23.B
The amendment of the Hemet Municipal Code to replace references from the Finance Director to the Administrative Services Director is necessary to ensure consistency and clarity in the City's legal and operational documents. This change reflects the broader responsibilities now encompassed by the Administrative Services Director's position, which includes oversight of financial operations as well as other administrative services.
The re-titling is part of the City's efforts to streamline operations and create more integrated service delivery models. By renaming the position, the City acknowledges the expanded scope of work and the strategic importance of the role in achieving organizational efficiency and effectiveness.
The proposed ordinance has been reviewed for legal sufficiency and compliance with applicable laws and regulations. The amendment process has been designed to ensure a seamless transition with minimal impact on day-to-day operations.
The proposed ordinance is a necessary update to align the Hemet Municipal Code, regulations, and policies with the current organizational structure and titles within the City. This amendment will ensure consistency across City documents and clarify the roles and responsibilities of the Administrative Services Director. Staff recommends the City Council approve the ordinance as presented.
STRATEGIC PLAN INTEGRATION:
GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.
Objective 2: Evaluate existing practices to ensure continuity with industry best practices.
ATTACHMENT(S):
Attachment 1 - Administrative Services Director Ordinance
23.B
ORDINANCE NO. 2024-XXX 1
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CITY OF HEMET
HEMET, CALIFORNIA
ORDINANCE NO. 2024-[XXX]
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
HEMET, CALIFORNIA, AMENDING THE HEMET
MUNICIPAL CODE, REGULATIONS, AND POLICIES TO
SUBSTITUTE REFERENCES TO THE FINANCE DIRECTOR
WITH THE ADMINISTRATIVE SERVICES DIRECTOR
WHEREAS, the City of Hemet (“City”) has undergone organizational changes, including the renaming or re-titling of certain positions; and WHEREAS, the City Council desires that the Hemet Municipal Code along with regulations and policies of the City be amended to reflect the change from Finance Director to Administrative Services Director.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HEMET DOES HEREBY ORDAINS AS FOLLOWS:
SECTION 1: FINDINGS. The recitals set forth above are hereby adopted as findings in support of this Ordinance.
SECTION 2: All references within the Hemet Municipal Code, regulations and policies of the City to the Finance Director are hereby amended to reference the Administrative Services Director.
SECTION 3: SEVERABILITY. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance is, for any reason, held to be
23.B
ORDINANCE NO. 2024-XXX 2
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invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional.
SECTION 4: EFFECTIVE DATE. This Ordinance shall take effect thirty (30) days from its passage by the City Council of the City of Hemet.
SECTION 5: PUBLICATION. The City Clerk is authorized and directed to cause this Ordinance to be published in the manner required by law.
INTRODUCED at the regular meeting of Hemet City Council on the 13thday of February, 2024.
APPROVED AND ADOPTED this 27th day of February, 2024.
____________________________
Joe Males, Mayor
ATTEST:
_____________________________
John Paul Maier, City Clerk
23.B
ORDINANCE NO. 2024-XXX 3
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State of California )
County of Riverside )
City of Hemet )
I, John Paul Maier, City Clerk of the City of Hemet, do hereby certify that the foregoing resolution was adopted by the Hemet City Council on the 27th day of February, 2024, and was passed by the following vote:
AYES: Council Members:
NOES: Council Members:
ABSTAIN: Council Members:
ABSENT: Council Members:
_____________________________
John Paul Maier, City Clerk
23.B
City of Hemet
City Council Meeting
STAFF REPORT
Meeting: City Council Meeting - Feb 13 2024
Department: Finance
Submitted by: Mark Prestwich, City Manager
Tori Roberts, Administrative Services Director;
☒ Receive and File ☐ Consent Calendar ☐ Business Item ☐ Public Hearing TITLE:
Fiscal Year 2024-25 Annual Budget Calendar
RECOMMENDED ACTION:
It is respectfully recommended that the City Council:
Receive and file the City of Hemet 24-25 Annual Budget Calendar.
ANALYSIS:
Each January, the City of Hemet begins its annual budget process. An integral tool of the process is the development of the Budget Calendar, which serves as a guide for the development of the Fiscal Year 2024-25 annual budget.
DISCUSSION:
Below is a list of key milestones in the annual budget process:
STRATEGIC PLAN INTEGRATION:
23.C
GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.
Objective 1: Operate in a financially sustainable manner.
Objective 2: Evaluate existing practices to ensure continuity with industry best practices.
Objective 3: Provide Council with policies that are consistent while lessening liabilities.
Objective 4: Increase employee retention by training and creating a positive workplace.
Objective 5: Streamline fire prevention coordination efforts.
23.C
City of Hemet
City Council Meeting
STAFF REPORT
Meeting: City Council Meeting - Feb 13 2024
Department: Administration
Submitted by: Mark Prestwich, City Manager
Mark Prestwich, City Manager;
☐ Receive and File ☐ Consent Calendar ☒ Business Item ☐ Public Hearing TITLE:
An Ordinance of the City Council of the City of Hemet, California, Adding Sections 74-100 through 74- 105 to the Hemet Municipal Code Related the Hotel Investment Program RECOMMENDED ACTION:
It is respectfully recommended that the City Council:
Waive full reading, read by title only, and introduce an Ordinance of the City of Hemet, California, Adding Sections 74-100 through 74-105 to the Hemet Municipal Code Related the Hotel Investment Program.
STRATEGIC PLAN INTEGRATION:
N/A
ATTACHMENT(S):
Hotel Report
23.D
A report will be forthcoming.
23.D
City of Hemet
City Council Meeting
STAFF REPORT
Meeting: City Council Meeting - Feb 13 2024
Department: Finance
Submitted by: Mark Prestwich, City Manager
Tori Roberts, Administrative Services Director;
☐ Receive and File ☐ Consent Calendar ☒ Business Item ☐ Public Hearing TITLE:
Measure U Compliance Monitoring Update
RECOMMENDED ACTION:
It is respectfully recommended that the City Council:
Consider and Provide Direction to the City Manager Regarding Proposed Scopes of Work for a Forensic Audit and a Financial Statement and Compliance Audit of Measure U Related Expenditures.
BACKGROUND:
Historical Compliance
Measure U, a General Transactions and Use Tax, was approved by City of Hemet voters in November 2016. The City began receiving revenues in April 2017. Measure U has been subject to external monitoring annually as part of the City's independent financial statement audit, in addition to the agreed-upon procedures engagements over financial activity in Fiscal Years 2018-19 and 2019-
20. The focus of this prior work included:
A determination if selected revenue and expenditure transactions were recorded in accordance with Generally Accepted Accounting Principles (GAAP).
A determination if expenditures were in accordance with (expended for the intended purpose) the provision of the Measure U ordinance and implementing resolution (includes payroll, nonpayroll, and maintenance and operations).
At the City Council Meeting of February 28, 2023, the Council requested the City Manager present options for the expenditure compliance of Measure U expenditures since inception in 2017 and options for enhancing the transparency of Measure U proceeds and expenditures (Hemet Ordinance No. 1918), and the implementing resolutions (Resolution Nos. 4703 & 4731).
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At the City Council Meeting of September 26, 2023, the Council received information regarding the prior audit oversight and monitoring activities that the Measure U fund (including related general ledger accounts) has been subjected to. The Council considered the information and requested that staff return with two proposed scopes of work:
A Forensic Audit, and
A standard audit of the financial statements, and compliance addressing the activity associated with Measure U, within the General Fund.
At the September 26th City Council Meeting, the City Manager and Administrative Services Director announced the deployment of additional transparency activities. Specifically, the Administrative Services Department's Finance Division commenced the publication of all historical expenditure activity associated with Measure U on the City's website, including a report that provides a budget to actual comparisons. This information will continue to be published quarterly. The staff report for this item has been included as Attachment 3.
ANALYSIS:
Key differences between each deliverable:
A forensic audit is typically warranted when there are concerns or suspicions of financial irregularities, fraud, or misconduct. The decision to conduct a forensic audit is based on the need to investigate and gather evidence related to specific allegations or suspicions. Here are common scenarios where a forensic audit may be warranted:
Suspected Fraud or Financial Misconduct:
Allegations or suspicions of fraudulent activities, including embezzlement, misappropriation of assets, financial statement fraud, or other deceptive practices.
Whistleblower Complaints:
Receipt of credible whistleblower complaints or tips regarding financial improprieties within an organization.
Legal or Regulatory Compliance Issues:
Concerns about non-compliance with laws, regulations, or internal policies that may have financial implications.
Asset Tracing:
Need to trace the flow of funds or identify the location and use of specific assets in cases of suspected misappropriation.
Contractual Disputes:
Disputes related to financial transactions, contracts, or agreements that require a detailed examination of financial records and transactions.
Shareholder or Stakeholder Concerns:
Concerns raised by shareholders, stakeholders, or governance bodies regarding potential financial irregularities.
Bankruptcy or Insolvency:
Situations, where a company faces financial distress, bankruptcy, or insolvency, and suspicious fraudulent activities, contribute to financial challenges.
Employee Misconduct:
Allegations of financial misconduct involving employees, such as kickbacks, bribery, or conflicts of interest.
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Conducting investigations into internal matters, such as allegations of financial improprieties made by employees, management, or other stakeholders.
Forensic audits require specialized skills in forensic accounting, investigative techniques, and a deep understanding of legal and regulatory frameworks. Professionals with experience in forensic accounting typically conduct them and may involve collaboration with legal experts. The decision to initiate a forensic audit should be carefully considered, and organizations often involve external experts to ensure independence and objectivity in the investigative process.
Standalone Financial Statement Audit:
A standalone audit, often referred to as a financial statement audit, is typically warranted in various situations where an independent examination of an entity's financial statements is deemed necessary. The primary purpose of a standalone audit is to provide assurance on the fairness and reliability of the financial information presented in the financial statements. Here are common scenarios where a standalone audit is warranted:
Statutory or Regulatory Requirements:
Many jurisdictions have legal or regulatory requirements that mandate certain entities, such as publicly traded companies, financial institutions, or government agencies, to undergo annual financial statement audits.
Bank Loan Requirements:
Lenders often require businesses to undergo a financial statement audit as a condition for obtaining loans or lines of credit. This provides assurance to lenders regarding the financial health and reliability of the borrower.
Internal Governance Policies:
Some organizations, even if not legally required, may have internal governance policies that mandate regular financial statement audits to ensure accountability and transparency.
Grant Compliance:
Organizations receiving government grants or funding may be required to undergo audits to ensure compliance with grant terms and conditions.
Governing Body Requests:
Governing bodies or management may decide to initiate a financial statement audit to address concerns, enhance internal controls, or demonstrate commitment to transparency and accountability.
Stakeholder Assurance:
Entities may choose to undergo a financial statement audit voluntarily to provide assurance to stakeholders, including customers, suppliers, and employees.
Credibility Enhancement:
Organizations seeking to enhance their credibility in the business community or among stakeholders may opt for a financial statement audit to demonstrate financial integrity.
Standalone audits are conducted by independent certified public accountants (CPAs) or audit firms.
The scope and nature of the audit procedures are determined based on the specific circumstances and risks associated with the audited entity. The ultimate goal is to provide stakeholders with confidence in the accuracy and reliability of the financial information presented in the financial statements. A standalone audit is not legally required under the Measure U Ordinance, or implementing resolution.
DISCUSSION:
23.E
Attachments 1 and 2 present the optional scopes of work for a forensic audit and a regular financial statement and compliance audit limited to the activity associated with Measure U, specifically within Fund 115, of the City's general ledger.
PREVIOUS COUNCIL ACTION:
At the two previous meetings, where this matter has been addressed, the Council has requested additional information and audit options.
STRATEGIC PLAN INTEGRATION:
GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.
Objective 1: Operate in a financially sustainable manner.
Objective 2: Evaluate existing practices to ensure continuity with industry best practices.
Objective 3: Provide Council with policies that are consistent while lessening liabilities.
ALTERNATIVE(S):
The cost associated with the options previously discussed ranges from an estimated $143,000 to $1.2 million, depending on the level of analysis. All options can be funded via Measure U Fund Balance. Some options presented may impact compliance with the Reserve Requirement adopted by the City Council.
ATTACHMENT(S):
Attatchment 1 Potential Forensic Audit Scope of Work
Attatchment 2 Potential Regular Audit Scope of Work (Measure U Activity Only) Attachment 3 Prior Staff Report _23-318 20230926 Meeting
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FORENSIC AUDIT
PROPOSED SCOPE OF WORK
RELEVANT PROFESSIONAL STANDARDS:
• Generally Accepted Accounting Principles (GAAP): GAAP provides a framework for financial reporting and accounting standards. While forensic audits often involve investigative procedures beyond traditional financial reporting, an understanding of GAAP is still crucial for assessing the accuracy and reliability of financial information.
• Generally Accepted Auditing Standards (GAAS): GAAS sets forth the principles and procedures for conducting audits. Forensic auditors may draw upon these standards, adapting them to the investigative nature of their work. GAAS helps ensure that audit work is performed with due professional care, skepticism, and thoroughness.
• Statement on Standards for Forensic Services (SSFS): Issued by the American Institute of Certified Public Accountants (AICPA), SSFS provides guidance specific to forensic services. It covers ethical principles, client relationships, engagement acceptance, planning, and reporting for forensic engagements.
• Association of Certified Fraud Examiners (ACFE) Standards: ACFE, a professional organization focused on fraud prevention and detection, has established standards for conducting fraud examinations. These standards address the entire fraud examination process, from planning and conducting the examination to reporting the findings.
• American Institute of Certified Public Accountants Code of Professional Conduct.
23.E
SCOPE OF WORK
• Financial Statement Analysis: Reviewing and analyzing financial statements to identify any discrepancies or anomalies.
• Transaction Testing: Examining individual transactions to ensure accuracy and detect any fraudulent activities.
• Compliance Review: Assessing adherence to relevant laws, regulations, and policies to identify any non-compliance issues.
• Interviews and Interrogations: Conducting interviews with relevant personnel to gather information and insights regarding the financial processes and transactions. • Data Analysis: Using data analytics tools to analyze large datasets for patterns, trends, and potential red flags.
• Documentation Review: Examining supporting documentation for financial transactions to ensure authenticity and accuracy.
• Asset Tracing: Tracing the flow of funds and identifying the destination of financial resources to uncover any misuse or misappropriation.
• Internal Controls Assessment: Evaluating the effectiveness of internal controls to prevent and detect fraudulent activities.
• Audit Trail Examination: Reviewing audit trails and system logs to trace user activities and identify any unauthorized access or manipulation of data. • Forensic Interviews: Conducting interviews with key personnel and stakeholders to gather information and perspectives on potential fraudulent activities. • Legal Compliance: Ensuring that the forensic audit process complies with legal and regulatory requirements.
• Other Procedures: Any other auditor-identified procedures necessary to mitigate audit risk. • Report Preparation: Compiling findings and preparing a comprehensive report that outlines the results of the forensic audit, including recommendations for corrective action.
23.E
PROPOSED SCOPE OF WORK
FINANCIAL STATEMENTS
RELEVANT PROFESSIONAL STANDARDS:
• Generally Accepted Accounting Principles (GAAP): GAAP provides a framework for financial reporting and accounting standards. While forensic audits often involve investigative procedures beyond traditional financial reporting, an understanding of GAAP is still crucial for assessing the accuracy and reliability of financial information.
• Generally Accepted Auditing Standards (GAAS): GAAS sets forth the principles and procedures for conducting audits. Forensic auditors may draw upon these standards, adapting them to the investigative nature of their work. GAAS helps ensure that audit work is performed with due professional care, skepticism, and thoroughness.
• American Institute of Certified Public Accountants Code of Professional Conduct.
23.E
STANDALONE FINANCIAL STATEMENT AND COMPLIANCE AUDIT
PROPOSED SCOPE OF WORK
The scope of work for a government financial statement audit and compliance audit involves a comprehensive examination of the financial statements, internal controls, and compliance with laws and regulations. Here's an overview of the key elements typically included in the scope of work for each type of audit.
The auditor’s reports should address all the relevant matters identified in the AICPA Audit and Accounting Guide regarding “Other Financial Presentations”, as appropriate.
Materiality:
The auditor, in consultation with management and considering relevant stakeholders, determines the materiality threshold. Materiality is often expressed as a percentage of a financial statement benchmark, such as total assets, total revenue, or net income.
Reports to be Issued:
1. Independent Auditor’s Report
2. Auditor’s Report on Compliance with Laws and Regulations Areas to be Examined:
Measure U Financial Statements (Fund 115):
Examine the basic fund financial statements (Balance Sheet & Statement of Revenues, Expenditures, and Changes in Fund Balance).
Note: These will not be GAAP Compliant Financial Statements, as they will not include the introductory section, notes to the financial statements, required supplementary information, or supplementary information. Individual fund-level financial statements are only subject to relevant audit procedures as determined by the external independent auditor.
Audit Planning:
Develop an understanding of the entity's operations, systems, and internal controls to plan the audit effectively.
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Risk Assessment:
Identify and assess risks of material misstatement in the financial statements. This includes evaluating internal controls and the control environment.
Substantive Testing:
Conduct substantive audit procedures to obtain sufficient and appropriate audit evidence regarding the accuracy and completeness of the financial statements.
Internal Control Evaluation:
Assess the design and operating effectiveness of internal controls relevant to the preparation and fair presentation of financial statements.
Compliance Testing:
Assess compliance with accounting principles and standards, including Generally Accepted Accounting Principles (GAAP) or the applicable accounting framework.
Audit Documentation:
Document audit procedures, findings, and conclusions in accordance with auditing standards.
Maintain an audit trail for review and documentation purposes.
Audit Reporting:
Issue an audit report expressing an opinion on the fairness of the financial statements in accordance with auditing standards. Communicate any material weaknesses or significant deficiencies in internal controls.
Government Compliance Audit:
Compliance Assessment:
Examine the government entity's compliance with applicable laws, regulations, and contractual agreements.
Audit Planning:
Develop a plan for assessing compliance risks, including understanding relevant laws and regulations.
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Risk Assessment:
Identify and assess the risks of non-compliance, including evaluating the effectiveness of internal controls related to compliance.
Substantive Testing:
Conduct substantive procedures to obtain evidence regarding the entity's compliance with laws and regulations.
Internal Control Evaluation:
Evaluate the design and operating effectiveness of internal controls related to compliance.
Documentation and Evidence:
Document audit procedures, findings, and conclusions related to compliance. Gather and retain sufficient and appropriate evidence.
Compliance Reporting:
Issue a compliance report expressing conclusions on whether the government entity complied, in all material respects, with the specific laws, regulations, and contractual provisions.
Communication of Non-Compliance:
If instances of non-compliance are identified, communicate these findings in the audit report and, if necessary, recommend corrective actions.
23.E
City of Hemet
City Council Meeting
STAFF REPORT
Meeting: City Council Meeting - Sep 26 2023
Department: Finance
Submitted by: Mark Prestwich, City Manager
Tori Roberts, Administrative Services Director;
☐ Receive and File ☐ Consent Calendar ☒ Business Item ☐ Public Hearing TITLE:
Report Back and Consideration of Further Measure U Oversight and Monitoring Options RECOMMENDED ACTION:
It is respectfully recommended that the City Council:
Discuss and provide direction to the City Manager regarding possible historical evaluation of compliance laws and regulations related to Measure U expenditures since inception (Hemet Ordinance No. 1918) and the implementing resolutions (Resolution Nos. 4703 & 4731).
BACKGROUND:
At the City Council Meeting of February 28, 2023, the Council requested the City Manager present options for the expenditure compliance of Measure U expenditures since inception in 2017, and options for enhancing the transparency of Measure U proceeds and expenditures (Hemet Ordinance No. 1918), and the implementing resolutions (Resolution Nos. 4703 & 4731).
DISCUSSION:
The City Manager and Administrative Services Director, a licensed Certified Public Accountant, have discussed options to evaluate the historical compliance with the enacted legislation and implemented resolution, as well as options to enhance the transparency of Measure U proceeds and expenditures.
Historical Compliance
Measure U, a General Transactions and Use Tax, was approved in November 2016. The City began receiving revenues in April 2017. Measure U has been subject to external monitoring as part of the City's independent financial statement audit, in addition to the agreed-upon procedures engagements over financial activity in Fiscal Year 2018-19 and 2019-20. The focus of this prior work included:
23.E
• A determination if selected revenue and expenditure transactions were recorded in accordance with Generally Accepted Accounting Principles (GAAP).
• A determination if expenditures were in accordance with (expended for the intended purpose) the provision of the Measure U ordinance and implementing resolution (includes payroll, nonpayroll, and maintenance and operations).
Option 1 - Agreed Upon Procedures From Inception through June 30, 2023 This strategic and targeted evaluation would include the following:
• Develop an understanding of the approved voter-enacted legislation, and implement resolutions for Measure U and Measure H;
• Perform a specific evaluation of compliance with the intended revenue split between the Fire and Police Department budgets and
• Perform a Compliance Evaluation Over Expenditures (including salary and benefits, purchases of goods and services over $5,000, and transfers between the respective Measure U funds and other City funds, if applicable).
Option 1 is estimated to cost $143,000. This cost of Option 1 could be reduced by limiting the scope to the immediately preceding three fiscal years.
Option 2 - Comprehensive Historical Evaluation for Fiscal Years 2020-21, 2021-22, and 2022- 23 Given the City's prior agreed-upon procedures engagements in Fiscal Years 2018-19 and 2019- 20, Option 2 would focus on all expenditures in the immediately preceding three fiscal years. The cost of this approach is estimated to be approximately $600,000.
Option 3 - Comprehensive Historical Evaluation
A comprehensive historical evaluation would perform a 100% evaluation by transaction evaluation for compliance with the implementing resolutions (line item review). Given the volume of transactions since 2017, it is estimated that such a review would cost in excess of $1.2 million. It is not likely to yield a statistically different outcome than an alternate agreed-upon procedures engagement, which focuses on transactions of a certain quantitative valuation (e.g., $5,000 or higher).
Transparency
The City Manager and Administrative Services Director recommend the following enhancements to the transparency of Measure U proceeds and expenditures:
• Posting of all expenditure detail reports for each fiscal year since inception on the City's Measure U Citizen Oversight Committee webpage.
• Beginning in Fiscal Year 2023-24, publish and post a quarterly comparison of Measure U spending to date in comparison to the spending plan approved at the beginning of the fiscal year. • Publish and post on the website any report directed by the City Council from the options presented above.
PREVIOUS COUNCIL ACTION:
23.E
None.
STRATEGIC PLAN INTEGRATION:
GOAL THREE: COMMUNITY ENGAGEMENT
To connect and participate in a constant dialogue between members of the community, City staff, and elected officials to promote togetherness and positivity.
Objective 2: Increase transparency for the public.
Objective 3: Increase the community's pride within the City.
GOAL FIVE: ORGANIZATIONAL EFFECTIVENESS
To identify the work needed inside the City organization to effectively provide services to the community and ensure financial stability.
Objective 1: Operate in a financially sustainable manner.
Objective 2: Evaluate existing practices to ensure continuity with industry best practices.
Objective 3: Provide Council with policies that are consistent while lessening liabilities.
FISCAL IMPACT:
The cost associated with the options offered ranges from an estimated $143,000 to $1.2 million, depending on the level of analysis. All options can be funded via Measure U Fund Balance. Some options presented may have an adverse effect on compliance with the 40% Reserve Requirement adopted by the City Council on June 27, 2023.
ATTACHMENT(S):
20230926 Measure U Audit Oversight And Monitoring FINAL
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Hemet City Council
Measure U Oversight, Monitoring & Transparency
Administrative Services Department
September 26, 2023
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Strategic Plan Integration
Organizational
Effectiveness
Community
Engagement
Select the Strategic Plan
objective that relates and
the related Action Item.
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Follow up on Previous Council Direction
• February 28, 2023
• The Council requested the City Manager present options • Expenditure compliance of Measure U expenditures since inception in 2017
• Enhancing the transparency of Measure U proceeds and
expenditures (Hemet Ordinance No. 1918), and the
implementing resolutions (Resolution Nos. 4703 & 4731). 3
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4 • Local CPA firm engaged to perform limited assurance procedures, under the professional standards as an Agreed Upon Procedures Engagement (AUP)
• Periods Covered:
• FYE June 30, 2019 and FYE June 30, 2020
• Procedure Focus
• Determine if selected revenue and expenditure transactions were recorded in accordance with Generally Accepted Accounting Principles (GAAP) • Determine if expenditures were in accordance with (expended for intended purpose) the provisions of the Measure U ordinance and implementing resolution. Includes: Payroll, nonpayroll, and maintenance and operations.
History of Assurance Services Provided
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• Outcomes:
• No instances of noncompliance were identified, however, in the procedures performed over the activity related to FY 19- 20, the firm did identify the $1.2 million of additional expenditures allocated to the Measure U fund, as approved by the City Council.
• Included increases in compensation and benefit costs, which were absorbed by the general fund during the year, but were ultimately allocable to the Measure U fund.
History of Assurance Services Provided
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Options
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Option 1 : Historical Evaluation
• Determine the Scope of the Monitoring
• Historical Lookback from FYE June 30, 2023 to inception of program • Activities to include
• Develop an understanding of the approved voter enacted legislation, and implementing resolutions for Measure U and Measure H
• Perform a specific evaluation of compliance with the intended revenue split between the Fire and Police Department budgets
• Compliance Evaluation Over Expenditures
• Include salary and benefits
• Purchase of goods and services
• Transfers between the respective Measure U funds and other City funds, if applicable
• Expenditures for one time projects or activities outside of the normal ongoing appropriations.
Most
Desirable
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Option 1: Cost Estimate and Assumptions
8 Stage Hours
Planning 55
Fieldwork 500
Reporting and wrapup 60
Total Estimated Hours 615
Estimated Rate per hour $ 233
Estimated Cost for Proposed Scope $ 143,295 Page 11 of 17 Page 21 of 27
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Option 2: Comprehensive Historical Evaluation
• Same as option one, except:
• Perform 100% evaluation by transaction evaluation for compliance with the implementing resolutions.
• Drastically increases level of effort
• Approximately 5x-8x increase in the level of effort (per fiscal year covered)
• Potential Cost: Greater than $600 thousand
• Is not likely to yield a different outcome
For Fiscal years 2020-21, 2021-22, and 2022- 23 Only
9
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Option 2: Cost Estimate and Assumptions
10 Stage Hours
Planning 60
Fieldwork 2,400
Reporting and wrapup 60
Total Estimated Hours 2,520
Estimated Rate per hour $ 233
Estimated Cost for Proposed Scope $ 587,160
For Fiscal years 2020-21, 2021-22, and 2022- 23 Only Page 13 of 17 Page 23 of 27
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Option 3: Comprehensive Historical Evaluation
• Same as option one, except:
• Perform 100% evaluation by transaction evaluation for compliance with the implementing resolutions.
• Drastically increases level of effort
• Approximately 5x-8x increase in the level of effort
• Potential Cost: Greater than $1.2 million
• Is not likely to yield a different outcome
11 For all Fiscal Years from Inception through June 30, 2023
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Option 3: Cost Estimate and Assumptions
12 For all Fiscal Years from Inception through June 30, 2023 Stage Hours
Planning 150
Fieldwork 4,900
Reporting and wrapup 120
Total Estimated Hours 5,170
Estimated Rate per hour $ 233
Estimated Cost for Proposed Scope $ 1,204,610 Page 15 of 17 Page 25 of 27
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Enhancements to Transparency
• Posting of all expenditure detail reports for each fiscal year since inception on City's Measure U Citizen Oversight Committee webpage.
• Beginning in Fiscal Year 2023-24, publish and post a quarterly comparison of Measure U spending to date in comparison to the spending plan approved at beginning of the fiscal year. • Publish and post on website any report directed by the City Council from options presented above.
13
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Discussion & Follow Up
23.E