City of Patterson
Transportation Development Act Fund
Patterson, California
Independent Auditors’ Reports
and Financial Statements
For the Year Ended June 30, 2022
City of Patterson
Transportation Development Act Fund
For the Year Ended June 30, 2022
Table of Contents
Page
Independent Auditors’ Report on Financial Statements .......................................................................................... 1 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, and With the Statutes, Rules and Regulations of the California Transportation Development Act ..................................................... 5 Financial Statements:
Balance Sheet ........................................................................................................................................................... 9 Statement of Revenues, Expenditures, and Change in Fund Balance .................................................................... 10 Notes to the Financial Statements............................................................................................................................. 15 This page intentionally left blank.
2121 North California Blvd., Suite 290
Walnut Creek, California 94596
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying balance sheet of the Transportation Development Act Fund (the “TDA Fund”) of the City of Patterson, California (the “City”) as of June 30, 2022 and the related statement of revenues, expenditures, and change in fund balance for the year then ended, and the related notes to the financial statements.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of TDA Fund as of June 30, 2022, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
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 Auditors’ 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 audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the TDA Fund of the City and do not purport to, and do not present fairly the financial position of the City as of June 30, 2022, and change in its 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.
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 TDA Fund’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.
2 To the Honorable Mayor and Members of the City Council of the City of Patterson
Patterson, California
Auditors’ 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 auditors' 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 auditing standards generally accepted in the United States of America 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 auditing standards generally accepted in the United States of America 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 TDA Fund’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 TDA Fund’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
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 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 financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. Our opinion on the financial statements is not affected by this missing information.
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards and the Transportation Development Act, we have also issued our report dated May 3, 2023, on our consideration of the TDA Fund’s internal control over financial reporting and on our tests of its compliance with the statutes, rules, and regulations of the California Transportation Development Act.
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 TDA Fund’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 TDA Fund’s internal control over financial reporting and compliance.
Walnut Creek, California
May 3, 2023
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2121 North California Blvd., Suite 290
Walnut Creek, California 94596
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, AND WITH THE STATUTES, RULES
AND REGULATIONS OF THE CALIFORNIA TRANSPORTATION DEVELOPMENT ACT Independent Auditors’ Report
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, 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 Transportation Development Act Fund (the “TDA Fund”) of the City of Patterson, California (the “City”), as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the TDA Fund’s basic financial statements and have issued our report thereon dated May 3, 2023.
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 TDA Fund 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 have not been identified.
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 or significant deficiencies may exist that have not been identified.
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
6 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s Transportation Development Act Fund financial statements are free from material misstatement, we performed tests of its compliance with the applicable statutes, rules and regulations of the Transportation Development Act and the allocation instructions and resolutions of the Stanislaus Council of Governments as required by Sections 6666 of Title 21, Division 3, Chapter 2, Article 5.5 of the California Code of Regulations, noncompliance with which could have a direct and material effect on the determination of financial statements. 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 or the Transportation Development Act.
As part of obtaining reasonable assurance about whether the TDA Fund’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 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 one instance of noncompliance or other matters that are required to be reported under Government Auditing Standards.
In connection with our audit referred to above, we also performed an audit for compliance with the Transportation Development Act, the California Code of Regulations, and the rules and regulations and allocation instructions of the Stanislaus Council of Governments, for the year ended June 30, 2022. In connection with our audit, we performed to the extent applicable, the compliance audit tasks set forth in Section 6666 of the Rules and Regulations of the California Administrative Code in the Transportation Development Act Statutes and Administrative Code for 1987 (the “Act”) and the allocation instructions and resolutions of the Stanislaus Council of Governments applicable to the City’s Transportation Development Act Fund (the “TDA Fund”). The results of performing the tasks specified above disclosed one instance of noncompliance with the applicable statutes, rules, and regulations of the Act, and the allocation instructions and resolutions of the Stanislaus Council of Governments. In our opinion, the funds allocated to and received by the TDA Fund for the year ended June 30, 2022, pursuant to the Transportation Development Act, were accounted for and expended in conformance with the Transportation Development Act, the California Code of Regulations, and the rules and regulations and allocation instructions of the Stanislaus Council of Governments.
Finding 2022-001 - Late Submission of Certified Fiscal Audit Criteria:
Pursuant to the Stanislaus Council of Governments TDA Guidebook for the Transportation Development Act:
“Certified Fiscal Audit -The TDA statute requires that all claimants submit a certified fiscal audit annually to their regional transportation planning agency and to the State Controller within 180 days after the end of the fiscal year. The fiscal report must include the audited amounts for the prior fiscal year.” Condition:
The City has experienced significant delays in the preparation and issuance of 2022 financial statements and completion of their annual fiscal audit required under the Transportation Development Act.
Effect:
The City is not in compliance with the requirements of the Transportation Development Act.
Recommendation:
The City’s Finance Department should develop standard operating procedures to facilitate monthly and year-end closing processes and the preparation of its financial statements.
To the Honorable Mayor and Members of the City Council
of the City of Patterson
Patterson, California
7 Finding 2022-001 - Late Submission of Certified Fiscal Audit (Continued) Management’s Response:
The City concurs with this finding. The Finance staff continues to improve its annual work plan and to focus on staff training in order to accelerate the publication of its annual financial statements.
City’s Response to the Findings
City’s response to the findings identified in our audit is described previously. City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
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 to express an opinion on the compliance of the TDA Fund with the Transportation Development Act, the California Code of Regulations, and the rules and regulations and allocation instructions of the Stanislaus Council of Governments, and not to provide an opinion on the effectiveness of the TDA Fund’s internal control or on other compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the TDA Fund’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Walnut Creek, California
May 3, 2023
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LTF
Transportation
ASSETS
Cash and investments $ 309,750
Intergovernmental receivable 585
Interest receivable 134
Total assets $ 310,469
LIABILITIES AND FUND BALANCE
LIABILITIES:
Accounts payable $ 114
Unearned revenue 309,470
Total liabilities 309,584
FUND BALANCE:
Unrestricted 885
Total fund balance 885
Total liabilities and fund balance $ 310,469
City of Patterson
Transportation Development Act Fund
Balance Sheet
June 30, 2022
See accompanying Notes to the Basic Financial Statements. 9 LTF
Transportation
REVENUES:
Streets - SB325 $ 40,365
Interest 541
Miscellaneous 585
Total revenues 41,491
EXPENDITURES:
Public works 114
Total expenditures 114
Net change in fund balance 41,377
FUND BALANCE (DEFICIT):
Beginning of year (40,492)
End of year $ 885
City of Patterson
Transportation Development Act Fund
Statement of Revenues, Expenditures, and Change in Fund Balance For the Year Ended June 30, 2022
See accompanying Notes to the Basic Financial Statements. 10 11
NOTES TO THE FINANCIAL STATEMENTS
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City of Patterson
Transportation Development Act Fund
Index to the Notes to the Financial Statements
For the Year Ended June 30, 2022
13 Note 1 – Summary of Significant Accounting Policies ............................................................................................. 15 A. The Reporting Entity .................................................................................................................................. 15 B. Fund Accounting......................................................................................................................................... 15 C. Basis of Accounting and Measurement Focus ............................................................................................ 15 D. Cash and Investments ................................................................................................................................. 15 E. Fund Balance .............................................................................................................................................. 15 F. Use of Estimates ......................................................................................................................................... 16 Note 2 – Cash and Investments ................................................................................................................................... 16 Note 3 – Unearned Revenue ........................................................................................................................................ 16 Note 4 – Transportation Development Act Compliance Requirements .................................................................. 16 Note 5 – Restrictions ..................................................................................................................................................... 16 14 This page intentionally left blank.
City of Patterson
Transportation Development Act Fund
Notes to the Financial Statements
For the Year Ended June 30, 2022
15 Note 1 – Summary of Significant Accounting Policies
The accompanying financial statements are prepared from the accounts and financial transactions of the Transportation Development Act Fund (“TDA Fund”) of the City of Patterson, California (the “City”) and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies applicable to the TDA Fund are described below.
A. The Reporting Entity
The City operates under a Council-Manager form of government and provides the following services as authorized: public safety (police, fire and civil defense), highway and streets, sanitation, health and social services, culture-recreation, education, public improvements, planning and zoning, and general administrative services. The City also provides water, garbage, and sewer service. It is governed by an elected five member council.
The financial statements of the TDA Fund are intended to present the financial position and changes in financial position of only those transactions attributable to the TDA Fund administered and disbursed by the City.
B. Fund Accounting
In accordance with Section 99400 (a) and (c) of the Transportation Development Act, monies are reported in the TDA Fund. The monies of the TDA Fund are the City’s share of the Transportation Development Act allocations that are legally restricted for specific purposes. The operation of this fund is accounted for as a “Special Revenue Fund” in a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures.
C. Basis of Accounting and Measurement Focus
The TDA Fund’s financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances. This 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 change in fund balance presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in fund balance. 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. The City defines available to be within 60 days.
D. Cash and Investments
The Transportation Development Act Fund’s cash is pooled with the City’s internal investment pool. Cash equivalents are reported as cash and are considered to be cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition.
E. Fund Balance
The City reports fund balance for governmental funds in specific classifications (nonspendable, restricted, committed, assigned, and unassigned), which creates a hierarchy primarily based on the extent to which the City is bound to the constraints on the specific purpose for which funds can be spent. The TDA fund only receives restricted revenues, therefore any remaining fund balance is restricted by nature of the revenue received.
City of Patterson
Transportation Development Act Fund
Notes to the Financial Statements (Continued)
For the Year Ended June 30, 2022
16 Note 1 – Summary of Significant Accounting Policies (Continued) F. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosure. Accordingly, actual results could differ from those estimates.
Note 2 – Cash and Investments
The TDA Fund’s share of the City’s cash and investments at June 30, 2022 was $309,750.
Cash is deposited in the City’s internal investment pool, which is reported at fair value. The TDA Fund do not own specifically identifiable securities in the City’s pool. Interest income is allocated based on average cash balances.
Investment policies and associates risk factors applicable to the TDA Fund are those of the City and are included in the City’s basic financial statements.
Note 3 – Unearned Revenue
As of June 30, 2022, the balance of $309,470 is unearned revenue and consists of unspent funds of $297,142 of FY2016 Congestion Mitigation and Air Quality (CMAQ) Improvement funding and $12,328 of FY2015 NonMotorized Sidewalks funding.
Note 4 – Transportation Development Act Compliance Requirements Allocations and disbursements of the State Transit Assistance Fund and the Local Transportation Fund are made by the Stanislaus Council of Governments. Such allocations and disbursements are in accordance with written allocation instructions conveyed by the Stanislaus Council of Governments, the Transportation Development Act, and Section 6753 of the California Administrative Code.
Pursuant to Section 6750 (e) of the California Administrative Code, the Local Transportation Fund shall not be commingled with the State Transit Assistance Fund, or with any other revenues or funds of the regional entity, county, or operator. The Local Transportation Fund is maintained as a separate fund of the City.
Note 5 – Restrictions
Funds received pursuant to TDA Article 3 may only be used for pedestrian and bicycle projects.
Funds received pursuant to TDA Article 8e may only be used to pay for capital expenses incurred while contracting for transit services with profit making or non-profit companies for public transportation services as described in TDA Article 8e.