM:
Theresia Trevino, Chief Financial Officer
THROUGH:
Eric Haley, Executive Director
SUBJECT:
Fiscal Year 2002-2003 TDA and Measure A Audit Results
STAFF RECOMMENDATION:
This item is for the Committee to:
1) Receive and file the Transportation Development Act (TDA) and
Measure A Audit Results Report for the Fiscal Year 2002-2003;
2) Forward to the Budget and Implementation Committee; and
3) Forward to the Commission for final action.
BACKGROUND INFORMATION:
In April 2003, Caporicci & Larson (C&L) was selected to perform the audits of
Riverside County's TDA claimants and Measure A recipients. C&L has completed the
audits of most of the local governments, non-profit agencies, and transit agencies that
receive TDA and Measure A funds and is in the process of preparing and will issue its
reports.
Professional auditing standards require the auditors to communicate to the audit
committee, or an equivalent group, to ensure that it is provided with additional
information regarding the scope and results of the audit that may assist the group in
overseeing management's financial reporting and disclosure process related to the TDA
claimants and Measure A recipients. Such communications related to C&L's
responsibilities and approach, summary of results, and preliminary findings will be
discussed with the Committee in an audit results presentation by Caporicci & Larson.
Upon receipt of all Measure A recipients' audited financial statements related to the
local streets and roads programs, Commission finance staff will perform an analysis of
fund balances at June 30, 2003 compared to the last three years of Measure A
allocations to determine if any excess balances exist. Should any excess balances
exist, Commission staff will meet with the local agencies to obtain an explanation for
the carryover and explore possible alternatives for moving projects faster. In
accordance with the Commission's Program and Funding Guide, a report of our
findings will be presented to the Budget and Implementation Committee for further
action.
Attachments: Audit Results Presentation to the Audit Ad Hoc Committee