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HomeMy WebLinkAbout0461.0934 A'UqtlBt .5, 1993 HONORABLE CITY COUNCIL Palo Alto, California APPlX RElOR.'l' or DI SPICIAL GIS IJ"N STU" IXPBOVEM2Nl' lqRD Members of the council: Report in Briaf This is an informational report and no CQuncil action is required. The State Controller recently completed an audit of the City'S Special Gas Tax street Improvement FUnd. The purpose of the audit was to verify that all monies received by the City under the Hiqhltay User Tax Fund w-e.re expended in accordance with the requirements established in the streets and Highways Code. The audit was completely clear of findings. lackcmmnd The scope of the audit covered all financial aspects of the city~s gas tax funds, with special emphasis on the procedure.s for disbursing the funds, the legality and authorization of purchases and expenditures, and the overall internal controls placed on the purchases/disbursements cycle. The audit entailed extensive discussions vith Financlt. s:taff .for a. complete: understanding of po11cies and procedures in this area. and an examination of samp~e transactions which verified that necessary internal controls were in place and functioning properly~ There were no audit findings in the area o~ compliance with State regulations reqarding Highway Users Tax Funds~ In addition, no matters invo1ving the internal control structure and its operation were noted~ Respectfully subaitted, G~/J ,,(,,! f R ~-----I '// II:J " ,<;' CAROL:.L '»ilLY' I!AlmTSON Accauntinq Manager Finance Director ~ E FLEMING Ci Y Manager CMR: 461: 93 ·' • CITY OF PALO .. .LTD AUDIT REPORT OF mE SPECIAL GAS TAX SrR.EET IMPROVEMENT FUND For The Fis<aI Year Ended June 30, 1992 TABLE OF CONTENTS PAGE Auditor's iIJ¥>rt .....•••....................•...•.............. 1 Analysis of Changes in Fund Balances F"1S<al Year Ended June 30, 1992 .•.....•...••...••...•.......•• 3 Audit"". Report on the Intemal Controi Structure .•.•..•....•........... 4 • CITY OF PALO AI. TO AUDIT REPORT OF 'mE SPEaAL GAS TAX SJ'REET IMPROVEMENT FUND For The Fiscal Year Ended June 30, 1992 GRAYDAVlS STATE CONTROu.F.R DIVISION OF LOCAL GOVERNMENT FISCAL AFFAIRS BUREAU OF CI1Y STREET AUDITS Program Manager ........ Steven A. Mar Audit Supervisor .••..... WilIiam Wong (916) 323-2357 Auditor ....... .AbduJ Shabib ;11" ' .. ••• , . ~ <I!"~ ... " GRAY DAVIS C!I.n,lnJUn of lip: ~. of QIajifunria June 25,1993 To the City Council City of Palo Alto, California We have audited the tinancial aansactions of the Special Gas Tax Stre..t !mprovemcnt Fund of the City of Palo Alto for the Jiscal year ended June 30, 1992. The purpose of our audit was to determine if Highway Users Ta.. Appmtionmcnts re:eived by the City were completely accounted for in a special revenue fund, were expended exclusively for authorized pwposes, or safeguarded for future expenditure, and to determine if recoveries of prior gas tax expenditures were identified and properly credited to the opeda1 fund. Our audit objectives were derived from the requiremenIs of the Streets and Highways Gode. Our audit was perfomled in acron!ance with Government Auditing Standards, a. issued by the Comptroller General of the United States. Accordingly, we considered the City's inrema1 control structure to the extent necessary to plan our audit. In addition, we tested seIec:ted transactions and baIanc:es of the Gas Tax Fund and perfonned other procedur .. we considered necessary in the circumstances. The accompanying AIIalysir of Changes in FwuJ &/an= represent the expenditures and resulting unexpended fund balances allowed by the Stre..ts and Highways Code and are not intended to be presented in accordance with generally accepted accounting principles. As a result of our audit, we bav. determined that the City of Palo Alto attounted for, expended, and safeguarded its High~ Users TaJ( funds in accordance with the requirements of the Streets and Highways Gode for the Jiscal year ended June 30, 1992. The results of our reJatOd consideration of the City's internal control structure are disclosed in the accompanying Auditor's Repolt on the Internal Conuol SlTUCture. 1 :,. City Council of the City of Palo Alia June 25, 19Q3 This report, and the accompanying financial presentations, relate only to evaluating the City's compliance with the Streets and Highways Code and does not extend to any of the fj"an';.al statements of the City of ?ale> Alto. The report is intended fO!" the use of management, the City Council and the Sta!e Col1trolla's Office, and sbouJd not be used for any other J'IlI'POS". This restriction is not intended to limit the distribution of the report, whicl! upon acceptaru:e by the City Council is a matter of public record. Cordia1Jy, GRAY DAVIS, STATE CONTROLLER by ~~ f>~ Kerry M<CIe1land, Chief Buteau of City Street Audits (916) 44S-S1s3 2 I j Beginning !lalance Re\'eIWeS: ApportiomtleIllS Interest ReimI>uroements Mis<:elIaneous Total Revenues Funds Available I!xpenditures: Engineering CotIsauctioo • CITY OF PALO ALTO SPECIAL GAS TA.X SfREET IMPROVEMENT FUND ANALYSIS OF CHANGES IN FUND BALANCES BY APPORTIONMENT SOURCE For The fiscal Vear Ended June 30, 1992 Streets and PJghWM Code Sections Wl:i 2106 ~ ~ $ 166,798 $ 1,008,439 $ 61,814 $ -0-$ 241,990 264,831 469,998 7,500 -C-108,088 -0--C- -C-193,270 -C--C- .0-41.670 .Q-:P- 241,990 607859 469998 7.500 408,788 1,616,298 531,812 7,500 .0-84,705 -0-7,500 .Q-.Q-~3Q,!iZ~ .Q- Total Expenditures .Q. 84,705 530 6Z5 7.500 Emling FWId I!al.aI= S ~I~~ 1,~~11523 ~ 1,1 3Z ~ -0-1 3 Total 1,237,051 984,312 108,088 . 193,270 41670 L327347 2,564,398 92,205 :i3l! fiZ:i 622 880 1 2:11 51!! , •'_. "'" .-. , ... GRAY DAVIS ar-moJln uf '4e ~ of C!laIifnnria June 25, 1993 To the City Council C;1y of Palo Alto, California w. have audited the financial transactions of the Special Gas Tax Street Improvement Fund of the City of Palo Alto for the fiscal year ended June 30, 1992, and have issued ourrepon thereon dated June 25, 1993. We <onducted aur audit in accocdance with Govenur.en( Auditi.'g Standards, as issued by the Comptroller General of the United States. These standards lequire that we plan and perform the audit to obt2ln a reasonab~ assurance about whether the Cily of Palo Alto aa:ounted for, exp<>nded, and safeguarded its Highway U5er5 Tax funds in accordance with the requireInents of the Streets and Highways Code. In planning and performing our audit, we considererl the CitY'. intemal control structure to se1ect effective audit procedures for the determination of whether the Cily complied with the Streets and Highways Code and not to provide assurance on the inlemal control stNcture. The ~ of the C;ty of Palo Alto is re.pon.ibl~ for establishing and =1n t a jning an internal control structure. In fulfilling this responsibility, estimates and judpnents by JIIIII1O&!'1"D' are required to assess the expected benefits and related COSts of internal control structure policies and procedures. The objectives of an intemal control structure are to provide management with reasonable, but not absolute, essurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are aecuted in aa:ordance with management's authorization and recorded properly to pennit the preparation of Iintmcial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any intemnl control structure, errors or irregu1arities may nevertheless 0C<:Ur and not be derected. Also, projection of any evaluation of the srructure to future periods is subject to the risk that procedures may beoome Inadequate because of changes in conditions or that the design and operation af policies and procedures may deteriorate. 4 .;>-- • • City CotmciJ of the City of Palo Alto June 25, 1993 For the putp<>Se of this report, we have classjfjed the significant internal control structure policies and pJOCedw-es of the pun:hases/disbursements cycle. Our st>,dy included the preceding categoIy, and we obtained an undemanding of the design of relevant policies and proeedures and whether they have been placed in operation, and we assessed the effect of conttol risk on the design of our aueli'. procedures. Our consideration of the intemal control structure would not necessarily disclose all matters in the in.temal control suucrure that might be material weaknesses under standards established by the American Institute of Cenified Public hcountants. A material weakness is a reportable condition In which the design or operation of one or more of the specifk internal conttol sttucture elements does not reduce to a relatively low level the risk that errors or iIregularlties in amounts w.t would be material to the financial transactions of the Special Gas Tax Street Improvement Fund being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving me internal control struc!W"e and its operation that we consider to be material weaknesses as defined above. This report is lntendecI for the information of management and me City Cotmcil. This restrlction is not intended to limit the distn"bution of the report, which upon acceptance by the City CotmciJ is a matter of public record. Cordially, GRAY DAVIS, STATE CONTROlLER by 5 Kerry McOeIIarui, Chief Bw-eau of City Street Audits (916) 445-5153 .-' '.-! . -. "