Loading...
HomeMy WebLinkAbout1G Staff CorrespondenceCity of Palm Springs Audit Communication With Those Charged With Governance For the Year Ended June 30, 2020 March 11, 2021 2 OUR RESPONSIBITY IN ACCORDANCE WITH PROFESSIONAL STANDARDS •Form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly,in all material respects,in accordance with accounting principles generally accepted in the United States of America •Our responsibility is to plan and perform the audit to obtain “reasonable”assurance (not “absolute”assurance)about whether the financial statements are free of material misstatements. •We considered internal control over financial reporting.Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. 3/11/2021 3 AUDIT RESULTS 03/10/2021 4 Audit Results 03/10/2021 Unmodified Opinions •Financial Statements are fairly presented in all material respects •Significant accounting policies have been consistently applied •Estimates are reasonable •Disclosures are properly reflected in the financial statements AU-C 265,Communicating Internal Control Related Matters Identified in an Audit •2020-001,Internal Control Over Financial Reporting •2020-002,Internal Service Funds Financial Statements 5 Finding 2020-001 Airport •During the prior fiscal year FY2018-19,several projects (TSA renovations,airfield design, and hold room chairs)were being constructed at the Airport which were recorded as operational expenses rather than as a capital improvement asset.An adjustment was completed reclassifying to an asset account resulting in a positive $647,433 increase in the Airport Fund balance. •The Airport has various long-term agreements with the car rental agencies that require those vendors to pay a Minimum Annual Guarantee (“MAG”)rental fee based on the prior year’s car rental revenue.In FY2016-17 a total credit (overpayment)was due to these agencies in the amount of $1,026,075,which was encumbered (as a reserve)in a accounts payable liability.In FY2017-18 a duplicate amount was encumbered (as a reserve)in a contracts payable liability (however,no duplicate payment was made to the car rental agencies),which has been reversed out (unencumbered)resulting in a positive $1,026,075 increase in the Airport Fund balance. Internal Control Over Financial Reporting (Prior period adjustments were made to correct transactions that were incurred in the previous years) 3/11/2021 6 Finding 2020-001 Redevelopment Agency •The City’s former Redevelopment Agency approved three different affordable housing projects (Sunset Hacienda,Vista Sunrise,and Desert Highland)and provided Housing Agency funding via long-term forgivable loans.Once the projects were constructed the developers requested and received City Council approval to increase the original loan amounts cumulative of $703,449.Staff understood the loans as a “forgivable loan”and did not record the additional loan amount as a receivable.An adjustment to increase the receivable has been completed. Internal Control Over Financial Reporting 3/11/2021 7 Finding 2020-002 On July 1, 2019, the City reported deficits in the following Internal Service Funds: •Employee Benefits Fund:In FY2014-15 the 2007 Pension Obligation Bond balance liability was reclassified from the General Long-Term Debt Fund to Internal Service Fund resulting in a negative ($15,611,732)fund balance.An adjustment was completed resulting in a positive fund balance of $5,669,184 at the end of FY2019-20. •Retiree Health Insurance Fund:The Retiree Heath Insurance fund is to provide heath insurance to qualifying retirees.In FY2017-18 the total Long-Term Debt OPEB Liability was recorded into the Retiree Health Insurance Fund resulting in a negative ($149,264,756)fund balance.An adjustment was completed resulting in a positive fund balance of $2,141,107 at the end of FY2019-20. •Cogeneration Plant Fund:This capital project was for the City’s Municipal Cogeneration plant at City Hall and the Sunrise Park electrical plant which started in FY13-14 and completed several years later.During the period of completion a capital project cost of $4,928,602 was expensed and not capitalized resulting in a July 1,2019 negative ($2,437,088)fund balance.An adjustment was completed resulting in a positive fund balance of $2,491,513 at the end of FY2019-20. Internal Services Funds 3/11/2021 HQ -ORANGE COUNTY 200 E. Sandpointe Avenue Suite 600 Santa Ana, CA 92707 SAN DIEGO 4365 Executive Drive Suite 710 San Diego, CA 92121 BAY AREA 2121 North California Blvd. Suite 290 Walnut Creek, CA 94596 LAS VEGAS 1050 Indigo Drive Suite 110 Las Vegas, NV 89145 PHOENIX 4742 North 24th Street Suite 300 Phoenix, AZ 85016