May 2, 2023
OFFICE OF THE CITY AUDITOR
Long Beach , California
HONORABLE MAYOR AND CITY COUNCIL
City of Long Beach
California
RECOMMENDATION :
LAURA L. DOUD, CPA
City Auditor
Receive and file the Quarterly Report of Cash and Investments for the quarter ending September 30, 2022.
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 September 30, 2022.
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 C-10
THE CITY OF LONG BEACH
OFFICE OF THE CITY AUDITOR
QUARTERLY AUDIT OF CASH AND INVESTMENTS
September 30, 2022
WINDES
AUDIT I TAX I ADVISORY
TABLE OF CONTENTS
Executive Summary ............................................... .......................................... 1 Background ................................................................................................. 1-2 Audit Objectives, Scope, and Methodology .......................................................... 2-3 Results and Conclusions .. .... .................. ... ........................................................ 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
AUD IT I TAX I ADV ISORY
EXECUTIVE SUMMARY
Long Beach I Irvine I Los Angeles
www.w indes.com
844.4 WIND ES
We have conducted a performance audit of the cash and investment balances of the City of Long Beach (the City) as of September 30, 2022. The City of Long Beach's management is responsible for the cash and investment balances. As of September 30, 2022, the City's cash and investment portfolio totaled approximately $2.1 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 September 30, 2022 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 September 30, 2022.
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 September 30, 2022 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 September 30, 2022 to the City's general ledger. • Obtained bank and investment reconciliations at September 30, 2022 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. 2 AUDIT OBJECTIVES, SCOPE, AND METHODOLOGY (CONTINUED)
• Compared investments listed on the City Treasurer's Investment Activity Portfolio Statistics Report (Sympro) at September 30, 2022 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.
• Compared the portfolio mix of investment types listed in the City Treasurer's Investment Activity Portfolio Statistics Report (Sympro) at September 30, 2022 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.)
• Recalculated accrued interest (in aggregate) to determine if accrued interest for investments held at September 30, 2022 was accurately stated on the City's general ledger.
The allocation of accrued interest and 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 and the Schedule of Pooled and Non-Pooled Cash and Investment Balances by Security Type are attached for informational purposes only. 3 RESULTS AND CONCLUSIONS
The City's cash and investment balances as of September 30, 2022 are summarized as follows:
Pooled Cash and Investments
Non-Pooled Cash and Investments
Total Cash and Investments
$ 1,945,735,156
109,733,840
$ 2,055,468,996
Based on the results of audit procedures performed, cash and investment balances as recorded on the City's books at September 30, 2022, 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
March 27, 2023
4 Fund
Number
1000
1009
1010
1011
1020
1021
1030
1040
1041
1042
1043
1090
1100
2000
2001
2010
2015
2020
2025
2026
2030
2035
2040
2041
2100
2150
2200
2210
2300
2301
2310
2400
2500
2501
2550
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT SEPTEMBER 30, 2022
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2021
Pooled Non-Pooled Total at
September 30, September 30, September 30,
Name of Fund 2022 2022 2022
GF - Operating $ 69,608,604 $ 1,374,053 $ 70,982,657 $
GF - District Priority 995,817 995,817
GF - Cap/Oper Grants 2,496,972 2,496,972
GF - Long Beach Recovery Act 77,062,155 77,062,155
GF - CLB Measure A 20,655,114 20,655,114
GF - CLB Measure US 727,470 727,470
GF - CLB Measure MA (10,973) (10,973)
GF - Asset Seizure Federal 817,633 817,633
GF - Asset Seizure US Treasury 980,133 980,133
GF - Asset Seizure State 1,049,713 1,049,713
GF - ASF Priority Intvntn Prgm 74,049 74,049
GF - CLB Measure M Escrow
GF - Uplands Oil Operating 16,442,121 16,442,121
SR - General Grants (3,951,005) (3,951,005)
SR - American Rescue Plan Act 8,523,655 8,523,655
SR - City Manager Grants 50,086 50,086
SR - Parks Grants (1,796,312) (1,796,312)
SR - Police Grants 3,164,203 3,164,203
SR - City Prosecutor Grants 255,438 255,438
SR - CP Grants Annual Fund 331,424 331,424
SR - Fire Grants (436,374) (436,374)
SR - Development Srvc Grants 526,112 526,112
SR - Library Grants 2,949,184 2,949,184
SR - Library Grants Annual (129,040) (129,040)
SR - PS Oil Prod Tax - Fire (5,598) (5,598)
SR - PS Oil Prod Tax - Police 163,108 163,108
SR - Health Operating 8,931,497 800 8,932,297
SR - Health Grants (8,113,698) (8,113 ,698)
SR - CUP A Operating 569,350 569,350
SR - CUP A Annual (1,213,592) (1,213,592)
SR - Cupa Grant
SR - Spec Adver/Prom Operating 10,792,216 10,792,216
SR - Housing Operations 5,848,304 5,848,304
SR - Housing Annual 11,771,834 8,440 11,780,274
SR - LB Community Invest Co 7,054,063 7,054,063
5 Total at
September 30,
2021
65,483,898
1,062,527
2,496,428
71,159,123
8,857,169
811,304
972,546
973,801
78,412
9,000 ,000
12,815,106
(2,172,639)
(3,785,736)
863,774
70,035
1,653,334
312,747
216,989
522,042
2,708,468
(4,785)
(6,764)
163,149
12,415,043
(12,200,846)
569,010
(9,328)
4,674,585
5,279,952
14,195,599
10,502,272
Fund
Number
2600
2650
2710
2711
2713
2714
2760
2761
2810
2811
2812
2813
4005
4505
5010
5015
5020
5021
5120
5200
5310
5320
5411
5412
5413
5414
5416
5417
5418
5420
5500
5501
6000
6005
6020
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT SEPTEMBER 30, 2022
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2021
(Continued)
Pooled Non-Pooled Total at
September 30, September 30, September 30,
Name of Fund 2022 2022 2022
SR - Belmont Shre Pkg Mtr 229,503 229,503
SR - Business Assistance 510,180 510,180
SR - Workforce Development Grants (5,989,664) 31,374 (5,958,290) SR - Comm Dev Grants - HUD 2,178,629 2,178 ,629
SR - Comm Dev - Other Grants 4,153,589 4,153,589
SR - CD GRANTS ANNUAL FUND (27,804) (27,804)
SR - Housing Auth Grnts (166,817) (166,817)
SR - Housing Auth Annual 29,393,055 2,139,579 31,532,634 SR - DIP-Traffic Mitigation Fees 7,669,199 7,669,199
SR - DIP-Parks Impact Fees 7,650,488 7,650,488
SR - DIP-Police Impact Fees 3,466,566 3,466,566
SR - DIF-Fire Impact Fees 1,274,250 1,274,250
DS - General Debt Service 16,010,094 2,486,333 18,496,427 DS - Successor Agency 15,022,532 15,022,532
CP - Capital Grants (3,684,714) (3,684,714)
CP - Bond Proceeds (528,786) (528,786)
CP - Capital Projects 114,305,582 114,305,582
CP - CIP PERSONNEL - A,NNUAL (661) (661)
CP - Special Assessment Projects 1,775,589 34,183 1,809,772 CP - Legislative 4,912,736 4,912,736
CP - Transport Capital Project (281,168) (281,168)
CP - State Gas Tax CP Projects 10,244,963 10,244,963
CP - County Prop C Metro 23,101 ,781 23,101,781
CP - County Measure R Metro 10,460,461 10,460,461
CP - State AB2766 Air Quality 1,515,871 1,515,871
CP - County Measure M Metro 14,584,550 14,584,550
CP - County Prop A Metro 14,778,873 14,778,873
CP - State RMRA Local Return 10,624,347 10,624,347
CP - County Measure W 13,498,512 13,498,512
CP- State PT Tran Dev Act SB821 (125,809) (125,809)
CP - Successor Agency Operating 174 174
CP - Successor Agency Annual 9,961,534 32,766 9,994,300 IS - Civic Center Operating 2,951,958 2,951,958
IS - Civic Center Debt 536,503 536,503
IS - Civic Center Capital (3,488,461) (3,488,461)
6 Total at
September 30,
2021
134,161
586,277
(5,659,650)
1,085,403
23,324,947
300,745
26,965,213
7,539,964
6,261 ,325
3,113,141
1,324,992
18,933,407
16,961,551
1,163,721
(285,701)
80,045,942
1,809,679
4,912,736
(281,168)
12,649,378
23,239,930
6,719 ,241
1,026,377
8,795,564
12,795,330
13,687,776
5,971,343
(3,475)
8,534,234
3,638,385
528,964
(3,920,042)
Fund
Number
6100
6110
6120
6200
6205
6210
6220
6230
6300
6350
6390
6400
6401
6402
6403
6405
7000
7005
7020
7035
7100
7101
7105
7106
7200
7205
7220
7300
7310
7320
7350
7355
7400
7410
7411
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT SEPTEMBER 30, 2022
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2021
(Continued)
Pooled Non-Pooled Total at
September 30, September 30, September 30,
Name of Fund 2022 2022 2022
IS - Genral Services Operating 7,393,736 1,565,374 8,959,110 IS - General Service Grants 4,545,017 855 4,545,872
IS - General Services Capital 15,506,776 15,506,776
IS - Fleet Operating (6,381 ,459) (6,381,459)
IS - Fleet Debt 241,021 241,021
IS - Fleet Grants 1,258,785 1,258,785
IS - Fleet Capital 5,155,401 5,155,401
IS - Fleet Replacement 38,293,215 12,873,271 51,166,486 IS - Workers' Compensation 37,072,131 37,072,131
IS - General Liability 7,612,255 7,612,255
IS - Disaster Recovery 630,841 630,841
IS - EBF - Operating (98,877,414) (98,877,414)
IS - EBF - Healthcare 130,454,200 130,454,200
IS - EBF - Payroll Taxes 47,986,679 47,986,679
IS - EBF - Paid Time Off 20,310,792 20,310,792
IS - EBF - Pension & Retirement (76,560,176) (76,560,176) EF - Gas Operating 35,259,216 750 35,259,966
EF- Gas Debt 60,686 29,180,074 29,240,760
EF - Gas Cap/Oper Proj 18,682,216 18,682,216
EF - Gas Prepay (LBBFA) 564 564
EF - Water ·operating 42,996,389 20,000 43,016,389
EF - Water Reclaimed Operating 1,000,000 1,000,000
EF - Water Debt 1,622,527 2,854,585 4,477,112
EF - Water Debt Others 8,760 8,760
EF - Sewer Operating 12,378,628 12,378,628
EF - Sewer Debt 303,417 303,417
EF - Sewer Capital Projects 1 1
EF - Sol Waste Operating 2,759,469 3,000 2,762,469
EF - Sol Waste Cap/Oper Grants 521,694 521,694
EF - Sol Waste Cap/Oper Proj (424,955) (424,955)
EF - SERRF Operations 24,151 ,411 24,151,411
EF - SERRF JPA Debt 153 153
EF - Airport Operating 44,619 ,017 44,619,017
EF - Airport Grants (7,258,245) (7,258 ,245)
EF - Airport Passenger Fae Chrg 7,119,963 7,119,963
7 Total at
September 30,
2021
10,308,123
(103,087)
16,649,338
2,508,575
125,009
1,546,933
4,293,210
44,722,912
38,154,341
92,712
630,841
63,731,748
16,850,682
(17,031,562)
26,087,678
(60,437,190)
36,442,767
27,238,419
21,642,183
559
25,041,131
1,000,000
4,506,821
12,261,232
303,667
7,627,138
687,212
(424,955)
15,495,049
148
38,447,566
(4,659,862)
4,480,143
Fund
Number
7412
7420
7425
7500
7510
7520
7550
7600
7605
7610
7620
7631
7635
7700
7710
7720
7750
7770
7800
7850
7885
7900
7901
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 SEPTEMBER 30, 2022
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2021
(Continued)
Pooled Non-Pooled Total at
September 30, September 30, September 30,
Name of Fund 2022 2022 2022
EF - Airport Customer Fae Chrg 13,053,432 13,053,432
EF - Airport Cap/Oper Proj 4,351,320 4,351,320
EF - Airport Debt 19,401,649 19,401,649
EF - Developmnt Svcs Operating 39,460 ,860 39,460,860
EF - Developmnt Svcs Grants (1 ,843,313) (1 ,843,313)
EF - Develpmnt Svc Casp SB1186 540,980 540,980
EF - Towing Operating 1,380,718 1,700 1,382,418
EF - Tidelands Operating 87,340,697 2,000 87,342,697
EF - Tidelands Debt 3,108 2,250 5,358
EF - Tidelands Capital Grants 197,847 197,847
EF - Tidelands Capital Projects 3,111 ,595 3,111 ,595
EF - Tidelands Parking Annual 6,788,665 6,788 ,665
EF - TF Convntn Ctr Pkg Surchg 3,606 ,669 3,606,669
EF - TF Marina Operating 37,724,828 8,455,049 46,179,877 EF - TF Marina Capital Grant 1,606,552 1,606,552
EF - TF Marina Capital Projects 2,350 2,350
EF - TF Queen Mary Project Oper 441,994 2,416,955 2,858 ,949 EF - TF Queen Mary Capital Project 1,232,017 1,232,017
EF - Tidelands Oil 60,811,084 60,811,084
EF - TF Subsidence 185,208,718 185,208,718
EF - TF Aqua Of The Pac Debt 8,249,835 1,410,808 9,660,643 EF - Harbor Operating 3,855,016,405 900 3,855 ,017,305
Ef - Harbor CTP 2022 Zero EMSS 18,150,257 18,150,257
EF - Harbor Cap/Oper Grants 120,393,833 120,393,833
EF - Harbor Cap/Oper Proj (3,387 ,367,148) (3,387,367,148) EF - Ha Debt 2014B Bonds 3,088 ,125 3,088,125
EF - Ha Debt 2015A Bonds 2,772 ,000 2,772,000
EF - Ha Debt 2015B Bonds 4,043,062 4,043,062
EF - Ha Debt 2015C Bonds 1,239,094 1,239,094
EF - Ha Debt 2015D Bonds 1,253,719 1,253,719
EF - Ha Debt 2017A Bonds 1,905,188 1,905,188
EF - Ha Debt 2017B Bonds 487,219 487,219
EF - Ha Debt 2017C Bonds 799,875 799,875
EF - Ha Debt 2019A Bonds 3,024,563 3,024,563
EF - Ha Debt 2020A Bonds 980,906 980,906
8 Total at
September 30,
2021
12,631,588
2,072 ,790
11,838,248
38,277,235
(2,036 ,587)
444,082
1,468,597
85,557,980
27,064
79,776
342,905
2,992,033
3,468,308
44,951,402
1,606,987
2,418 ,581
314,716
51,905,459
191,150,182
43,073,191
3,860,366,196
115,665,395
(3,262,569,297)
219,375
5,798,063
377,438
1,239,094
1,253,719
1,905,188
487,219
799,875
3,024,563
980,906
Fund
Number
7944
7948
8000
8010
8100
8105
8110
8115
8120
8125
8190
8200
8300
8310
8400
8500
8550
8600
8610
8620
ATTACHMENT I
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY FUND AT SEPTEMBER 30, 2022
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2021
(Continued)
Pooled Non-Pooled Total at
September 30, September 30, September 30,
Name of Fund 2022 2022 2022
EF - Ha Debt 2020B Bonds 5,374,969 5,374,969
EF - Ha Debt 2021 TIFIA 3,216 ,819 3,216 ,819
CS - Fiduciary Operating 3,859,477 3,859,477
CS - Prisoner Welfare 299,068 1,500 300,568
CS - Asmt CFD5 Lb Towne Center 219,710 2,196,758 2,416,468 CS - Asmt CFD6 Pike Pub Imprv 3,849 5,792,511 5,796,360 CS - Asmt CFD7-1 Douglas Pk Cm 187,879 1,185,206 1,373,085 CS - Asmt CFD7-2 Belmont Shore 67,388 438,923 506,311
CS - Asmt CFD8-1 Toledo Ugd Ut 42,561 164,822 207,383
CS - Asmt CFD 11-1 Douglas Pk N (12,795) (12,795)
CS - Other Special Assessment 144,016 144,016
CS - ICTF JPA Operating 3,434,382 3,434 ,382
CS - Earthquake Asmt Dist 90-3 258,920 258,920
CS - Earthquake Asmt Dist 93-1 539,226 539,226
CS - Los Cerritos Wetlands Auth 634,840 634,840
CS - Pkg & Bus Area Improve 1,825,866 1,825,866
CS - Promenade District 534,202 534,202
PP - Expendable Trust (35,310) (35,310)
PP - Library Miller Trust 591,453 591,453
PP - Homeless Expendable Trust 4,945 4,945
TOT AL CASH AND INVESTMENTS $ 1,945,735,156 $ 109,733,840 $ 2,055,468,996 Total at
September 30,
2021
8,885,194
2,654,072
3,911,214
303,742
2,373 ,697
5,675,439
1,233,217
500,837
201,158
(59,258)
149,080
6,499,612
267,944
558,330
241,462
635,854
481,474
(58,528)
671,213
5,080
$ 2,087,059,490
* 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. 9 ATTACHMENT II
POOLED AND NON-POOLED CASH AND INVESTMENT BALANCES
BY SECURITY TYPE AT SEPTEMBER 30, 2022
WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2021
Pooled Non-Pooled Total at
September 30, September 30, September 30,
2022 2022 2022
CASH
Cash in Banks $ 66,328,102 $ 2,445,371 $ 68,773,473 $
Cash with Fiscal Agents 78,151,939 78,151,939
Total Cash $ 66,328,102 $ 80,597,310 $ 146,925,412 $
INVESTMENTS
U.S . Treasury Notes $ 1,439,762,495 $ - $ 1,439,762,495 $ Federal Farm Credit Bank 6,711,812 6,711,812
Federal Home Loan Bank 44,854,940 44,854,940
Federal National Mortgage Association 88,940,465 88,940,465 Federal Home Loan Mortgage Corp 54,299,243 54,299,243
Local Agency Investment Fund (L.A .I.F .) 72,475 ,841 72,475,841 Guaranteed Investment Contracts 29,136 ,530 29,136,530
Federal Home Loan Discount 91,650,925 91 ,650,925
Corporate Notes 80,711,333 80,711,333
Total Investments $ 1,879,407,054 $ 29,136,530 $ 1,908,543,584 $ TOT AL CASH AND INVESTMENTS $ 1,945,735,156 $ 109,733,840 $ 2,055,468,996 $ 10 Total at
September 30,
2021
206,578,613
93,085 ,385
299,663,998
1,234,243,486
7,283,222
83,926,679
127,438,066
58,088,429
221,623,054
27,085,028
27,707,528
1,787,395,492
2,087,059,490