Attachment B
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CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
FOR THE THREE YEAR PERIOD ENDING JUNE 30, 2023 FINANCIAL STATEMENTS Focused
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CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Financial Statements
For the Three Year Period Ending June 30, 2023
CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Financial Statements
For the Three Year Period Ending June 30, 2023
Table of Contents
Page
Number
FINANCIAL SECTION
INDEPENDENT AUDITORS'REPORT.............................................................................................................. 1
BASIC FINANCIAL STATEMENTS
Balance Sheet.................................................................................................................................................. 4 Statement of Revenues, Expenditures, and Changes in Fund Balance.......................................................... 5 Notes to Basic Financial Statements ...............................................................................................................6
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule for the Year Ended June 30, 2023 ............................................................. 8 Budgetary Comparison Schedule for the Year Ended June 30, 2022 ............................................................. 9 Budgetary Comparison Schedule for the Year Ended June 30, 2021........................................................... 10
OTHER REPORTS
Independent Auditors' Report on Compliance................................................................................................... 11 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..................................................................................... 13 LSU
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INDEPENDENT AUDITOR'S REPORT
To the hlonorable Mayor and Members of the City Council City of Pasadena, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the Measure W Fund, a special revenue fund, which reports the Safe, Clean Water Program ("SOW Program") of the City of Pasadena, California (the "City"), as of and for the three-year period ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the SCW Program's basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the SCW Program of the City, as of June 30, 2023, and the changes in financial position for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Bas/s for Opinions
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. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Note 1, the financial statements of the SCW Program are intended to present the financial position and the changes in financial position of only that portion of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City that is attributable to the transactions of the SOW Program. They do not purport to, and do not, present fairly the financial position of the City, as of June 30, 2023, the changes in its financial position, or, where applicable, its cash flows 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.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. '-..-?PrimeGloba!
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203 N. Brea Blvd. Suite 203
Brea. CA 92821
(714)672-0022
24422 Avenida de la Cartota, Suite 275
Laguna Hills, CA 92653
(949) 829-8299
1611 E. Fourth Street, Suite 200
Santa Ana.CA 92701
(714) 569-1000
2151 River Plaza Dr.. Suite 150
Sacramento, CA 95833
(916)503-9691
21 Waterway Avenue, Suite 30089
The Woodlands, TX 77380
(936) 828-4587
LSU
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To the hlonorable Mayor and Members of the City Council City of Pasadena, California
Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit 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, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the budgetary comparison information on as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has omitted the management's discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. 2 LSU
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
Summarized Comparative Information
The financial statements of the City for the year ended June 30, 2022 and June 30, 2021, were audited by another auditor, who expressed an unmodified opinion on those financial statements in their reports dated March 17,2023 and January 19, 2022, respectively. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2022 and June 30, 2021, is consistent, in all material respects, with the audited financial statements from which it has been derived.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 28, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters, including compliance with Los Angeles County Flood Control District Code Chapter Sections 16.05 and 18.05 through 18.07. 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 financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. ^QMt,
Brea, California
December 28, 2023
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3 CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Balance Sheet
As of June 30,
ASSETS
Cash and investments
Accounts Receivable
Total assets
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable
Total liabilities
FUND BALANCE
Restricted:
Public works
Total fund balance
Total liabilities and fund balance
202320222021
$ 2,105,660 $
$
$
2,105,660 $
28,223 $
28,223
537,442 $
$
2,126,469537,442
1,536,502
537,442 $ 1,536,502
1,536,502
2,126,469537,4421,536,502
$ 2,154,692 $537,442 $ 1,536,502
See accompanying notes to financial statements.4
CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Statement of Revenues, Expenditures, and Changes in Fund Balance For the Year Ended June 30,
REVENUES
Intergovernmental
Total revenues
EXPENDITURES
Current:
Public works
Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance, beginning
Fund balance - ending
202320222021
$ 3,099,753 $$ 1,536,502
3,099,753
584,636
584,636
2,515,117
(926,090)
(926,090)
1,589,027
537,442
999,060
999,060
(999,060)
(999,060)
1,536,502
1,536,502
1,536,502
1,536,502
$ 2,126,469 $ 537,442 $ 1,536,502
See accompanying notes to financial statements.5
CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Notes to the Basic Financial Statements
For the Three Year Period Ending June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Measure W special revenue fund (the "Fund"), which reports the Safe, Clean Water Program ("SCW Program") of the City of Pasadena (the "City") conform to accounting principles generally accepted in the United States of America as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting principles. These financial statements present only the financial position of the Fund and do not present nor purport to present the financial position of the City as a whole. The following is a summary of the significant policies.
A. Reporting Entity
The Fund was set up to administer resources received from the Los Angeles County Flood Control District (the District) pursuant to the SCW Program. The purpose of the SOW program is to fund projects and programs to increase stormwater and urban runoff capture and reduce stormwater and urban runoff pollution in the District. Forty percent (40%) of the annual SCW Program tax revenues is allocated to Municipalities within the District, in the same proportion as the amount of revenues collected within each Municipality, and is expended by these cities within their respective jurisdictions for the implementation, operation and maintenance, and administration of projects and programs, in accordance with the criteria and procedures established in Chapters 16 and 18 of the Los Angeles County Flood Control District Code.
B. Measurement Focus, Basis of Presentation, And Financial Statement Presentation The Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balance.
The Fund is accounted for on a spending or current financial resources measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual are recognized when due. The primary sources susceptible to accrual are property tax, sales tax, transient occupancy tax, investment income, and grant revenues. Generally, revenues are subject to accrual if anticipated to be received within 180 days after year-end.
The exception to this general rule is that property taxes are subject to accrual if received within 60 days after year-end.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred.
C. Stewardship, Compliance, and Accountability
The legal level of budgetary control is at the fund level. For the year ended June 30, 2023, there were no violations of expenditures over appropriations.
D. Investments and Interest Income on Investments
Cash and investments of the City are managed on a pooled basis, and the Fund's share in this pool is displayed in the accompanying financial statements as cash and investments. Investment income from the pool is allocated quarterly to the Fund based on its average cash balance in relation to the pool's total balance. The primary components of investment earnings are interest earnings and distributions, unrealized gains or losses from changes in fair value, and realized gains or losses from the liquidation or sale of investments. All pooled investments are controlled by an investment policy that is adopted by the City Council and further controlled by State legislation. 6 CITY OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Notes to the Basic Financial Statements
For the Three Year Period Ending June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Fund Balance
In the governmental fund financial statements, fund balance is made up of the following categories:
Restricted fund balance includes amounts that can be spent only for specific purposes imposed by creditors, grantors, contributors, or laws or regulations of other governments or through enabling legislation.
When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City's policy is to consider restricted fund balance to have been depleted before using any components of unrestricted fund balance. Further, when expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City's policy is to first deplete committed fund balance, then assigned fund balance, and finally unassigned fund balance.
NOTE 2: CASH AND INVESTMENTS
The Fund participates in the City's pooled cash and investments (the pool). Information relating to the City's cash and investments can be found in the City's financial statements.
NOTE 3: SUBSEQUENT EVENTS
The City evaluated subsequent events for recognition and disclosure through March 31, 2024, the date on which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2023, that required recognition or disclosure in these financial statements. 7 CITf OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Budgetary Comparison Schedule
For the Year Ended June 30, 2023
Budgeted Amounts
REVENUES
Intergovernmental
Total revenues
EXPENDITURES
Current:
Public works
Total expenditures
Excess (deficiency) of revenues over (under) expenditures
OTHER FINANCING SOURCES (USES)
Transfers out
Total other financing sources (uses)
Net change in fund balance
Fund balance - beginning
Fund balance - ending
OriginalFinalActual
Variance with
Fjnal Budget
_$__$$ 3,099,753 $ 3,099,753
3,099,753
1,650,000630,000584,636
1,650,000630,000584,636
$ (1,650,000) $ (630,000)
(700,000)(926,090)
(700,000)(926,090)
$ (1,650,000) $ (1,330,000)
$ 2,126,469
3,099,753
45,364
45,364
2,515,117 $ 3,054,389
(226,090)
(226,090)
1,589,027 $ 2,828,299
537,442
8 CITC OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Budgetary Comparison Schedule
For the Year Ended June 30,2022
Budgeted Amounts
REVENUES
Intergovernmental
Total revenues
EXPENDITURES
Current:
Public works
Total expenditures
Excess (deficiency) of revenues over (under) expenditures Fund balance - beginning
Fund balance - ending
OriginalFinalActual
Variance with
Final Budget
$$_$_
3,120,000355,000999,060(644,060)
3,120,000355,000999,060(644,060)
$ (3,120,000) $ (355,000)(999,060) $ (644,060)
1,536,502
$537,442
9 CITC OF PASADENA, CALIFORNIA
SAFE, CLEAN WATER PROGRAM
Budgetary Comparison Schedule
For the Year Ended June 30,2021
Budgeted Amounts
REVENUES
Intergovernmental
Total revenues
EXPENDITURES
Current:
Public works
Total expenditures
Excess (deficiency) of revenues over (under) expenditures Fund balance - beginning
Fund balance - ending
OriginalFinalActual
Variance with
Final Budget
$$ 1,536,502 $ 1,536,502
1,536,5021,536,502
3,120,0003,120,0003,120,000
3,120,0003,120,0003,120,000
$ (3,120,000) $ (3,120,000)1,536,502 $ 4,656,502
$ 1,536,502
10 LSU
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INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
To the Honorable Mayor and Members of the City Council
City of Pasadena, California
Opinion
We have audited City of Pasadena, California (the "City")'s compliance with the compliance requirements identified as subject to audit in Los Angeles County Flood Control District Code Chapter Sections 16.05 and 18.05 through
18.07 that could have a direct and material effect on the City's Safe, Clean Water Program ("SCW Program") for the three-year period ended June 30,2023.
In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the SCW Program for the year ended June 30, 2023.
Basis for Opinion
We conducted our audit of compliance 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. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for the SCW Program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City's SOW Program.
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City's compliance with the requirements of the SCW Program as a whole. ^ PrimeGlobal I ;:U,: ff.A<^w^
203 N. Brea Blvd, Suite 203
Brea. CA 92821
(714)672-0022
24422 Avenida de la Carlota. Suite 275
Laguna Hills, CA 92653
(949) 829-8299
1611 E. Fourth Street. Suite 200
Santa Ana. CA 92701
(714)569-1000
2151 River Plaza Dr.. Suite 150
Sacramento, CA 95833
(916)503-9691
21 Waterway Avenue, Suite 30089
The Woodlands. TX 77380
(936) 828-4587
LSU
••••
••••
To the Honorable Mayor and Members of the City Council
City of Pasadena, California
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the City's internal control over compliance relevant to the audit in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of City's internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to be reported and which are described in the accompanying schedule of findings and questioned costs as items 2023-001, 2023-002 and 2023-003. Our opinion on the SCW Program is not modified with respect to these matters.
Government Auditing Standards requires the auditor to perform limited procedures on the City's response to the noncompliance findings identified in our compliance audit described in the accompanying schedule of findings and questioned costs. The City's response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. ^OWt,
Brea, California
April 1, 2024
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12 LSU
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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
To the Honorable Mayor and Members of the City Council
City of 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 Safe, Clean Water Program ("SOW Program") of the City of Pasadena, California (the "City"), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the SCW Program's basic financial statements, and have issued our report thereon dated April 1, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over SCW Program's financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.
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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses or significant deficiencies.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the SCW Program's financial statements are free from material misstatement, 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 financial statements, including Los Angeles County Flood Control District Code Chapter Sections 16.05 and 18.05 through
18.07. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items 2023-001, 2023-002, and 2023-003. 'S PrimeGlobat
203 N. Brea Blvd, Suite 203
Brea, CA 92821
(714) 672-0022
24422 Avenida de la Cartota, Suite 275
Laguna Hills, CA 92653
(949) 829-8299
1611 E. Fourth Street, Suite 200
Santa Ana. CA 92701
(714)569-1000
2151 River Plaza Dr.. Suite 150
Sacramento, CA 95833
(9161503-9691
21 Waterway Avenue, Suite 30089
The Woodlands. TX 77380
(936) 828-4587
LSU
••••
••••
To the hlonorable Mayor and Members of the City Council City of Pasadena, California
City of Pasadena's Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City's response to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The City's response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
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 entity's internal control. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. ^ ^^^^^4 ^^
Brea, California
April 1, 2024
14 LSU
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Reference Number
2023-001
Evaluation of Finding
Non-Compliance - Reporting
Condition
The City submitted the annual progress/expenditure reports beyond the six-month requirement.
Criteria
Program regulations under B-26 require the City to submit annual progress/expenditure reports within six months following the end of the fiscal year to the District.
Cause of Condition
The City submitted the FY21-22 and FY22-23 annual reports beyond the six-month requirement. The FY21-22 report was submitted August 7, 2023, and the FY22-23 report was submitted March 6, 2024.
Effect or Potential Effect of Condition
Measure W - Safe Clean Water Program is new funding for the City. The City has been implementing new processes and procedures to ensure all requirements are met, however the reconciliation and tracking of activity as well as requirements are new. Due to insufficient staff, information and invoices for services being provided in a timely manner, the City submitted the reports late.
Recommendation
We recommend the City implement procedures at year-end
requirements.
to ensure timely submissions for all reporting
Management Response
Management agrees with the recommendation. Due to this being new funding and new procedures the City does not expect this to be an issue in future years. The City will be able to reconcile information through the tracking under fund 243 and through a new administrator position. This will result in timely submission of the annual reports. 15 LSU
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
Reference Number
2023-002
Evaluation of Finding
Non-Compliance - Interest Allocation
Condition
The City did not have internal controls to properly set up the fund into the pooled cash for interest allocation and did not allocate interest from the City's pooled cash and investments accounts to the Program.
Criteria
Program regulations under Section 16.13 require the City to hold the Program funds under a separate interest-bearing account not be combined with other funds. Interest earned from each account shall be used by the account holder only for eligible expenditures consistent with the requirements of the Program.
Cause of Condition
The City calculated and recorded their interest allocation journal entries independently of requirements and through the financial closing process. Program regulations under Section communicated to the City's finance personnel prior to the calculations being recorded. the compliance
16.13 were not
Effect or Potential Effect of Condition
Measure W - Safe Clean Water Program is new funding for the City. The City has been implementing new processes and procedures to ensure all requirements are met, however the reconciliation and tracking of activity as well as requirements are new. Due to insufficient information, the City finance department unknowingly omitted the interest allocation to the SCW Program Fund within the City's general ledger.
Recommendation
We recommend the City implement procedures to ensure interest is properly allocated to all SCW Program Funds within the City's general ledger.
Management Response
Management agrees with the recommendation. Due to this being new funding and new procedures the City does not expect this to be an issue in future years. The Public Works department has communicated Program requirements to the City's finance department to alleviate this issue in subsequent fiscal years. 16 LSU
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
Reference Number
2023-003
Evaluation of Finding
Non-Compliance - Program Implementation
Condition
The City did not attain the required threshold of at least 70% of SOW Program expenditures to be expended on eligible Projects and Programs implemented on or after Novembers, 2018 during FY21-22 and FY22-23. The City obtained 65% on both years and calculation was monitored and will be adjusted moving forward.
Criteria
Program regulations under Section 18.06 require that at least 70% of Program funds be spent annually on eligible expenses related to Projects or Programs implemented on or after November 6, 2018.
Cause of Condition
Due to new Program costs and activities, costs were not fully implemented as anticipated during FY21-22 and FY22-23.
Effect or Potential Effect of Condition
Measure W - Safe Clean Water Program is new funding for the City. The City has been implementing new processes and procedures to ensure all requirements are met, however the reconciliation and tracking of activity as well as requirements are new. Due to new implementation of new projects and programs, costs were not incurred as anticipated resulting in the failure to attain the aforementioned 70% expenditure threshold.
Recommendation
We recommend the City implement procedures to track Program expenditures throughout the year and monitor against projected budgets to ensure funds are in line with developments and within required ratios of the Program.
Management Response
Management agrees with the recommendation. Due to this being new funding and new procedures the City does not expect this to be an issue in future years. The City had delays in development and now has a new Stormwater Program Administrator position to monitor activity and ensure the ratios are being maintained in subsequent fiscal years.
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CORRECTIVE ACTION PLAN
Reference Number: 2023-001
Name of Contact Person: Dawn Petschauer (Stormwater Program Administrator) Corrective Action: The City has implemented new monitoring and tracking procedures as well as established a new Stormwater Program Administrator position to ensure all compliance requirements are met with timely submissions of annual reports.
Proposed Completion Date: June 30, 2024
Reference Number: 2023-002
Name of Contact Person: Dawn Petschauer (Stormwater Program Administrator) Corrective Action: The City has implemented new monitoring and tracking procedures as well as established a new Stormwater Program Administrator position to ensure all compliance requirements are met with proper interest allocation to all SCW Program activity within the City's general ledger.
Proposed Completion Date: June 30, 2024
Reference Number: 2023-003
Name of Contact Person: Dawn Petschauer (Stormwater Program Administrator) Corrective Action: The City has implemented new monitoring and tracking procedures as well as established a new Stormwater Program Administrator position to ensure all compliance requirements are met with proper adherence to the required threshold of annual expenditures required to be expended on eligible Projects and Programs implemented on or after November 6, 2018.
Proposed Completion Date: June 30, 2024
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