City of Sacramento
Budget and Audit Committee Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2023-00334 4/4/2023 Consent Item 5.
Fiscal Year 2021/22 Transportation Development Act Fund Audited Financial Statements and Compliance Report
File ID: 2023-00334
Location: Citywide
Recommendation: Receive and file.
Contact: Osvaldo Lopez, Finance Manager, (916) 808-4740, [email protected]; Leyne Milstein, Assistant City Manager, (916) 808-8491, [email protected], Department of Finance.
Presenter: None.
Attachments:
1-Description/Analysis
2-TDA Audited Financials and Independent Auditor’s Report Description/Analysis
Issue Detail: The FY2021/22 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, 2022.
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: Not applicable.
California Environmental Quality Act (CEQA): This action is not a project subject to
File ID: 2023-00334 4/4/2023 Consent Item 5.
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 FY2021/22 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 FY2021/22 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, 2022
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
Audited Financial Statements
and Compliance Report
June 30, 2022 and 2021
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
Opinion
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, 2022 and 2021, and the related notes to the 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 Transportation Development Act Fund of the City of Sacra mento as of June 30, 2022 and 2021, 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.
Basis for Opinion
We conducted our audits in acco rdance with auditing standards g enerally 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 State ments section of our report. We are required to be independent of the City and to meet our other ethical responsib ilities, in accordance with the relevant ethical requirements related to our audit. We believe that the audit e vidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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, 2022 and 2021, 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.
Responsibilities of Management 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, 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.
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 is sue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not ab solute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditi ng 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, To the City Council
City of Sacramento, California
2 misrepresentations, or the override of internal control. Misstatements are considered material if there is a likelihood that, individually or in aggregate, they would influence the ju dgement made by a reasonable user based on the financial statements.
In performing an audit in accord ance with generally accepted au diting standards and Government Auditing Standards, we:
Exercise professional judgement and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those ris ks. 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 ex pressing 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 th e 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 governan ce 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 audits.
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 basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who co nsiders it to be an essential part of financial reporting for placing the basic financial statements in an appr opriate 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 February 22, 2023 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.
February 22, 2023
2022 2021
ASSETS
Cash and investments 1,121,730$ 551,795 $
Due from other governments 423,680
TOTAL ASSETS 1,121,730$ 975,475 $
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCE
LIABILITIES
Accounts payable 36,175 $ 68,380 $
TOTAL LIABILITIES 36,175 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 1,085,555 483,415 TOTAL FUND BALANCE 1,085,555 483,415
TOTAL LIABILITES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCE 1,121,730$ 975,475 $
The accompanying notes are an integral part of these financial statements.
CITY OF SACRAMENTO
TRANSPORTATION DEVELOPMENT ACT FUND
BALANCE SHEETS
June 30, 2022 and 2021
3 2022 2021
REVENUES
Local Transportation Fund 975,742 $
Interest (44,761) 7,694 $
930,981 7,694
EXPENDITURES
Pedestrian and bicycle facilities 328,841 464,982 328,841 464,982
NET CHANGE IN FUND BALANCE 602,140 (457,288)
Fund balance at beginning of year 483,415 940,703 FUND BALANCE AT END OF YEAR 1,085,555$ 483,415 $
The accompanying notes are an integral part of these financial statements.
For the Years Ended June 30, 2022 and 2021
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, 2022 and 2021
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 a ccepted 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 pre sent 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, 2022 and 2021
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 h eld 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, 2022 and 2021, the weighted average maturity of the investments contained in the City’s investment pool was approximately 2.54 years and 3.14 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:
2022 2021
Transportation Development Act:
Local Transportation Fund
Fiscal year 2020/21 423,680 $
Total due from other governments - $ 423,680$ 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 generall y 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, 2022, 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 February 22, 2023.
Report on 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 allo w 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 contr ol 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.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Cit y’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 o ur 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 perfor med 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.
February 22, 2023