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Fin
ancial Statements
June 30, 2022 and 2021
City of Rialto, California
Transportation Development Act Fund
ATTACHMENT B
City of Rialto, California
Transportation Development Act Fund
Table of Contents
June 30, 2022 and 2021
Independent Auditor’s Report ......................................................................... ................................................... . 1 Financial Statements
Balance Sheets .................................... ................................................... ................................................... ...... 4 Statements of Revenues, Expenditures and Changes in Fund Balances .................................... ........................ 5 Notes to Financial Statements ........................................................................ ................................................. 6 Required Supplementary Information
Schedules of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – TDA Article 3 Fund ................................................................................... ................................................... ..... 9 Note to Required Supplementary Information ........................................................... .....................................10 Supplementary Information
Schedule of Allocations Received and Expended, by Project Year ....................................................................11 Independent Auditor’s 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 Transportation Development Act Compliance Requirements ........................................................12 Summary Schedule of Prior Audit Findings ............................................................. .........................................14
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10681 Foothill Blvd., Ste. 300 | Rancho Cucamonga, CA 91730-3831 | T 909.466.4410 | F 909.466.4431 | EOE 1 Independent Auditor’s Report
To the Board of Directors
San Bernardino County Transportation Authority
San Bernardino, California
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the Transportation Development Act Article 3 Fund (TDA Fund) of the City of Rialto, California (City), as of and for the years ended June 30, 2022 and June 30, 2021, and the related notes to the financial statements, as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of the TDA Fund of the City, as of June 30, 2022 and June 30, 2021, and the changes in its financial position thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Go vernment Auditing Standards i ssued by the Comptroller General of the United States ( Government Auditing Standards). 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 C ity, 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 opinion.
E
mphasis of Matter
As
discussed in Note 1, the financial statements present only the TDA Fund, and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2022 and June 30, 2021, the changes in its financial position, or, where applicable, its cash flows for the years 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.
2 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 opinion. 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 GAAS 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 GAAS 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.
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 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.
3 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 the missing information.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the schedule of allocations received and expended, by project year, as listed in the table of contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
I
n connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated.
If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 17, 2023, on our consideration of the City’s internal control over financial reporting of the TDA Fund 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 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, as it relates to the TDA Fund.
Rancho Cucamonga, California
March 17, 2023
S
ee Notes to Financial Statements. 4
City of Rialto, California
Transportation Development Act Fund
Balance Sheets
June 30, 2022 and 2021
2022 2021
Article 3 Article 3
Assets
Cash and investments -$ 20,872$
Accounts receivable 387,021 161,021
Total assets 387,021$ 181,893$
Liabilities, Deferred Inflows of Resources and Fund Balance Liabilities
Due to the City of Rialto 205,192$ -$
Deferred inflows of resources
Unavailable revenue 387,021 161,021
Fund balance (deficit)
Restricted - 20,872
Unassigned (205,192) -
Total liabilities, deferred inflows of resources and fund balance 387,021$ 181,893$ S
ee Notes to Financial Statements. 5
City of Rialto, California
Transportation Development Act Fund
Statements of Revenues, Expenditures and Changes in Fund Balances Years Ended June 30, 2022 and 2021
2022 2021
Article 3 Article 3
Revenues
TDA allocation -$ 361,021$
Expenditures
Current
TDA expenditures 226,000 -
Revenues Over/(Under) Expenditures (226,000) 361,021
Other Financing Sources (Uses)
Transfers to other Funds (64) -
Net Change in Fund Balance (226,064) 361,021
Fund Balance (Deficit), Beginning of Year 20,872 (340,149) Fund Balance (Deficit), End of Year (205,192)$ 20,872$ 6 City of Rialto, California
Transportation Development Act Fund
Notes to Financial Statements
June 30, 2022 and 2021
N
ote 1 - General Information
The financial statements are intended to reflect the financial position and changes in financial position of the Transportation Development Act (TDA) Article 3 Fund only. Accordingly, the financial statements do not purport to, and do not, present fairly the financial position of the City of Rialto, California (City), as of June 30, 2022 and 2021, and changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Article 3
The City has entered into a Cooperative Agreement (TDA 3 Agreement) with San Bernardino County Transportation Authority (SBCTA) to enhance bicycle and pedestrian facilities in accordance with Section 99234 of the California Public Utilities Code (Code). According to the Code, TDA Article 3 monies may only be used for facilities provided for the exclusive use of pedestrians and bicycles, including the construction and related engineering expenditures of those facilities, the maintenance of bicycle trails (that are closed to motorized traffic) and bicycle safety education programs. TDA Article 3 Funds may also be used for transportation-related projects that enhance quality of life through the design of pedestrian walkways and bicycle facilities. TDA Article 3 projects may be stand-alone projects, such as projects that serve the needs of commuting bicyclists, including, but not limited to, new trails serving major transportation corridors, secure bicycle parking at employment centers, park and ride lots and transit terminals where other funds are available. TDA Article 3 projects may also be add-ons to normal transportation projects, such as additional sidewalk and bike lanes on a bridge, enhanced pedestrian lighting, and median refuge islands for pedestrians When an approved project is ready for construction, as evidenced by a contract award or commitment of the participating agency’s resources, the participating agency submits a claim to SBCTA for disbursement of TDA Funds. The participating agency may submit the claim, either prior or subsequent to, incurring project expenditures. After review and approval of the claim, SBCTA issues the allocation disbursement instructions to the County Auditor-Controller. Following instruction from SBCTA, funds are disbursed from the County Local Transportation Fund to the participating agency. In accordance with the agreement, the City is required to provide matching funds equal to 10% of the project costs. The City satisfied the 10% match in the fiscal year by utilizing City funding for 10% of the total project costs incurred.
Note 2 - Significant Accounting Policies
The accounting policies of the TDA Article 3 Fund of the City conform to accounting principles generally accepted in the United States of America. The following is a summary of significant accounting policies:
A. Fund Accounting
The City accounts for the activity of the Article 3 TDA Fund in its Transportation Development Act Fund, which is a special revenue fund.
City of Rialto, California
Transportation Development Act Fund
Notes to Financial Statements
June 30, 2022 and 2021
7 The accounts of the City are organized on the basis of funds. A fund is defined as an independent fiscal and accounting entity wherein operations of each fund are accounted for in a separate set of self-balancing accounts that record resources, related benefits, and equity, segregated for the purpose of carrying out specific activities.
The City accounts for the TDA activities in separate general ledger accounts within its Article 3 special revenue fund.
Special revenue funds are used to account for the proceeds derived from specific revenue sources which are restricted or committed to expenditures for specified purposes.
B. Measurement Focus and Basis of Accounting
The special revenue funds of the City are accounted for using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, revenues are available if they are collected within 90 days of the end of the fiscal period. Expenditures generally are recorded when a liability is incurred.
C. Cash and Investments
Cash and investments are pooled by the City to facilitate cash management and maximize investment opportunities and yields. Investment income resulting from this pooling is allocated to the respective funds including the TDA Article 3 Fund based upon the average cash balance. The investment policies and the risks related to cash and investments , applicable to the Article 3 Fund, are those of the City and are disclosed in the City’s basic financial statements. The City’s basic financial statements can be obtained at City Hall. As of June 30, 2022 and 2021, the cash balance of the TDA fund is $0 and $20,872, respectively.
D. Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
E. Deferred Inflows of Resources
Deferred inflows of resources represent an acquisition of net assets that applies to future periods and will not be recognized as an inflows or resources (revenue) until that time. These amounts are deferred and recognized in the period that the amounts become available. Deferred inflows of resources in the financial statements represent amounts due from other governments at year-end, and not collected with a timeframe to finance current year expenditures.
C
ity of Rialto, California
Transportation Development Act Fund
Notes to Financial Statements
June 30, 2022 and 2021
8 F. Fund Balance
Fund balance is reported according to the following classifications: nonspendable, restricted, committed, assigned, and unassigned based on the relative strength of the constraints that control how specific amounts can be spent.
Restricted fund balance represents amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first.
Note 3 - Accounts Receivable
Accounts receivable of $387,021 and $161,021 represent the TDA revenues which had not been received from SBCTA as of June 30, 2022 and June 30, 2021, respectively.
Note 4 - Due to the City of Rialto
Due to the City of Rialto of $205,192 and $0 represents the amounts paid by the City on behalf of the TDA Fund for expenditures incurred for which reimbursements had not yet been received as of June 30, 2022 and June 30, 2021, respectively.
Note 5 - Fund Balance
The TDA Fund reported a deficit fund balance of $205,192 as of June 30, 2022 and a fund balance of $20,872 as of June 30, 2021. Article 3 revenues may be spent on projects, and then reimbursed after completion. As such, the timing difference between the expenditures and receipt of Article 3 revenues has created a deficit fund balance. The obligation of the negative unassigned fund balance will be paid by future Article 3 revenues from SBCTA.
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R
equired Supplementary Information
June 30, 2022 and 2021
City of Rialto, California
Transportation Development Act Fund
S
ee Note to Required Supplementary Information 9
City of Rialto, California
Transportation Development Act Fund
Schedules of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – TDA Article 3 Fund
Years Ended June 30, 2022 and 2021
Variance From
Final Budget
Positive
Original Final Actual (Negative)
Revenues
TDA allocation -$ 1,168,518$ -$ (1,168,518)$
Expenditures
Current
TDA expenditures - 1,408,949 226,000 (1,182,949)
Revenues Over/(Under) Expenditures - (240,431) (226,000) 14,431 Other Financing Sources (Uses)
Transfers to other Funds (64) (64) (64) -
Net Change in Fund Balance (64) (240,495) (226,064) 14,431 Fund Balance, Beginning of Year 20,872 20,872 20,872 - Fund Balance (Deficit), End of Year 20,808$ (219,623)$ (205,192)$ 14,431$ Budget
June 30, 2022
Variance From
Final Budget
Positive
Original Final Actual (Negative)
Revenues
TDA allocation -$ -$ 361,021$ 361,021$
Expenditures
Current
TDA expenditures 240,432 240,432 - 240,432
Net Change in Fund Balance (240,432) (240,432) 361,021 601,453 Fund Balance (Deficit), Beginning of Year (340,149) (340,149) (340,149) - Fund Balance (Deficit), End of Year (580,581)$ (580,581)$ 20,872$ 601,453$ Budget
June 30, 2021
1 0
City of Rialto, California
Transportation Development Act Fund
Note to Required Supplementary Information
Years Ended June 30, 2022 and 2021
N
ote 1 - Budgetary Data
The City adopts an annual budget on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. eidebailly.com
S
upplementary Information
June 30, 2022 and 2021
City of Rialto, California
Transportation Development Act Fund
11 City of Rialto, California
Transportation Development Act Fund
Schedule of Allocations Received and Expended, by Project Year Year Ended June 30, 2022
Unspent Unspent
Year Allocation Allocations at Allocations at
Article Allocated Amount 6/30/2021 Expenditures 6/30/2022 Article 3 Easton Sidewalk Improvements 2019 226,000 $ 226,000 $ 226,000 $ -$ Article 3 Merrill Safe Routes to School 2021 639,405 639,405 - 639,405 Article 3 Sycamore Safe Routes to School 2021 457,616 - - 457,616 1,323,021 $ 865,405 $ 226,000 $ 1,097,021 $
Project/Use
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10681 Foothill Blvd., Ste. 300 | Rancho Cucamonga, CA 91730-3831 | T 909.466.4410 | F 909.466.4431 | EOE 1 2
Independent Auditor’s 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 Transportation Development Act Compliance Requirements To the Board of Directors
San Bernardino County Transportation Authority
San Bernardino, California
W
e have audited, 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, the financial statements of the Transportation Development Act Article 3 Fund (TDA Fund) of the City of Rialto, California (City), as of and for the year ended June 30, 2022 and the related notes to the financial statements, and have issued our report thereon dated March 17, 2023. Our report included an emphasis of matter stating that the financial statements of the TDA Fund do not purport to, and do not, present fairly the financial position of the City as of June 30, 2022.
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 financial reporting of the TDA Fund (internal control) 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. 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. 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. 1 3
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the financial statements of the TDA Fund of the City are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, including Section 6666 of Part 21 of the California Code of Regulations and the allocation instructions of the San Bernardino County Transportation Authority (SBCTA) noncompliance with which could have a direct and material effect on the 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, including the requirements of Section 6666 of Part 21 of the California Code of Regulations and the allocation instructions of the SBCTA.
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 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 internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Rancho Cucamonga, California
March 17, 2023
1 4
City of Rialto, California
Transportation Development Act Fund
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2022
2021-001
Finding No. Description Status
Financial Reporting Implemented