OFFICE OF THE CITY AUDITOR
Long Beach, California
August 2, 2022
HONORABLE MAYOR AND CITY COUNCIL
City of Long Beach
California
RECOMMENDATION:
C-6
LAURAL. DOUD, CPA
City Auditor
Receive and file the Quarterly Report of Cash and Investments for the quarter ending December 31, 2021.
DISCUSSION:
Pursuant to Section 803 of the City Charter, the Office of the City Auditor is charged with verifying cash in the City Treasury on a quarterly basis and providing a written report to the City Council. Attached is the Quarterly Report of Cash and Investments for the quarter ending December 31, 2021.
TIMING CONSIDERATIONS:
This item is not time sensitive.
FISCAL IMPACT:
There is no fiscal impact.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
Laura L. Doud, CPA
CITY AUDITOR
attachment
411 West Ocean Boulevard, 8th Floor, Long Beach, California 90802 (562) 570-6751 [email protected] CityAuditorlauraDoud.com
THE CITY OF LONG BEACH
OFFICE OF THE CITY AUDITOR
QUARTERLY AUDIT OF (ASH AND INVESTMENTS
m r 1
WINDES
TABLE OF CONTENTS
Executive Summary ......................................................................................... 1 Background ................................................................................................. 1-2 Audit Objectives, Scope, and Methodology .......................................................... 2-3 Results and Conclusions ................................................................................. 3-4 Attachment I: Pooled and Non-Pooled Cash and Investment Balances By Fund .............. 5-9 Attachment II: Pooled and Non-Pooled Cash and Investment Balances By Security Type .......................................................................................... 10 WINDES
AUDI( i TA>< i ADVISORY
EXECUTIVE SUMMARY
Long Beach I Irvine I Los Angeles
www.windes.com
844.4WINOES
We have conducted a performance audit of the cash and investment balances of the City of Long Beach (the City) as of December 31, 2021. The City of Long Beach's management is responsible for the cash and investment balances. As of December 31, 2021, the City's cash and investment portfolio totaled approximately $2 billion.
We conducted this performance audit in accordance with Generally Accepted Government Auditing Standards. Those standards require that we plan and perform the audit to obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
BACKGROUND
City Charter Mandate
Pursuant to Section 803 of the Charter of the City of Long Beach, California, the Office of the City Auditor is charged with verifying cash and investment balances in the City Treasury on a quarterly basis and providing a written report to the City Council. The Office of the City Auditor has contracted Windes, Inc. to perform the December 31, 2021 audit.
The audit of cash and investment balances of the City of Long Beach includes verifying cash and investments with outside depositories, and evaluating the City Treasurer's compliance with the relevant provisions of the California Government Code and the City's Investment Policy, which is adopted annually by the City Council.
Pooled Cash and Investments
The City's pooled cash is a grouping of the City's available cash for investments. The larger amount of money involved in a pool allows the City to earn a higher rate of return than each fund could receive by itself. Pooled funds that are not needed for operations are invested by the Treasury Bureau. The interest income earned in pooled cash and investments is apportioned to funds based on the ratio of daily cash balances to the total of pooled cash and investments.
Non-pooled Cash and Investments
Generally, non-pooled cash and investments are used for specific project operations or pledged for reserves or interest payments of outstanding debt.
1 BACKGROUND (CONTINUED)
Chandler Asset Management
The City has an agreement with Chandler Asset Management ("Chandler") to provide investment advisory and management services related to the City's pooled investment portfolio.
The term of the agreement beginning January 1, 2015 was extended through December 31, 2023. Chandler manages the City's pooled investment portfolio on a non-discretionary basis and provides ongoing oversight of investment activity, including "best practice" recommendations, updates on both financial and regulatory developments, investment strategy review, and performance and credit analysis related to investments in the City's investment pool.
AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY
The objectives of our performance audit were to reconcile cash and investments as to the amount and description recorded on the City's books with outside depositories and to evaluate the City's compliance with the relevant provisions of the California Government Code Section 53601 and the City's Investment Policy.
The scope of this audit was limited to the quarter ended December 31, 2021.
We performed the following procedures:
• Obtained an understanding of the internal controls surrounding the City's cash and investment process.
• Obtained confirmations of cash held by banks and investments held by the City Treasurer's safekeeping agent and other custodians as of December 31, 2021 and reconciled them to the City's general ledger.
• Reconciled the balance of total investments on the City Treasurer's Investment Activity Portfolio Statistics Report (Sympro) at December 31, 2021 to the City's general ledger. • Obtained bank and investment reconciliations at December 31, 2021 and traced balances to the City's general ledger. This also included testing, on a sample basis, the adjustments made on the reconciliation to ensure they are valid adjustments. • Compared investments listed on the City Treasurer's Investment Activity Portfolio Statistics Report (Sympro) at December 31, 2021 to the types of investments authorized for the City in accordance with the City's Investment Policy and the relevant provisions of the California Government Code.
2 AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY (CONTINUED)
• Compared the portfolio mix of investment types listed in the City Treasurer's Investment Activity Portfolio Statistics Report (Sympro) at December 31, 2021 to the portfolio mix limitations imposed by the City's Investment Policy and the relevant provisions of the California Government Code.
• Reviewed supporting documentation on a sample basis, the purchase, sale and maturity of individual investments to determine compliance with the following provisions of the California Government Code and the City's Investment Policy:
o Purchases of investments meet minimum rating requirements and maximum allowable maturity periods.
o All sections of the investment transaction record are properly completed and authorized by the City Treasurer.
o Transactions are supported by documentation from third-party sources (individual broker confirmations, safekeeping statements, custodian statements, etc.)
The City finalizes its calculations of accrued interest at the end of the fiscal year; thus, testing of accrued interest is conducted as part of the fiscal year-end cash and investment audit. As such, we did not test accrued interest, which is excluded from the balance of Total Cash and Investments at December 31, 2021, listed in Attachments I and II. In addition, the allocation of pooled cash and investments between funds was outside the scope of this audit. As such, the Schedule of Pooled and Non-Pooled Cash and Investment Balances by Fund is attached for informational purposes only.
3 RESULTS AND CONCLUSIONS
The City's cash and investment balances as of December 31, 2021 are summarized as follows:
Pooled Cash and Investments
Non-Pooled Cash and Investments
Total Cash and Investments
$ 1,922,367,892
90,431,828
$ 2,012,799,720
Based on the results of audit procedures performed, cash and investment balances as recorded on the City's books at December 31, 2021, materially agree as to the amount and description with outside depositories. Also, we found the City to be in compliance with all other relevant provisions of the California Government Code and the City's Investment Policy.
MANAGEMENT COMMENTS
Management concurs that investment activity for the subject period was in full compliance with the applicable sections of the California government Code and City's Investment Policy.
Long Beach, California
April 22, 2022
4 Fund
Number
1000
1009
1010
1011
1020
1030
1040
1041
1042
1043
1090
1100
2000
2001
2010
2015
2020
2025
2026
2030
2035
2040
2041
2100
2150
2200
2210
2300
2301
2400
2500
2501
2550
2600
2650
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT DECEMBER 31, 2021
WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2020
Pooled Non-Pooled Total at
December 31, December 31, December 31,
Name of Fund 2021 2021 2021
GF - Operating $ 21,927,229 $ 1,371,182 $ 23,298,411
GF - District Priority 1,062,527 1,062,527
GF - Cap/Oper Grants 2,484,898 2,484,898
GF - Long Beach Recovery Act 70,360,972 70,360,972
GF - Clb Measure A 28,858,939 28,858,939
GF - Clb Measure Ma (10,973) (10,973)
GF - Asset Seizure Federal 812,362 812,362
GF - Asset Seizure Us Treasury 973,814 973,814
GF - Asset Seizure State 996,343 996,343
GF - Asf Priority Intvntn Prgm 82,268 82,268
GF - CLB Measure M Escrow 9,000,000 9,000,000
GF - Uplands Oil Operating 16,230,452 16,230,452
SR - General Grants (2,462,535) (2,462,535)
SR - American Rescue Plan Act (3,790,673) (3,790,673)
SR - City Manager Grants 621,288 621,288
SR - Parks Grants 787,446 787,446
SR - Police Grants 4,234,525 4,234,525
SR - City Prosecutor Grants 312,364 312,364
SR - CP Grants Annual Fund (14,422) (14,422)
SR - Fire Grants 416,131 416,131
SR - Developmentsrvc Grants 522,728 522,728
SR - Library Grants 2,711,253 2,711,253
SR - Library Grants Annual (51,035) (51,035)
SR - Ps Oil Prod Tax - Fire 317,373 317,373
SR - Ps Oil Prod Tax - Police 487,125 487,125
SR - Health Operating 10,673,701 800 10,674,501
SR - Health Grants (20,565,418) (20,565,418)
SR - Cupa Operating 1,715,959 1,715,959
SR - Cupa Annual (42,195) (42,195)
SR - Spec Adver/Prom Operating 5,087,841 5,087,841
SR - Housing Operations 5,334,016 5,334,016
SR - Housing Annual 13,604,742 28,489 13,633,231
SR - Lb Community Invest Co 10,512,233 10,512,233
SR - Belmont Shre Pkg Mtr 38,867 38,867
SR - Business Assistance 726,577 726,577
5 Total at
December 31,
2020
$ 18,038,566
1,069,449
2,464,050
20,496,609
(7,252,585)
753,702
1,281,134
922,496
69,864
3,000,000
13,878,473
123,341
15,860,626
(1,893,926)
2,431,200
354,451
304,452
514,778
1,824,823
363,438
534,146
12,204,710
(14,824,444)
877,656
6,718,293
4,535,579
14,905,677
9,971,305
54,531
270,516
Fund
Number
2710
2711
2713
2760
2761
2810
2811
2812
2813
4005
4505
5010
5015
5020
5120
5200
5310
5320
5411
5412
5413
5414
5416
5417
5418
5420
5500
5501
6000
6005
6020
6100
6110
6120
6200
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT DECEMBER 31, 2021
WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2020
( Continued)
Pooled Non-Pooled Total at
December 31, December 31, December 31,
Name of Fund 2021 2021 2021
SR - Workforce Development Grants (7,535,258) 33,035 (7,502,223) SR - Comm Dev Grants - Hud 6,326,238 (54) 6,326,184
SR - Comm Dev - Other Grants 9,863,463 9,863,463
SR - Housing Auth Grants (183,726) (183,726)
SR - Housing Auth Annual 25,470,131 2,224,520 27,694,651 SR - Dif-Traffic Mitigation Fees 7,893,431 7,893,431
SR- Dif-Parks Impact Fees 6,877,833 6,877,833
SR - Dif-Police Impact Fees 3,254,297 3,254,297
SR - Dif-Fire Impact Fees 1,392,707 1,392,707
DS - General Debt Service 16,647,910 2,205,852 18,853,762 DS - Successor Agency 8,883,920 8,883,920
CP - Capital Grants 3,736,380 3,736,380
CP - Bond Proceeds (285,701) (285,701)
CP - Capital Projects 61,089,043 61,089,043
CP - Special Assessmt Projects 1,775,589 34,091 1,809,680 CP - Legislative 4,912,736 4,912,736
CP - Transport Capital Project (281,168) (281,168)
CP - State Gas Taxcp Projects 13,035,967 13,035,967
CP - County Prop C Metro 25,458,363 25,458,363
CP - County Measure R Metro 8,231,752 8,231,752
CP - State Ab2766 Air Quality 1,173,744 1,173,744
CP - County Measure M Metro 9,353,939 9,353,939
CP - County Prop A Metro 15,671,990 15,671,990
CP - State Rmra Local Return 16,098,526 16,098,526
CP - County Measure W 5,805,757 5,805,757
CP- State Pt Tran Dev Act Sb821 (3,479) (3,479)
CP - Successor Agney Operating 174 174
CP - Successor Agney Annual 9,125,348 32,678 9,158,026
IS - Civic Center Operating 5,069,263 5,069,263
IS - Civic Center Debt 100,000 100,000
IS - Civic Center Capital (4,628,471) (4,628,471)
IS - Genral Services Operating 7,473,367 378,134 7,851,501 IS - General Service Grants (2,040,983) (2,040,983)
IS - General Services Capital 15,772,301 3,205 15,775,506 IS - Fleet Operating 1,225,193 1,225,193
6 Total at
December 31,
2020
(4,882,243)
4,276,221
246,422
19,687,313
2,558,159
6,787,575
4,173,520
2,686,566
1,453,300
22,599,970
13,617,089
21,509,679
(42,617)
39,374,575
1,837,295
4,912,736
(367,060)
12,340,288
22,649,642
2,984,590
862,492
2,955,918
14,708,237
15,759,334
(490,844)
(3,456)
3,344,321
7,077,745
5,228,859
100,000
(4,132,172)
498,082
(1,678,267)
15,992,051
1,834,620
Fund
Number
6205
6210
6220
6230
6300
6350
6390
6400
6401
6402
6403
6405
7000
7005
7020
7035
7100
7101
7105
7106
7120
7121
7200
7205
7220
7300
7310
7320
7350
7355
7400
7410
7411
7412
7420
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT DECEMBER 31, 2021
WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2020
(Continued)
Pooled Non-Pooled Total at
December 31, December 31, December 31,
Name of Fund 2021 2021 2021
IS - Fleet Debt 125,009 125,009
IS - Fleet Grants 1,546,933 1,546,933
IS - Fleet Capital 4,007,972 4,007,972
IS - Fleet Replacement 44,551,143 44,551,143
IS - Workers' Compensation 37,820,879 37,820,879
IS - General Liability (3,976,372) (3,976,372)
IS - Disaster Recovery 630,841 630,841
IS - Bbf - Operating 86,244,794 86,244,794
IS - Bbf - Healthcare 18,182,080 18,182,080
IS - Bbf - Payroll Taxes (17,016,358) (17,016,358)
IS - Bbf - Paid time off 26,087,678 26,087,678
IS - Bbf - Pension & Retirement (60,249,331) (60,249,331) BF - Gas Operating 42,673,433 750 42,674,183
BF- Gas Debt 60,285 7,701,377 7,761,662
BF - Gas Cap/Oper Proj 16,597,192 16,597,192
BF - Gas Prepay (Lbbfa) 560 560
BF - Water Operating 33,596,016 20,000 33,616,016
BF - Water Reclaimed Operating 2,411,935 2,411,935
BF - Water Debt 1,322,514 2,873,983 4,196,497
BF - Water Debt Others (42,167) (42,167)
BF - Water Capital Projects (3,877,608) (3,877,608)
BF - Water Reclaimed Capital (104,205) (104,205)
BF - Sewer Operating 15,913,728 15,913,728
BF - Sewer Debt 132,599 132,599
BF - Sewer Capital Projects (1,610,497) (1,610,497)
BF - Sol Waste Operating 10,734,958 3,000 10,737,958
BF - Sol Waste Cap/Oper Grants 680,703 680,703
BF - Sol Waste Cap/Oper Proj (424,955) (424,955)
BF - Serrf Operations 18,137,326 18,137,326
BF - Serrf Jpa Debt 151 151
BF - Airport Operating 43,242,049 100 43,242,149
BF - Airport Grants (3,374,025) (3,374,025)
BF - Airport Passenger Fae Chrg 4,254,935 4,254,935
BF - Airport Customer Fae Chrg 12,986,701 12,986,701
BF - Airport Cap/Oper Proj (3,622,762) (3,622,762)
7 Total at
December 31,
2020
134,247
1,556,878
3,826,304
43,610,314
29,885,533
(2,666,293)
630,841
5,294,850
14,190,623
(2,702,570)
86,734,685
5,783,688
29,392,562
6,783,343
19,272,612
2,100,997
30,786,457
2,524,611
4,076,537
(42,167)
(5,676,911)
(2,496)
15,570,259
124,758
(2,224,844)
9,508,752
764,410
(424,955)
15,270,858
139
29,888,699
(12,921,632)
12,291,896
12,270,986
17,200,077
Fund
Number
7425
7500
7510
7520
7550
7600
7605
7610
7620
7630
7631
7635
7700
7710
7720
7750
7751
7770
7800
7850
7885
7900
7905
7910
7920
7933
7934
7935
7936
7937
7938
7939
7940
7942
7943
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT DECEMBER 31, 2021
WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2020
(Continued)
Pooled Non-Pooled Total at
December 31, December 31, December 31,
Name of Fund 2021 2021 2021
BF - Airport Debt (3,440,052) 13,763,948 10,323,896
BF - Development Svcs Operating 42,427,842 42,427,842
BF - Development Svcs Grants (2,298,005) (2,298,005)
BF - Development Svc Casp Sbl186 461,979 461,979
BF - Towing Operating 1,805,146 1,700 1,806,846
BF - Tidelands Operating 87,140,197 2,000 87,142,197
BF - Tidelands Debt (52,879) 26,533 (26,346)
BF - Tidelands Capital Grants 79,776 79,776
BF - Tideland Capital Projects (2,320,707) (2,320,707)
BF - Tidelands Parking (63,941) (63,941)
BF - Tidelands Parking Annual 4,265,250 4,265,250
BF - Tf Convntn Ctr Pkg Surchg 3,500,535 3,500,535
BF - Tf Marina Operating 36,637,370 8,726,495 45,363,865 BF - Tf Marina Capital Grant 1,606,552 1,606,552
BF - TF Marina Capital Projects (2,066) (2,066)
BF - Tf Queen Mary Project Oper (842,320) 145,982 (696,338) BF - TF QM Entertainment Dist Ops 515,132 515,132
BF - Tf Queen Mary Capitl Proj 156,122 156,122
BF - Tidelands Oil 64,361,977 64,361,977
BF - Tf Subsidence 190,609,337 190,609,337
BF - Tf Aqua Of The Pac Debt 6,297,513 35,648,472 41,945,985 BF - Harbor Operating 3,875,898,062 900 3,875,898,962
BF - Harbor Debt - Locs & Other
BF - Harbor Cap/Oper Grants 116,052,168 116,052,168
BF - Harbor Cap/Oper Proj (3,319,357,015) (3,319,357,015) BF - Ha Debt 2014B Bonds 73,125 73,125
BF - Ha Debt 2015A Bonds 9,127,688 9,127,688
BF - Ha Debt 2015B Bonds 125,813 125,813
BF - Ha Debt 2015C Bonds 413,031 413,031
BF - Ha Debt 2015D Bonds 417,906 417,906
BF - Ha Debt 2017A Bonds 635,063 635,063
BF - Ha Debt 2017B Bonds 162,406 162,406
BF - Ha Debt 2017C Bonds 266,625 266,625
BF - Ha Debt 2019A Bonds 1,008,188 1,008,188
BF - Ha Debt 2020A Bonds 326,969 326,969
8 Total at
December 31,
2020
12,993,773
44,501,210
(151,730)
363,389
384,895
108,451,649
(90,596)
79,776
(3,007,331)
1,927,930
3,403,962
39,597,095
1,606,987
371,335
1,587,148
43,844,652
188,827,391
14,293,084
3,335,672,210
(93,611)
112,572,779
(3,161,777,035)
73,125
3,186,032
125,813
413,031
417,906
635,063
162,406
266,625
1,008,189
325,534
Fund
Number
7944
7946
7947
7948
8000
8010
8100
8105
8110
8115
8120
8125
8190
8200
8300
8310
8400
8500
8550
8600
8610
8620
9900
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT DECEMBER 31, 2021
WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2020
( Continued)
Pooled Non-Pooled Total at
December 31, December 31, December 31,
Name of Fund 2021 2021 2021
BF - Ha Debt 2020B Bonds 13,531,731 13,531,731
BF - Ha Debt 2020C Notes Const
BF - Ha Debt 2020C Notes Cap I
BF - Ha Debt 2021 TIFIA 1,445,864 1,445,864
CS - Fiduciary Operating 3,911,364 3,911,364
CS - Prisoner Welfare 303,396 1,500 304,896
CS - Asmt Cfd5 Lb Towne Center 209,176 1,049,233 1,258,409 CS - Asmt Cfd6 Pike Pub Imprv 148,930 3,245,154 3,394,084 CS - Asmt Cfd7-1 Douglas Pk Cm 407,440 1,180,023 1,587,463 CS - Asmt Cfd7-2 Belmont Shore 93,034 464,441 557,475
CS - Asmt Cfd8-1 Toledo Ugd Ut 77,880 164,136 242,016
CS - Asmt Cfdl 1-1 Douglas Pk N (38,368) (38,368)
CS - Other Special Assessment 148,673 148,673
CS - Ictf Jpa Operating 7,287,502 7,287,502
CS - Earthquake Asmt Dist 90-3 267,193 267,193
CS - Earthquake Asmt Dist 93-1 556,750 556,750
CS - Los Cerritos Wetlands Aut 216,249 216,249
CS - Pkg & Bus Area Improve 1,270,080 1,270,080
CS - Promenade District 493,050 493,050
PP - Expendable Trust (58,604) (58,604)
PP - Library Miller Trust 669,182 669,182
PP - Homeless Expendable Trust 5,066 5,066
Accrued Interest Receivable (3,833,746) (3,833,746)
Unrealized gains on investments **
TOTAL CASH AND INVESTMENTS $ 1,922,367,892 $ 90,431,828 $ 2,012,799,720 Total at
December 31,
2020
12,662,835
49,839,265
5,837,118
3,866,561
286,413
1,233,713
3,398,265
1,543,140
546,154
232,192
27,953
147,592
9,292,547
265,357
552,997
139,383
1,343,719
429,858
(58,216)
700,641
5,033
(4,742,468)
21,563,451
$ 1,584,213,087
* The City's pooled cash and investments was audited in aggregate and the allocation among funds was outside the scope of the performance audit. The allocation is presented for informational purposes only. **Unrealized gains on investments are due to market changes and represent the difference between the City's cost basis and the fair market value. The City's policy is to recognize the unrealized gains and losses at the end of the fiscal year for financial statement purposes in compliance with Governmental Accounting Standards. All unrealized gains or losses are reported to the City Council through the Quarterly Investment Report by the City Treasurer. 9 ATTACHMENT II
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY SECURITY TYPE AT DECEMBER 31, 2021
WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2020
Pooled Non-Pooled Total at
December 31, December 31, December 31,
2021 2021 2021
CASH
Cash in Banks $ 213,260,077 $ 2,552,268 $ 215,812,345
Cash with Fiscal Agents 80,978,075 80,978,075
Total Cash 213,260,077 83,530,343 296,790,420
INVESTMENTS
U.S. Treasury Notes 1,190,053,037 1,190,053,037
Federal Farm Credit Bank 7,070,173 7,070,173
Federal Home Loan Bank 81,098,349 81,098,349
Federal National Mortgage Association (FNMA) 124,977,608 124,977,608 Federal Home Loan Mortgage Corporation (FHLMC) 47,556,725 47,556,725 Local Agency Investment Fund (L.A.I.F.) 221,637,292 221,637,292 Guaranteed Investment Contracts 6,901,485 6,901,485
Money Market (Federal Investors)
Corporate Notes 36,714,631 36,714,631
Total Investments 1,709,107,815 6,901,485 1,716,009,300 TOTAL CASH AND INVESTMENTS $ 1,922,367,892 $ 90,431,828 $ 2,012,799,720 Total at
December 31,
2020
$ 236,815,396
73,096,203
309,911,599
691,937,334
7,391,720
132,930,765
171,024,330
71,884,581
192,303,556
6,655,134
174,068
1,274,301,488
$ 1,584,213,087