CIT
Y OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT
SPECIAL REVENUE FUND
FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2021
CITY OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND
TABLE OF CONTENTS
YEAR ENDED JUNE 30, 2021
INDEPENDENT AUDITORS’ REPORT 1
FINANCIAL STATEMENTS
BALANCE SHEET 3
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE 4
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET TO ACTUAL 5
NOTES TO FINANCIAL STATEMENTS 6
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH APPLICABLE REQUIREMENTS AND ON INTERNAL CONTROL OVER COMPLIANCE 8
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 10
CliftonLarsonAllen LLP
CLAconnect.com
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(1)
INDEPENDENT AUDITORS’ REPORT
Honorable Mayor and Members of the City Council
of the City of Pasadena, California
Pasadena, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Air Quality Improvement Special Revenue Fund (AQMD) of the City of Pasadena, California (the City), as of and for the year ended June 30, 2021, and the related notes to the financial statements, as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the AQMD’s financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Honorable Mayor and Members of the City Council
of the City of Pasadena, California
(2)
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Air Quality Improvement Special Revenue Fund of the City of Pasadena, California, as of June 30, 2021, and the changes in financial position and the budgetary comparison for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Air Quality Improvement Special Revenue Fund and do not purport to, and do not present fairly the financial position of the City of Pasadena, California, as of June 30, 2021, or the changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Management has not presented the management’s disc ussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the financial statements. Such missing information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of the financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. Our opinion on the AQMD’s financial statements is not affected by this missing information.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2022, on our consideration of the internal control over the City’s AQMD financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over AQMD financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the internal control over the City’s AQMD financial reporting and compliance.
CliftonLarsonAllen LLP
Irvine, California
January 19, 2022
CITY OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND
BALANCE SHEET
JUNE 30, 2021
See accompanying Notes to Financial Statements.
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Governmental
Funds
ASSETS
Cash and Investments 72,131$
Accounts Receivable 48,264
Total Assets 120,395$
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts Payable 3,310$
Total Liabilities 3,310
FUND BALANCE
Restricted for:
Air Quality Improvements 117,085
Total Fund Balance 117,085
Total Liabilities and Fund Balance 120,395 $
CITY OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
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Governmental
Funds
REVENUES
Intergovernmental 189,132$
Investment Earnings 1,670
Total Revenues 190,802
EXPENDITURES
Transportation 196,978
Total Expenditures 196,978
NET CHANGE IN FUND BALANCE (6,176)
Fund Balance - Beginning of Year 123,261
FUND BALANCE - END OF YEAR 117,085$
CITY OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGET TO ACTUAL
YEAR ENDED JUNE 30, 2021
See accompanying Notes to Financial Statements.
(5)
Budget Actual Variance
REVENUES
Intergovernmental 170,000 $ 189,132 $ 19,132 $ Investment Earnings 3,299 1,670 (1,629) Total Revenues 173,299 190,802 17,503
EXPENDITURES
Transportation 172,388 196,978 (24,590) Total Expenditures 172,388 196,978 (24,590)
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES 911 (6,176) (7,087) Fund Balance - Beginning of Year 123,261 123,261 - FUND BALANCE - END OF YEAR 124,172$ 117,085 $ (7,087) $
CITY OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 1 DESCRIPTION OF THE REPORTING ENTITY
The City of Pasadena Air Quality Improvement Special Revenue Fund was formed to account for the allocations made by AB 2766 known as the Clean Air Act. The revenue provides a means and incentive for programs to reduce traffic and air pollution. The City performs all administrative and accounting functions. The accounting policies of the Air Quality Improvement Fund are in conformity with generally accepted accounting principles in the United States applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing accounting and financial reporting principles. These financial statements are exclusively for the Air Quality Improvement Special Revenue Fund and do not purport to, and do not, present fairly the financial position and changes in the financial position of the City of Pasadena.
Complete financial statements of the City can be obtained from the City’s Finance Department.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fund Accounting
In order to ensure the proper identification of individual revenue sources and the expenditures made from those revenues, the Air Quality Improvement Special Revenue Fund is organized on the basis of an individual fund which is considered a separate accounting entity. The operations of the fund are accounted for with a separate set of self-balancing accounts. Monies under AB 2766 are accounted for in the Air Quality Improvement Special Revenue Fund.
Measurement Focus and Basis of Accounting
Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statem ents, regardless of the measurement focus applied. All governmental funds are presented using modified accrual basis of accounting.
Revenues are recognized when they become measurable and available. Measurable means the amount of the transaction can be determined and available means the amount is collectible within the current period or soon enough thereafter (generally sixty days) to be used to pay liabilities in the current period. Amounts which could not be measured or were not available were not accrued as revenue in the current year. Expenditures are also recognized under the modified accrual basis of accounting which means that expenditures are generally recorded at the time liabilities are incurred.
Fund Balances
Governmental fund balance represents the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities. Portions of a fund’s balance may be restricted for future expenditure.
CITY OF PASADENA, CALIFORNIA
AIR QUALITY IMPROVEMENT SPECIAL REVENUE FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2021
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NOTE 3 CASH AND INVESTMENTS
Equity in the Cash and Investment Pool of the City of Pasadena The AQMD has no separate bank accounts or investments other than its equity in the cash and investment pool managed by the City. The AQMD has not adopted an investment policy separate from that of the City.
The fair value of the AQMD’s investment in this pool is reported in the accompanying financial statements at amounts based upon the AQMD’s pro rata share of the fair value calculated by the City for the entire City portfolio. The balance available for withdrawal is based on the accounting records maintained by the City.
Disclosures Relating to the Investment Policy, Interest Rate Risk, Credit Risk and Custodial Credit Risk
Additional disclosures related to the investment policy, interest rate risk, credit risk and custodial credit risk are available in the City of Pasadena’s Comprehensive Annual Financial Report.
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(8)
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH APPLICABLE
REQUIREMENTS AND ON INTERNAL CONTROL OVER COMPLIANCE
Honorable Mayor and Members of the City Council
of the City of Pasadena, California
Pasadena, California
Compliance
We have audited the City of Pasadena’s (the City) compliance with the applicable provisions of Assembly Bill 2766, Chapter 1705 (Health and Safety Code Sections 44220 through 44247) (AB2766) applicable to the City’s Air Quality Improvement Special Revenue Fund (AQMD Fund) for the year ended June 30, 2021.
Management’s Responsibility
Compliance with the requirements referred to above is the responsibility of City’s management.
Auditors’ Responsibility
Our responsibility is to express an opinion on City’s compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and AB2766. Those standards and AB2766 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the City’s AQMD Fund occurred. An audit includes examining, on a test basis, evidence about City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination of City’s compliance with those requirements.
Opinion
In our opinion, City complied, in all material respects, with the compliance requirements referred to above that are applicable to the AQMD Fund for the year ended June 30, 2021.
Honorable Mayor and Members of the City Council
of the City of Pasadena, California
(9)
Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit, we considered City’s internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.
The purpose of this report on internal control over co mpliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the AB2766.
Accordingly, this report is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
January 19, 2022
CliftonLarsonAllen LLP
CLAconnect.com
CLA is an independent member of Nexia International, a leading, global network of independent accounting and consulting firms. See nexia.com/member-firm-disclaimer for details.
(10)
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and Members of the City Council
of the City of Pasadena, California
Pasadena, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Air Quality Improvement Special Revenue Fund (AQMD) of the City of Pasadena, California (the City), as of and for the year ended June 30, 2021, and the related notes to financial statements, which collectively comprise the AQMD’s financial statements, and have issued our report thereon dated January 19, 2022.
Internal Control Over Financial Reporting
In planning and performing our audit of the AQMD financial statements, we considered the City’s internal control over financial reporting (internal control) as it relates to the AQMD as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control related to the AQMD. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control related to the AQMD.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Honorable Mayor and Members of the City Council
of the City of Pasadena, California
(11)
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Air Quality Improvement Special Revenue Fund of the City of Pasadena, California’s financial statements are free from material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s AQMD internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s AQMD internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Irvine, California
January 19, 2022