Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00308 February 8, 2022 Consent Item 13
Title: Fiscal Year 2020/21 Transportation Development Act Fund Audited Financial Statements and Compliance Report
Location: Citywide
Recommendation: Receive and file.
Contact: Osvaldo Lopez, Finance Manager, (916) 808-4740, [email protected] ;
Emily Combs, Director, (916) 808-7914, [email protected], Department of Finance
Presenter: None
Attachments:
1-Description/Analysis
2-TDA Audited Financials and Independent Auditor’s Report
File ID: 2022-00308 Consent Item 13
February 8, 2022
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City of Sacramento
Description/Analysis
Issue Detail: The FY2020/21 Transportation Development Act (TDA) Fund Audited Financial Statements and Compliance Report has been prepared to present the financial results of the TDA Fund for the fiscal year that ended June 30, 2021.
Policy Considerations: This report is consistent with the City’s fiscal transparency and accountability principles and is required by the Sacramento Area Council of Governments (SACOG) for the receipt of funds.
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): This action is not a project subject to CEQA because it involves only organizational or administrative activities that will not result in direct or indirect physical changes in the environment (14 Cal. Code Regs. § 15378(b)(5)).
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: It is in the best interest of the City Council to receive and file the FY2020/21 TDA Fund Audited Financial Statements and Compliance Report for the following reasons:
• This report is required by the Sacramento Area Council of Governments (SACOG), the transportation planning agency administering TDA funds.
• The public accounting firm of Richardson & Company LLP has audited the City’s TDA Fund FY2020/21 financial statements and has rendered its unmodified opinion that the financial statements are fairly presented in accordance with generally accepted accounting principles.
Financial Considerations: There are no financial considerations associated with this report.
Local Business Enterprise (LBE): Not applicable.
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
Audited Financial Statements
and Compliance Report
June 30, 2021
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
Audited Financial Statements
and Compliance Report
June 30, 2021 and 2020
Audited Financial Statements
Independent Auditor’s Report ....................................................................................................................................... 1 Balance Sheets ............................................................................................................................................................... 3 Statements of Revenues, Expenditures and Changes in Fund Balance.......................................................................... 4 Notes to Financial Statements ....................................................................................................................................... 5 Compliance Report
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financ ial Statements Performed in Accordance with Government Auditing Standards and the Transportation Development Act ................................................................................................. 7
550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564‐8727
FAX: (916) 564‐8728
1 INDEPENDENT AUDITOR’S REPORT
To the City Council
City of Sacramento, California
Report on the Financial Statements
We have audited the accompanying f inancial statements of the Transportation Development Act Fund (the Fund) of the City of Sacramento (the City) as of and for years ended Jun e 30, 2021 and 2020, 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 o f 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our a udits. We conducted our audits 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 of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures sel ected depend on the auditor’s ju dgment, 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 entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropr iate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accoun ting 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 sufficie nt and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Transportation Development Act Fund of the City of Sacra mento as of June 30, 2021 and 2020, and the changes in financial position th ereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.
To the City Council
City of Sacramento, California
2 Emphasis-of-Matter
As discussed in Note B, the financial statements present only t he Transportation Development Act Fund of the City of Sacramento and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2021 and 2020, the changes in financial position, or where applicabl e, its cash flows for the years then ended in conformity with accounting princi ples 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 omitted management’s discussion and analysis and budgetary comparison information that accounting principles generally accepted in the United States o f 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.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 10, 2022 on our consideration of the County’s in ternal control over financial r eporting related to the Fund and on our tests of its compliance with certain provisi ons of laws, regulations, contra cts and grant agreements and other matters, and the Transportation Development Act. The purpose of that report is to describe the scope of our testing of internal control over financial reporti ng and compliance and the results of that testing and not to provide an opinion on internal control over financial reporting or on compliance. Th at report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s inter nal control over financial repo rting and compliance.
January 10, 2022
2021 2020
ASSETS
Cash and investments 551,795 $ 474,706 $
Due from other governments 423,680 465,997
TOTAL ASSETS 975,475$ 940,703 $
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCE
LIABILITIES
Accounts payable 68,380 $
TOTAL LIABILITIES 68,380
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 423,680
TOTAL DEFERRED INFLOWS OF RESOURCES 423,680
FUND BALANCE
Restricted for pedestrian and bicycle facilities 483,415 940,703$ TOTAL FUND BALANCE 483,415 940,703
TOTAL LIABILITES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE 975,475$ 940,703$
The accompanying notes are an integral part of these financial statements.
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
BALANCE SHEETS
June 30, 2021 and 2020
3
2021 2020
REVENUES
Local Transportation Fund 465,997 $
Interest 7,694 $ 9,796
7,694 475,793
EXPENDITURES
Pedestrian and bicycle facilities 464,982 24,467 464,982 24,467
NET CHANGE IN FUND BALANCE (457,288) 451,326
Fund balance at beginning of year 940,703 489,377 FUND BALANCE AT END OF YEAR 483,415$ 940,703 $
The accompanying notes are an integral part of these financial statements.
For the Years Ended June 30, 2021 and 2020
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
STATEMENTS OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
4
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2021 and 2020
5 NOTE A – ORGANIZATION
The City of Sacramento (the City ) receives funds under the prov isions of the Transportation Development Act (TDA) from the Sacramento County Local Transportation Fund (LTF) under Article 3, Section 99234 for pedestrian and bicycle facilities. These funds represent amounts set asid e by the Sacramento Area Council of Governments, the transportation planning agency administering TDA funds, to be allocated for pedestrian and bicycle facilities within the jurisdictions of Sacramento County and represent up to 2% of the available funds countywide. The City of Sacramento’s Transportation Development Act Fund is used to account for these TDA funds received by the City.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The financial statements of the Transpo rtation Development Act Fund (the Fund) of the City of Sacramento have been prepare d in conformity with generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Boar d is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.
Reporting Entity: The financial statements are intended to present the financial position and results of operations of only those transactions recorded in the Fund. The Fund is included in the financial statements of the City.
Fund Accounting: The accounts of the City are organized on the basis of funds or account groups. A fund or account group is an accounting en tity with a self-balancing set of accounts established to record the financial position and results of operations of a specific governmental activity.
The City utilizes the special revenue fund type of the governme ntal fund group to account for the activities of the Fund. Special revenue funds are used to account for the procee ds of specific revenue sources that are legally restricted to expenditures for specific purposes.
Basis of Accounting: The accoun ting and financial reporting tr eatment applied to a fund is determined by its measurement focus. A special revenue fund is accounted for using a current financial resources measurement focus.
With this measurement focus, only current assets, deferred outf lows of resources, curren t liabilities and deferred inflows of resources generally are included on the balance shee t. Operating statements of these funds present increases (i.e., revenues and o ther financing sources) and decr eases (i.e., expenditures and other financing uses) in net current assets.
The modified accrual basis of accounting is used by special rev enue funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual , i.e., when they become both measurable and available. “Measurable” means the amount of the transaction ca n be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period, which is generally 60 days. LTF revenues are recognized when all eligib ility requirements have been met. The amount reported as deferred inflows of resources represents amounts that do not meet both the “measurable” and “available” criteria for recognition in the current period. Expenditures are recorded when the related fund liability is incurred.
When both restricted and non-rest ricted type resources are avai lable for use, it is the City’s policy to use restricted resources first, then non-restricted resources as they are needed.
Deferred Inflows of Resources: Deferred inflows of resources i n governmental funds arises when a potential revenue source does not meet both the “measurable” and “availab le” criteria for recognition in the current period.
Deferred inflows of resources consisted of LTF revenues for whi ch all eligibility requirements had been met at year end, but the amounts were not received from SACOG within the 60 day availability period.
Fund Balance: Restrictions of fund balance represent amounts t hat can be spent only for the specific purposes stipulated by constitution, external resource providers or thro ugh enabling legislation. The restrictions of fund balance are according to the provisions of the Transportation Development Act and the purpose of each restriction is indicated by the account title on the face of the balance sheets.
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2021 and 2020
6 NOTE C – CASH AND INVESTMENTS
Investment Policy: The City’s investment policy may be found in the notes to the City’s basic financial statements.
Investment in the City’s Investment Pool: The Fund’s cash is held in the City of Sacramento Treasury. The City maintains an investment pool and allocates interest to the vari ous funds based upon the average daily cash balances.
Investments held in the City’s investment pool are available on demand to the Fund and are stated at cost, which approximates fair value.
Interest Rate Risk: Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. As of June 30, 2021 and 2020, the weighted average maturity of the investments contained in the City’s investment pool was approximately 3.14 years and 2.13 years, respectively.
Credit Risk: Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The City’s investment pool does not have a ratin g provided by a nationally recognized statistical rating organization.
Custodial Credit Risk: Custodial risk is the risk that the gove rnment will not be able to recover its deposits or the value of its investments that are in the possession of an outsi de party. Custodial credit risk does not apply to a local government’s indirect deposits or investment in securities thro ugh the use of government investment pools (such as the City’s investment pool).
NOTE D – DUE FROM OTHER GOVERNMENTS
Due from other governments consists of the following at June 30:
2021 2020
Transportation Development Act:
Local Transportation Fund
Fiscal year 2020/21 423,680 $
Fiscal year 2019/20 451,190 $
Fiscal year 2018/19 14,807
Total due from other governments 423,680 $ 465,997 $ NOTE E – CONTINGENCIES
On March 11, 2020, the World Heal th Organization declared the o utbreak of a coronavirus (COVID-19) pandemic.
The extent of the impact of COVID-19 on the City’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak a n d i t s i m p a c t o n t h e c i t i z e n s o f t h e C i t y o f Sacramento, all of which are uncertain and cannot be predicted. At this point, the full extent to which COVID-19 may impact the financial condition or results of operations is uncertain. Possible effects could be a loss or reduction of revenue sources.
550 Howe Avenue, Suite 210
Sacramento, California 95825
Telephone: (916) 564‐8727
FAX: (916) 564‐8728
7 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 THE TRANSPORTATION DEVELOPMENT ACT
To the City Council
City of Sacramento, California
We 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 Fund (the Fund) of the City of Sacramento (the City), as of and for the year ended Jun e 30, 2021, and the related notes to the financial statements, which collectively comprise the Fund’s basic financ ial statements, and have issued our report thereon dated January 10, 2022.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statement s, we considered the City’s internal control over financial reporting (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 fu nctions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or 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 s evere than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpo se 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 a material weakness. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of 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 ma terial effect on the financial statements. Our audit was further made to determine that Transportation Develop ment Act (TDA) funds a llocated and received by the City were expended in conformance with the applicable statu tes, rules and regulations of the TDA and Section 6666 of the California Code of Regulations. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not e xpress such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that a re required to be reported under Government Auditing Standards or the TDA.
To the City Council
City of Sacramento, California
8 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 e ffectiveness 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 and the TDA in considering the City’s internal control and com pliance. Accordingly, this communication is not suitable for any other purpose.
January 10, 2022