City of El Segundo 04/07

CITY OF EL SEGUNDO Audit Report GAS TAX FUND July 1, 2004, through June 30, 2005 J C OHN HIANG California State Controller April 2007 April 6, 2007 Jim Walker Accounting Manager City of El Segundo 350 Main Street El Segundo, CA 90245-0813 Dear Mr. Walker: The State Controller’s Office audited the City of El Segundo’s Gas Tax Fund—highway users tax and Traffic Congestion Relief Fund (TCRF) allocations—for the period of July 1, 2004, through June 30, 2005. The city accounted for and expended its Gas Tax Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code. If you have any questions, please contact Paul R. Criss, Chief, Financial-Related Audits Bureau, at (916) 322-4941. Sincerely, Original signed by JEFFREY V. BROWNFIELD Chief, Division of Audits JVB/jj:vb:ams City of El Segundo Gas Tax Fund Contents Audit Report Summary .................................................................................................................................. 1 Background ............................................................................................................................. 1 Objective, Scope, and Methodology ...................................................................................... 1 Conclusion ............................................................................................................................... 2 Follow-Up on Prior Audit Findings ...................................................................................... 2 Views of Responsible Official ................................................................................................ 2 Restricted Use .......................................................................................................................... 2 Schedule 1—Reconciliation of Fund Balance ........................................................................... 3 City of El Segundo Gas Tax Fund Audit Report Summary The State Controller’s Office (SCO) audited the City of El Segundo’s Gas Tax Fund for the period of July 1, 2004, through June 30, 2005. We also audited the Traffic Congestion Relief Fund (TCRF) allocations recorded in the Gas Tax Fund for the period of July 1, 2000, through June 30, 2005. The last day of fieldwork was February 26, 2006. Our audit disclosed that no adjustment to the Gas Tax Fund is required. Background The State apportions funds monthly from the highway users tax account in the transportation tax fund to cities and counties for the construction, maintenance, and operation of local streets and roads. The highway users taxes are derived from state taxes on the sale of motor vehicle fuels. In accordance with Streets and Highways Code Section 2101 and Article XIX of the California Constitution, a city must deposit all apportionments of highway users taxes in its Gas Tax Fund (also known as the Special Gas Tax Street Improvement Fund). A city must expend gas tax funds only for street-related purposes. We conducted our audit of the city’s Gas Tax Fund under the authority of Government Code Section 12410. Chapter 91, Statutes of 2000 (Assembly Bill 2928), as amended by Chapter 656, Statutes of 2000 (Senate Bill 1662), established a Traffic Congestion Relief Fund in the State Treasury for allocating funds quarterly to cities and counties for street or road maintenance, reconstruction, and storm damage repair. Cities must deposit funds received into the city account designated for the receipt of state funds allocated for transportation purposes. The city recorded the TCRF allocations in the Gas Tax Fund. We conducted our audit of the city’s TCRF allocations under the authority of Streets and Highways Code Sections 2182 and 2182.1. Objective, Our audit objective was to determine whether the city accounted for and Scope, and expended the Gas Tax Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code. To meet the Methodology audit objective, we determined whether the city: Properly deposited highway users tax apportionments and other appropriate revenues in the Gas Tax Fund; Expended funds exclusively for authorized street-related purposes; and Made available unexpended funds for future expenditures. We conducted our audit according to Government Auditing Standards, issued by the Comptroller General of the United States. We did not audit the city’s financial statements. We limited our audit scope to planning and performing the audit procedures necessary to obtain reasonable -1- City of El Segundo Gas Tax Fund assurance that the city accounted for and expended the Gas Tax Fund in accordance with the requirements of the Streets and Highways Code. Accordingly, we examined transactions, on a test basis, to determine whether the city expended funds for street purposes. We considered the city’s internal controls only to the extent necessary to plan the audit. Conclusion Our audit disclosed that the city accounted for and expended its Gas Tax Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code for the period of July 1, 2004, through June 30, 2005. Our audit also disclosed that the city accounted for and expended its Traffic Congestion Relief Fund allocations recorded in the Gas Tax Fund in compliance with Article XIX of the California Constitution and the Streets and Highways Code for the period of July 1, 2000, through June 30, 2005. Follow-Up on Prior Our prior audit report dated June 15, 1995, disclosed no findings. Audit Findings Views of We discussed the audit results with city representatives during an exit conference on February 22, 2006. Jim Walker, Accounting Manager, Responsible agreed with the audit results. Mr. Walker further agreed that a draft audit Official report was not necessary and that the audit report could be issued as final. Restricted Use This report is intended for the information and use of city management and the SCO; it is not intended to be and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. Original signed by JEFFREY V. BROWNFIELD Chief, Division of Audits -2- City of El Segundo Gas Tax Fund Schedule 1— Reconciliation of Fund Balance July 1, 2004, through June 30, 2005 Gas Tax Fund Highway Users Tax TCRF Allocation 1 Allocation 2 Totals Beginning fund balance per city $ 163,655 $ — $ 163,655 Revenues 319,768 — 319,768 Total funds available 483,423 — 483,423 Expenditures (152,237) — (152,237) Ending fund balance per city 331,186 — 331,186 Timing adjustment: Accrual of June 2005 highway users tax apportionment (Governmental Accounting Standards Board Statement No. 34) 30,890 — 30,890 SCO adjustment — — — Ending fund balance per audit $ 362,076 $ — $ 362,076 ___________________________ 1 The city receives apportionments from the state highway users tax account, pursuant to Streets and Highways Code Sections 2105, 2106, 2107, and 2107.5. The basis of the apportionments for Sections 2105, 2106, and 2107 varies, but the money may be used for any street purpose. Streets and Highways Code Section 2107.5 apportionments are restricted to administration and engineering expenditures, except for cities with populations of fewer than 10,000 inhabitants. Those cities may use the funds for rights-of-way and for the construction of street systems. 2 Chapter 91, Statutes of 2000 (Assembly Bill 2928), as amended by Chapter 656, Statutes of 2000 (Senate Bill 1662), established the State Traffic Congestion Relief Fund (TCRF), which allocates funds to cities and counties for street or road maintenance and reconstruction from FY 2000-01 through FY 2005-06. -3- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250-5874 http://www.sco.ca.gov C06-GTA-024