Loading...
HomeMy WebLinkAbout7/15/2015 - STAFF REPORTS - 4.A. iy a u w c441poA"�P CITY COUNCIL STAFF REPORT DATE: JULY 15, 2015 UNFINISHED BUSINESS SUBJECT: CITY COUNCIL DIRECTED INDEPENDENT LEGAL AND ACCOUNTING REVIEW OF POLICY, PROCEDURES, REGULATIONS AND PRACTICES FOR THE TRANSFER AND/OR SALE OF CITY AND SUCCESSOR AGENCY OWNED REAL PROPERTY AND CITY ECONOMIC DEVELOPMENT INCENTIVE PROGRAMS. FROM: David H. Ready, City Manager RECOMMENDATION: Receive the Certified Public Accountants report on the Economic Development Incentive Programs, from Brabo & Carlsen, LLP, Certified Public Accountants. STAFF ANALYSIS: On June 3, 2015, the City Council authorized the law firm of Kane, Ballmer, and Berkman to review the transfer and/or sale of City and Successor Agency owned real property, and requested an outside accounting review of the City's Economic Development Incentive Programs. The Certified Public Accounts will present its report and findings to the City Council on the economic development programs. According to the law firm, the report on the Property Disposition Plan and the Redevelopment property transaction is not yet complete and will be made available to the City Council and the public when received, later this month. With the exception of providing all records and documents as requested by the outside firms, City Staff has not been involved in the independent review. DAVID H. READY City Manager ITEM NO. RABO & ARLSEN, LLP MICHAH.J. BRABO, CPA CERTIFIED PUBLIC WAYNE E. CAKLSEN, CPA ACCOUNTANTS w,„!he, C I,„r> Pmcti,e Srdion afllie Anreritrru loaihik I C•rti�od Puhlic ArnnoJmtls July 13, 2015 City of Palm Springs 3200 E.Tahquitz Canyon Way Palm Springs, CA 92262 In planning and performing our examination of City Management's Assertion of Compliance with Economic Incentive Programs as of June 30, 2015, we considered the City's internal control in order to determine our procedures for the purpose of expressing our opinion on management's assertions and not to provide assurance on the internal control. Our assessment of the internal control was limited to obtaining an understanding of the internal control sufficient to plan our examination and did not include tests of controls. Description of Procedures Performed Our examination included three major vacancies grants and approximately twenty interior remodel grants; it is our understanding that these grants represents all of the completed City grants in excess of$5,000 from 2008 through June 30, 2015. We also selected and examined a sample of approximately fourteen fagade improvements grants which we understand represents about ten percent of the grants of$5,000 or less during the same period. During our audit we preformed the following procedures based on information provided to us by the City: We examined the City's grant documentation — including grant files, grant applications, grant contracts, legal files, and program descriptions — that were provided to us by the City Clerk's office, the Finance Department,the Economic Development Department, and the City Attorney's office; We conducted formal interviews and held informal conversations with City Manager David Ready, Finance Director Geoffrey Kiehl, Economic Development Administrator Cathy Van Horn, and City Attorney Doug Holland; We examined the City's documentation of denied applications including a spreadsheet with explanations maintained by the Economic Development Department; We examined copies of meeting minutes and resolutions of the City Council and the Community Redevelopment Agency including related staff reports that were provided to us by the City Clerk's office; and We reviewed the results of the City's internal examination of certain grant programs. ilk Y- A , 1111 E.TAHdurrz CAVYON WAY,SUITE 203,PALM SPRINGS CA 92262 ph:760-320-0848 •fax:760-322-4626 • www.bribo-carlsen.com / 4-� City of Palm Springs July 13, 2015 Page Two Recommendations The following summarizes our comments and suggestions regarding these matters. This letter does not affect our report dated July 10, 2015, on the City Management's Assertion of Compliance with Economic Incentive Programs. The following recommendations should allow the City to strengthen its documentation and procedures regarding the City's grant programs. The costs of implementing any of the following controls or procedures should be weighed against the benefits to be gained from their implementation. Grant Documentation During our audit, we noted that grant files and other files were sometimes not complete based on the City's internal guidelines for documentation. For example, City checklists and program descriptions specified that cancelled checks should be included in grant files to support grant recipients' claims for expenditures made. Other means of supporting expenditures were on file, such as photographs, on-site inspection, check copies (not showing cancellation), contractor invoices, etc. It appeared that the City's documentation substantially showed that grants funds were distributed in a manner that is materially consistent with program objectives and guidelines as established in Council minutes, staff reports, and program summaries. However,the City's procedures for meeting internal documentation standards should be strengthened to comply with established internal policies. Grant files and documentation should be prepared and maintained in a manner that facilitates third parties being able to review files and make uniform conclusions. Toward that objective, documentation standards should include the following: Grant files should have a checklist that serves as a table of contents and chronology for the file. Sign offs on the checklist should be initialed and dated after that particular requirement is satisfied. Fastener files such as two-prong fastener files should be used to reduce documents being misfiled or misplaced. All documents should be bound into the file using the fasteners. File dividers or tabs should be used for the standard set of items and/or sections identified in the checklist/table of contents. File sections should work backward in reverse chronological order, beginning with post-grant follow- up notes if required. Photos of recipients' premises both before and after completed work, with dates indicated, should be obtained whenever possible. Where dollar figures are tallied up based on invoices,checks, receipts, etc., a lead sheet of some type, such as a spread sheet, or list, should be used rather than adding machine tapes. Documents supporting the figures on the lead sheet could be organized in order, following the lead sheet. Multiple copies of the same document should be avoided when possible. Checklists should include verification that all required signatures have been obtained before disbursements are made. City of Palm Springs July 13, 2015 Page Three Policies,Procedures,and_Trainine When programs such as new grant programs are initiated, the City should develop a set of written procedures and policies which should be communicated to staff. Staff should receive any training necessary to comply with program requirements. City's Remedies In its City Management's Assertion of Compliance with Economic Incentive Programs,the City describes revisions to its practices and procedures which the City is implementing. The City should provide oversight and follow up to ensure these revisions are carried out ongoing. We would like to thank the City Council and especially the City staff for their cooperation and assistance during our audit. Very truly yours, BRABO& CARLSEN, LLP Certified Public Accountants 141-(44L�I 1�;/210 Michael J. Brabo, CPA MJB/Imf Report on Assertion of Compliance with Economic Incentive Programs CITY OF PALM SPRINGS JUNE 30, 2015 BR W&CARLSEN,LLP Certified Public Accountants L�7) A 12O A��X AMEN, LLP MICHAEL J. BRABO, CPA t1U CERTIFILD PUBLIC WAYNE L. CARLSEN, CPA ACCOUNTANTS Member of th,Prk rtte Cornpnuies Pmcfice Sectiot of the American lusatute of C,,hf,d Pn GLcA¢ounfnnts INDEPENDENT ACCOUNTANT'S REPORT City of Palm Springs We have examined management's assertion, included in the accompanying City Management's Assertion of Compliance with Economic Incentive Programs as of June 30, 2015. Management is responsible for the City's compliance with those requirements. Our responsibility is to express an opinion on management's assertion about the City's compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary under the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the City's compliance with specified requirements. In our opinion, management's assertion that the City complied with the aforementioned requirements for the period ended June 30, 2015 is fairly stated in all material respects. BRABO&CARLSEN, LLP Palm Springs,California Piha.n .4 dil im , 1P July 10, 2015 1111 E.TAIIQUITZ CANYON WAY,SUITE 203,PALM SPRINGS,CA 92262 ph:760-320-0848 •fax:760-322-4626 • www.brabo-carlsen.com Sp City of Palm Springs David H. Ready, Esq., Ph.D. + City Manager A(/FORN�t- 3200 E.Tahquitz Canyon Way,Palm Springs,CA 92262 Tel 760.322.8350 • Fax 760.323.8207 •TDD 760.864.9527 David.Ready@palmspringsca.gov • w .palmspingsca.gov June 30, 2015 Mike Brabo Brabo & Carlsen, LLP 1111 E. Tahquitz Canyon Way, Suite 203 Palm Springs, CA 92262 RE: City Management's Assertion of Compliance with Economic Incentive Programs Dear Mr. Brabo, The City has implemented a series of certain grants from 2008 to 2015, consisting of Facade Improvement Grants, Retail Interior Remodel Grants, and Special Focus Area Grants. In the administration of these grant programs, City Management asserts: 1. Applications were submitted and reviewed for each grant. 2. For each grant approved, the applicant was found to be qualified and otherwise eligible for the grant applied for. 3. In the case of each of the Major Vacancies Grants, the City conducted a public meeting and made findings for the approval of the grant consistent with the requirements under California Government Code Section 53083. 4. Each grant was evidenced by a written agreement. 5. Each agreement described the conditions and requirements of payment under the terms of the grant. 6. For each grant payment made, there was reasonable evidence of compliance with the conditions of payment under the terms of the grant agreement with certain exceptions which are in review and enforcement by the City Attorney. 7. City Management has implemented the following revisions to the practices and procedures in the administration of all future grant programs and these modifications will strengthen consistent, uniform, and fair treatment of applicants and ensure that the goals of the grant programs are achieved: Modify agreements to provide express disclosure of the manner in which the work will be performed: a general contractor, business owner acting as the general contractor, and or combination of both methods, so that PO Box 2743,Palm Sizings, California 92263 July 7, 2015 Page Two the evidence of payment can be specifically tailored to meet the needs of the City and the grant recipient. • The City Council currently authorizes funding for incentive programs; however, the Council formally approves the agreements for over$25,000. Going forward, City Council will approve all incentive agreements. • Payment requests were previously reviewed and approved by the Department Manager. Going forward, payment requests will also be reviewed and approved by both the City Manager and City Attorney before the Finance Department will release any funds. • The Finance Department will process all pay requests—Community Development will be responsible for the application process and serve as liaison for recipients. Finance Department will implement uniform procedures for organizing Grant files. • All City incentive grants will be included in the City's annual independent audit. Sincerely, David H. Ready, ., h.D. City Manager