Colusa County 10/08

COLUSA COUNTY Audit Report ROAD FUND July 1, 2006, through June 30, 2007 J C OHN HIANG California State Controller October 2008 J C OHN HIANG California State Controller October 15, 2008 The Honorable Peggy Scroggins Loren Clifton Auditor-Controller Public Works Director Colusa County Colusa County 546 Jay Street 1215 Market Street Colusa, CA 95932 Colusa, CA 95932 Dear Ms. Scroggins and Mr. Clifton: The State Controller’s Office (SCO) audited Colusa County’s Road Fund for the period of July 1, 2006, through June 30, 2007. We also reviewed road-purpose revenues, expenditures, and changes in fund balances for the period of July 1, 2003, through June 30, 2006. The results of this review are included in our audit report. The county accounted for and expended fiscal year (FY) 2003-04 through FY 2006-07 Transportation Equity Act of the 21st Century Matching and Exchange moneys and Senate Bill 1435 allocations from the regional transportation planning agency in compliance with Article XIX of the California Constitution and Streets and Highways Code section 182.6. If you have any questions, please contact Steven Mar, Chief, Local Government Audits Bureau, at (916) 324-7226. Sincerely, Original signed by JEFFREY V. BROWNFIELD Chief, Division of Audits JVB/vb cc: Grace Kong, Chief Local Program Accounting Branch Department of Transportation Colusa County Road Fund Contents Audit Report Summary ........................................................................................................................... 1 Background ....................................................................................................................... 1 Objectives, Scope, and Methodology .............................................................................. 2 Conclusion ......................................................................................................................... 3 Follow-Up on Prior Audit Findings ................................................................................ 3 Views of Responsible Officials ........................................................................................ 3 Restricted Use ................................................................................................................... 3 Schedule 1—Reconciliation of Road Fund Balance ............................................................ 4 Schedule 2—Reconciliation of TEA-21 and RTPA Balances ............................................. 5 Colusa County Road Fund Audit Report Summary The State Controller’s Office (SCO) audited Colusa County’s Road Fund for the period of July 1, 2006, through June 30, 2007. We also reviewed road-purpose revenues, expenditures, and changes in fund balances for the period of July 1, 2003, through June 30, 2006. This review was limited to performing inquiries and analytical procedures to ensure that (1) highway users tax apportionments and road-purpose revenues were properly accounted for and recorded in the Road Fund; (2) expenditure patterns were consistent with the period audited; and (3) unexpended fund balances were carried forward properly. Our audit and review disclosed that the county accounted for and expended Road Fund moneys in compliance with Article XIX of the California Constitution, the Streets and Highways Code, and the SCO’s Accounting Standards and Procedures for Counties manual. In addition, we audited Transportation Equity Act of the 21st Century (TEA-21) Matching and Exchange moneys and Senate Bill (SB) 1435 allocations from the regional transportation planning agency (RTPA) for FY 2003-04 through FY 2006-07 at the request of the California Department of Transportation (Caltrans). The TEA-21- and RTPA- funded projects were verified to be for road-related purposes and are eligible expenditures. The TEA-21 and RTPA moneys received by the county were accounted for and expended in compliance with Article XIX of the California Constitution and Streets and Highways Code section 182.6. Background We conducted an audit of the county’s Road Fund in accordance with Government Code section 12410. The Road Fund was established by the county board of supervisors in 1935, in accordance with Streets and Highways Code section 1622, for all amounts paid to the county out of moneys derived from the highway users tax fund. A portion of the Federal Forest Reserve revenue received by the county is also required to be deposited into the Road Fund (Government Code section 29484). In addition, county board of supervisors may authorize the deposit of other sources of revenue into the Road Fund. Once moneys are deposited into the Road Fund, it is restricted to expenditures made in compliance with Article XIX of the California Constitution and Streets and Highways Code Sections 2101 and 2150. The Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 created a federal program designed to increase flexibility in federal funding for transportation purposes by shifting the funding responsibility to state and local agencies. The TEA-21 is a continuation of this program. The funds are restricted to expenditures made in compliance with Article XIX of the California Constitution. Caltrans requested that we audit these expenditures to ensure the county’s compliance. -1- Colusa County Road Fund Objectives, Scope, The objectives of our audit of the Road Fund, TEA-21 Matching and Exchange moneys, and RTPA revenues were to determine whether: and Methodology • Highway users tax apportionments, TEA-21 Matching and Exchange moneys, and RTPA revenues received by the county were accounted for in the Road Fund, a special revenue fund; • Expenditures were made exclusively for authorized purposes or safeguarded for future expenditure; • Reimbursements of prior Road Fund expenditures were identified and properly credited to the Road Fund; • Non-road-related expenditures were reimbursed in a timely manner; • The Road Fund cost accounting is in conformance with the SCO’s Accounting Standards and Procedures for Counties manual, Chapter 9, Appendix A; and • Expenditures for indirect overhead support service costs were within the limits formally approved in the Countywide Cost Allocation Plan. Our audit objectives were derived from the requirements of Article XIX of the California Constitution, the Streets and Highways Code, the Government Code, and the SCO’s Accounting Standards and Procedures for Counties manual. To meet the objectives, we: • Gained a basic understanding of the management controls that would have an effect on the reliability of the accounting records of the Road Fund, by interviewing key personnel and testing the operating effectiveness of the controls; • Verified whether all highway users tax apportionments, TEA-21 Matching and Exchange moneys, and RTPA revenues received were properly accounted for in the Road Fund, by reconciling the county’s records to the State Controller’s and Caltrans’ payment records; • Analyzed the system used to allocate interest and determined whether the interest revenue allocated to the Road Fund was fair and equitable, by interviewing key personnel and testing a sample of interest calculations; • Verified that unauthorized borrowing of Road Fund cash had not occurred, by interviewing key personnel and examining the Road Fund cash account entries; and • Determined, through testing, whether Road Fund expenditures were in compliance with Article XIX of the California Constitution and with the Streets and Highways Code, and whether indirect cost allocation plan charges to the Road Fund were within the limits approved by the SCO’s Division of Accounting and Reporting, County Cost Plan Unit. -2- Colusa County Road Fund We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We did not audit the county’s financial statements. Our scope was limited to planning and performing audit procedures necessary to obtain reasonable assurance concerning the allowability of expenditures claimed for reimbursement. Accordingly, we examined transactions on a test basis to determine whether they complied with applicable laws and regulations and were properly supported by accounting records. We considered the county’s internal controls only to the extent necessary to plan the audit. Conclusion Our audit and review disclosed that the county accounted for and expended Road Fund moneys in compliance with Article XIX of the California Constitution, the Streets and Highways Code, and the SCO’s Accounting Standards and Procedures for Counties manual. We verified that the TEA-21- and RTPA-funded projects were for road- and transportation-related purposes, and are eligible expenditures. The TEA-21 and RTPA moneys received by the county were accounted for and expended in compliance with Article XIX of the California Constitution and the Streets and Highways Code. Follow-up on Prior Our prior audit report, issued on July 23, 2004, disclosed no findings. Audit Findings Views of We discussed the audit results with county representatives during an exit conference on May 1, 2008. Loren Clifton, Director of Public Works, Responsible and Robert Zunino, Assistant Auditor/Controller, agreed with the audit Officials results. Mr. Clifton and Mr. Zunino further agreed that a draft audit report was not necessary and that the audit report could be issued as final. Restricted Use This report is solely for the information and use of county management, the county board of supervisors, 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 October 15, 2008 -3- Colusa County Road Fund Schedule 1— Reconciliation of Road Fund Balance July 1, 2006, through June 30, 2007 Amount Beginning fund balance per county $ 1,561,129 Revenues 4,327,586 Total funds available 5,888,715 Expenditures (4,520,859) Ending fund balance per audit $ 1,367,856 -4- Colusa County Road Fund Schedule 2— Reconciliation of TEA-21 and RTPA Balances July 1, 2003, through June 30, 2007 Amount Beginning balance per county $ 237,251 Revenues: TEA-21 Matching and Exchange funds 1,217,770 RTPA funds 182,706 Other — Total revenues 1,400,476 Total funds available 1,637,727 Expenditures: Construction — Maintenance (1,394,173) Other — Total expenditures (1,394,173) Ending balance per audit $ 243,554 Note: The TEA-21 and RTPA moneys have been accounted for and expended within the Road Fund. -5- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250-5874 http://www.sco.ca.gov S08-RFA-003