South Coast Air Quality Management District’s (aqmd) - Carl Moyer Memorial Air Quality Standards Attainment Program (cmp), Lower-Emission School Bus Program (lesbp), and Air Quality Improvement Program (aqip)

SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT Audit Report STATE-SPONSORED AIR POLLUTION REDUCTION INCENTIVE PROGRAMS July 1, 2008, through June 30, 2017 BETTY T. YEE California State Controller November 2019 BETTY T. YEE California State Controller November 26, 2019 Wayne Nastri, Executive Officer South Coast Air Quality Management District 21865 Copley Drive Diamond Bar, CA 91765 Dear Mr. Nastri: The State Controller’s Office audited the South Coast Air Quality Management District’s (AQMD) implementation of the state-sponsored air pollution reduction incentive programs for the Carl Moyer Memorial Air Quality Standards Attainment Program (CMP), Lower-Emission School Bus Program (LESBP), and Air Quality Improvement Program (AQIP) for the period of July 1, 2008, through June 30, 2017. The objectives of the audit were to determine whether:  Program revenues and expenditures are adequately supported and recorded in accordance with applicable accounting standards, federal and state laws, and other financial requirements per program guidelines;  Administrative expenditures are adequately supported, recorded, and allowable as specified in program guidelines; and  Interest earned on grant funds is properly credited and expended. Our audit determined that South Coast AQMD complied with applicable accounting standards, federal and state laws, and other financial requirements per program guidelines associated with the CMP, LESBP, and AQIP. However, our audit identified some weaknesses with South Coast AQMD’s subsidiary ledgers, as discussed in the Conclusion. If you have any questions, please contact Andrew Finlayson, Chief, State Agency Audits Bureau, by telephone at (916) 324-6310. Sincerely, Original signed by JIM L. SPANO, CPA Chief, Division of Audits JLS/as Wayne Nastri, Executive Officer -2- November 26, 2019 cc: Sujata Jain, Assistant Deputy Executive Officer, Finance Administrative Office South Coast Air Quality Management District Susanna Leung, Controller, Finance Administrative Office South Coast Air Quality Management District Bayron Gilchrist, General Counsel South Coast Air Quality Management District Scott Rowland, Chief Incentives & Technology Advancement Branch Mobile Source Control Division California Air Resources Board Radhika Majhail, Manager Incentives Oversight Section Mobile Source Control Division California Air Resources Board Yvonne Sanchez, Air Resources Engineer Mobile Source Control Division California Air Resources Board South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Contents Audit Report Summary ............................................................................................................................ 1 Background ........................................................................................................................ 1 Objectives, Scope, and Methodology ............................................................................... 2 Conclusion .......................................................................................................................... 5 Follow-up on Prior Audit Findings .................................................................................. 6 Views of Responsible Officials .......................................................................................... 6 Restricted Use .................................................................................................................... 7 Appendix A—Summary of Revenues and Expenditures for the Carl Moyer Memorial Air Quality Standards Attainment Program, Lower-Emission School Bus Program, and Air Quality Improvement Program .............. A1 Appendix B—Carl Moyer Memorial Air Quality Standards Attainment Program Revenues and Expenditures ....................................................................... B1 Appendix C—Lower-Emission School Bus Program Revenues and Expenditures ........ C1 Appendix D—Air Quality Improvement Program Revenues and Expenditures ............ D1 Appendix E—Assembly Bill 923 Receipts, Expenditures, and Interest Earned .............. E1 South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Audit Report Summary The State Controller’s Office (SCO) conducted an audit of the South Coast Air Quality Management District’s (South Coast AQMD) administration of state-sponsored air pollution reduction incentive programs for the Carl Moyer Memorial Air Quality Standards Attainment Program (CMP), Lower-Emission School Bus Program (LESBP), and Air Quality Improvement Program (AQIP) for the period of July 1, 2008, through June 30, 2017. The purpose of this audit was to ensure that South Coast AQMD’s administration of state-sponsored air pollution reduction incentive programs complies with applicable accounting standards, federal and state laws, and other financial requirements per program guidelines associated with the CMP, LESBP, and AQIP, to ensure continued program accountability and good stewardship of public funds. We prepared and audited information contained in the following appendices:  Summary of revenues and expenditures for the CMP, LESBP, and AQIP (Appendix A);  CMP revenues and expenditures (Appendix B);  LESBP revenues and expenditures (Appendix C); and  AQIP revenues and expenditures (Appendix D). In addition, we included a schedule related to Assembly Bill 923 receipts, expenditures, and interest earned (Appendix E); however, we did not audit these funds. Our audit determined that South Coast AQMD complied with applicable accounting standards, federal and state laws, and other financial requirements per program guidelines associated with the CMP, LESBP, and AQIP. However, our audit identified some weaknesses with South Coast AQMD’s subsidiary ledgers, as discussed in the Conclusion. South Coast AQMD is the air-pollution control agency for all of Orange Background County and portions of Los Angeles, Riverside, and San Bernardino counties. South Coast AQMD is one of 35 districts partnering with California Air Resources Board (CARB) to improve air quality by implementing CARB’s emission reduction incentive programs. The districts share responsibility with CARB to ensure state air quality standards are achieved and maintained. CARB awards block grants to the districts and provides guidance and oversight for the CMP, LESBP, and AQIP. The grants provide funding to re-power, replace, or retrofit older engines, school buses, and equipment with low-emission engines, and require districts to abide by CARB’s guidelines for administering each program. -1- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs The CMP funds the incremental expenditures of replacing or repowering older engines with cleaner-than-required engines and equipment. Public and private entities that operate eligible engines or equipment participate by applying for funding through their local air districts. Within the CMP, districts are required to provide $1 in match funding for every $2 of CMP funding awarded by CARB, with a cap on statewide match funds of $12 million. Match funding sources may include Assembly Bill (AB) 923 (Chapter 707, 2004) funds. The LESBP provides funding for new buses to replace old, high-emitting public school buses and to equip in-use diesel school buses with retrofit devices that significantly reduce toxic emissions. The primary goal of the LESBP is to reduce school children’s exposure to both cancer-causing and smog-producing pollution. The program does not impose any regulatory requirements on school districts, and their participation in the program is voluntary. The AQIP, established by the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007, is a voluntary incentive program administered by CARB to fund clean vehicle and equipment projects, in addition to workforce training and research on biofuel production and the air quality impacts of alternative fuels. AB 923 funding is comprised of a $2 Department of Motor Vehicles (DMV) vehicle registration surcharge fee, which is sent directly by the DMV to applicable districts. AB 923 provides additional funding to districts for the CMP, LESBP, Agricultural Assistance Programs, and light-duty accelerated vehicle retirement or repair programs in order to reduce emissions. Although a schedule of AB 923 receipts, expenditures, and interest earned within the audit period is provided in Appendix E, we did not audit AB 923 funds. The programs and funding years within the audit scope are:  CMP: Fiscal year (FY) 2009-10 through FY 2014-15  LESBP: FY 2008-09 through FY 2009-10  AQIP: FY 2010-11 We performed the audit of the state-sponsored air pollution reduction incentive programs administered by South Coast AQMD at the request of CARB, pursuant to an Interagency Agreement. Objectives, Scope, The objectives of the audit were to determine whether: and Methodology  Program revenues and expenditures are adequately supported and recorded in accordance with applicable accounting standards, federal and state laws, and other financial requirements per program guidelines;  Administrative expenditures are adequately supported, recorded, and allowable as specified in program guidelines; and -2- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs  Interest earned on grant funds is properly credited and expended. We conducted an audit of South Coast AQMD’s administration of state- sponsored air pollution reduction incentive programs for the CMP, LESBP, and AQIP for the period of July 1, 2008, through June 30, 2017. To achieve our objectives, we:  Reviewed prior reviews and audits related to the administration of the state-sponsored air pollution reduction incentive programs performed by external audit organizations and CARB, and reviewed prior findings;  Reviewed applicable laws, regulations, program guidelines, grant agreements, and South Coast AQMD’s policies and procedures applicable to the administration of the CMP, LESBP, and AQIP incentive programs: o Health and Safety Code sections 44275 through 44299.2 (CMP) o Health and Safety Code sections 44299.90 through 44299.91 (LESBP) o Health and Safety Code sections 44274 through 44274.7 (AQIP) o The Carl Moyer Program Guidelines, Approved Revision 2008 o The Carl Moyer Program Guidelines, Approved Revision 2011 o Lower Emission School Bus Program 2008 Guidelines o Title 13, California Code of Regulations, Division 3, Chapter 8.2, sections 2350 through 2359 (Guidelines for the AB 118 Air Quality Improvement Program) o CMP Grant Award and Authorization Forms, and related amendments, for FY 2009-10 through FY 2014-15 o CMP Grant Award and Authorization Forms for multi-district grants for FY 2009-10 through FY 2014-15 o LESBP Grant Award and Authorization Forms, and related amendments, for FY 2007-08 o AQIP grant agreements, and related amendments, for FY 2010-11 o Generally Accepted Accounting Principles  Interviewed the South Coast AQMD staff who administer the incentive programs to gain an understanding of the applicable processes and internal controls as they relate to the audit objectives, including but not limited to South Coast AQMD’s accounting system, accounting records, and record keeping;  Examined accounting records and contract documentation; tested selections using non-statistical sampling methods. Errors found were not projected to the intended population1; and 1As these samples were not statistical, we made no assumption that the errors would also be found in the transactions not sampled. -3- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs  Made testing selections and reviewed invoices and other supporting documentation for compliance with applicable laws, regulations, program guidelines, grant agreements and/or South Coast AQMD’s policies and procedures as follows: Revenues and Interest Earned o CMP (including multi-district grants)  Grant Awards: Selected all 10 grant agreements and tested all associated payments ($160,677,689 total)  Interest Earned: Tested 14 of 92 interest statements ($204,039 of $2,506,823) o LESBP  Grant Awards: Tested all payments associated with the sole grant agreement ($71,179,635 total)  Interest Earned: Tested 14 of 92 interest statements ($139,397 of $1,244,796) o AQIP  Grant Awards: Selected all three grant agreements and tested all associated payments ($918,474 total)  Interest Earned: Tested 14 of 92 interest statements ($1,206 of $15,1962) Expenditures o CMP (including multi-district grants)  Program: Selected 149 of 937 project contracts and tested all associated expenditures ($49,561,676 of $142,246,8203)  Administrative: Tested 16 of 28 contracts/transfers ($7,807,266 of $9,013,458)  Interest: Selected four of 15 project contracts and tested all associated interest expenditures ($4,467,226 of $6,086,329) o LESBP  Program: Selected 23 of 70 project contracts and tested all associated expenditures ($58,859,385 of $69,847,915)  Administrative: Tested four of nine transfers ($1,139,161 of $1,331,722)  Interest: Selected three of 21 project contracts and tested all associated interest expenditures ($1,028,565 of $1,244,587) o AQIP  Program: Selected all four project contracts and tested all associated expenditures ($843,130 total) 2Although interest could not accrue for AQIP due to it being a reimbursement grant, interest was erroneously being allocated to and recorded in the AQIP subsidiary ledger between August 2012 through August 2018. We tested a portion of the interest that was recorded in the subsidiary ledger. 3The CMP expenditure testing population was determined by filtering liquidation reports for liquidated program expenditures. -4- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs  Administrative: Tested all transfers ($75,344 total)  Interest: No AQIP interest expenditures We conducted this performance audit in accordance with Government Auditing Standards, issued by the Comptroller of the United States. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings, if any, conclusion, and recommendations, based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our conclusion, based on our audit objectives. We limited our review of internal control to gain an understanding of South Coast AQMD’s processes for the CMP, LESBP, and AQIP incentive programs and its compliance with applicable accounting standards, federal and state laws, and other financial requirements in the program guidelines. We did not audit South Coast AQMD’s financial statements. Conclusion Our audit did not identify any findings. We noted the following:  CMP, LESBP, and AQIP program revenues and expenditures were adequately supported and recorded in accordance with applicable accounting standards, federal and state laws, and other financial requirements per program guidelines;  CMP, LESBP, and AQIP administrative expenditures were adequately supported, recorded, and allowable as specified in program guidelines; and  Interest earned on grant funds was properly credited and expended for CMP and LESBP. South Coast AQMD accounted for AQIP revenues and expenditures within its accounting software, PeopleSoft, in Fund 27, but did not use separate account coding to distinguish AQIP grant expenditures from other Fund 27 expenditures. South Coast AQMD’s accounting software is able to track expenditures by contract ID; thus, as each of the three AQIP grants consisted of expenditures of four separate contracts, the AQIP expenditures were traceable through South Coast AQMD’s accounting software using contract IDs. Initially, South Coast AQMD provided us with Excel spreadsheets (South Coast AQMD identified these spreadsheets as its subsidiary ledgers) as detailed revenue and expenditure reports for the AQIP grant. The Excel spreadsheets were prepared manually and were not part of South Coast AQMD’s accounting software. The Excel spreadsheets were used by South Coast AQMD for day-to-day tracking of AQIP grant revenues and expenditures. We identified the following issues:  The AQIP Excel spreadsheets did not record program expenditures, totaling $444,883, for two of the four contracts. However, the $444,833 was recorded in South Coast AQMD’s accounting software under the correct contract ID; -5- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs  The AQIP Excel spreadsheet showed $25,913 in grant reimbursements. However, South Coast AQMD accounted for the expenditures within the wrong program in South Coast AQMD’s accounting software. Journal entries were posted in South Coast AQMD’s accounting software to correct the accounting error during our fieldwork;  $49,431 in grant reimbursements was recorded in the Rule 2202 Excel spreadsheet instead of the AQIP Excel spreadsheet; and  Because of the inaccuracies noted above, incorrect interest amounts were recorded in the AQIP Excel spreadsheet. Although we identified inaccuracies in the AQIP Excel spreadsheets, we did not identify any unallowable or questioned costs. Additionally, all AQIP expenditures were accounted for and traceable to correct contract IDs within South Coast AQMD’s accounting software. For these reasons, the inaccuracies did not result in audit findings; however, we recommend that South Coast AQMD update its business processes to fully utilize its accounting software. South Coast AQMD’s accounting software is capable of grant/project cost accounting and can produce grant/project cost reports to replace South Coast AQMD’s manual Excel spreadsheets. Eliminating the need to produce secondary Excel spreadsheets would save staff time and reduce accounting errors and inconsistencies with tracking and reconciling those entries to South Coast AQMD’s accounting software. Follow-up on We reviewed 10 prior South Coast AQMD Single Audit Reports from FY 2007-08 through FY 2016-17, and 10 prior South Coast Prior Audit AQMD Comprehensive Annual Financial Reports (CAFRs) from Findings FY 2007-08 through FY 2016-17. As we did not identify issues in any Single Audit or CAFR, follow-up was not applicable. We also reviewed four incentive program review and audit reports performed by the Department of Finance (issued in 2006, 2007, and 2012), and one CMP audit report by the California State Auditor (issued in 2007). Due to the engagement periods covered, the age of review and audit reports, and turnover of staff involved with the incentive programs since these engagements, we did not consider follow-up of the status of corrective actions to be necessary. Our objectives and methodologies included reviewing several areas noted in the prior reviews and audits; however, our audit did not find similar issues. Views of We provided South Coast AQMD with a preliminary final report on November 13, 2019. Sujata Jain, Chief Financial Officer of South Coast Responsible AQMD, responded by telephone on November 14, 2019, agreeing with the Officials audit results. -6- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Restricted Use This audit report is solely for the information and use of the South Coast AQMD, CARB, 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, and is available on the SCO website at www.sco.ca.gov. Original signed by JIM L. SPANO, CPA Chief, Division of Audits November 26, 2019 -7- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix A— Summary of Revenues and Expenditures for the Carl Moyer Memorial Air Quality Standards Attainment Program, Lower-Emission School Bus Program, and Air Quality Improvement Program Period Ended June 30, 20171 Air Quality Carl Moyer Lower-Emission Improvement Program School Bus Program (CMP)2 Program (LESBP)2 (AQIP) Revenues Program award $ 152,643,804 $ 6 8,866,297 $ 843,130 Administrative award 8,033,885 2,313,338 75,344 Total award 1 60,677,689 71,179,635 9 18,474 Interest earned3 2,506,822 1,244,796 Total revenues 1 63,184,511 72,424,431 9 18,474 Expenditures Program (District projects) 1 47,786,874 69,847,913 8 43,130 Administrative 9,013,457 1,331,722 75,344 Total award expenditures 1 56,800,331 71,179,635 9 18,474 Interest 6,086,329 1,244,587 - Total expenditures $ 162,886,660 $ 7 2,424,222 $ 918,474 ______________ 1 The program revenue, expenditure, interest, and match requirement amounts have been rounded to the nearest dollar within all applicable appendices. 2 Includes Carl Moyer multi-district grants. 3 Although AQIP could not accrue interest because it was a reimbursement grant, interest in the amount of $15,196 was erroneously allocated to and recorded in the AQIP subsidiary ledger between August 2012 and August 2018. See the Conclusion for more details. -A1- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix B— Carl Moyer Memorial Air Quality Standards Attainment Program Revenues and Expenditures Period of July 1, 2008, through June 30, 2017 Recorded Audited Unaudited Amount Amount Amount Revenue: Grant G09-M028 $ 26,485,801 $ 26,485,801 $ - Grant G09-M037 (Multi-district) 1,471,433 1,471,433 - Grant G10-M029 24,703,413 24,703,413 - Grant G10-M038 (Multi-district) 2,744,824 2,744,824 - Grant G11-M028 26,307,542 26,307,542 - Grant G11-M039 (Multi-district) 2,923,060 2,923,060 - Grant G12-M028 23,229,938 23,229,938 - Grant G13-M028 24,296,352 24,296,352 - Grant G13-M035 (Multi-district) 3,000,000 3,000,000 - Grant G14-M029 25,515,326 25,515,326 - Interest earned 2,506,823 204,039 2,302,784 Total revenue 163,184,512 160,881,728 2,302,784 Expenditures:1 Program 147,786,874 49,561,676 98,225,198 Administrative 9,013,458 7,807,266 1,206,192 Interest 6,086,329 4,467,226 1,619,103 Total expenditures $ 1 62,886,661 $ 61,836,168 $ 101,050,493 ______________ 1 CMP reported program expenditure and interest amounts were determined by filtering liquidation report funding sources. -B1- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix B (continued) Schedule 1: Revenue Administrative Funding Fiscal Program Amount Awarded Amount Awarded Total Year Year (Including Multi-district) (Including Multi-district) Awarded Funds 12 2009-10 $ 2 6,559,372 $ 1,397,862 $ 2 7,957,234 13 2010-11 26,075,825 1,372,412 27,448,237 14 2011-12 27,769,072 1,461,530 29,230,602 15 2012-13 22,068,441 1,161,497 23,229,938 16 2013-14 25,931,534 1,364,818 27,296,352 17 2014-15 24,239,560 1,275,766 25,515,326 Total $ 1 52,643,804 $ 8 ,033,885 $ 1 60,677,689 Schedule 2: Expenditures Funding Fiscal Program Expenditures Administrative Expenditures Year Year2 (Including Multi-district) (Including Multi-district) Total Expenditures 12 2009-10 $ 2 6,561,335 $ - $ 2 6,561,335 13 2010-11 26,075,825 2,031 26,077,856 14 2011-12 27,769,071 1,699,469 29,468,540 15 2012-13 22,073,441 6 19,368 22,692,809 16 2013-14 25,931,533 2,610,344 28,541,877 17 2014-15 19,375,669 1,276,105 20,651,774 18 2015-16 - 21,534 21,534 19 2016-17 - 2,784,606 2,784,606 Total $ 147,786,874 $ 9,013,457 $ 156,800,331 Schedule 3: Match Requirements Required Funding Fiscal District Match Year Year Match Expenditures 12 2009-10 $ 3,972,870 $ 3,972,870 13 2010-11 3,705,512 3,705,512 14 2011-12 3,946,131 3,946,131 15 2012-13 3,484,491 3,484,491 16 2013-14 3,644,453 3,644,453 17 2014-15 3,827,299 3,827,299 Total $ 22,580,756 $ 22,580,756 Schedule 4 : Interest Earned and Expended Fiscal Interest Earned Interest Expended Year (Including Multi-district) (Including Multi-district)3 2010-11 $ 6 26,784 $ 5,261,841 2011-12 476,902 - 2012-13 261,461 2 41,947 2013-14 203,560 1 03,089 2014-15 268,568 4 79,452 2015-16 317,906 - 2016-17 351,641 - Total $ 2 ,506,822 $ 6 ,086,329 ______________ 2 The program revenue awarded for funding year 17, totaling $24,239,560, has not been fully liquidated; the liquidation deadline is June 30, 2019. 3 The interest expenditures were determined by filtering liquidation report funding sources from the “Moyer Interest” expenditures within the South Coast AQMD liquidation reports, for funding years 12 through 17. -B2- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix C— Lower-Emission School Bus Program Revenues and Expenditures Period of July 1, 2008, through June 30, 2017 Recorded Audited Unaudited Amount Amount Amount Revenue: Grant G07-SB0311 $ 71,179,635 $ 71,179,635 $ - Interest earned 1,244,796 139,397 1,105,399 Total revenue 72,424,431 71,319,032 1,105,399 Expenditures: Program 69,847,913 58,859,385 10,988,528 Administrative 1,331,722 1,139,161 192,561 Interest 1,244,587 1,028,565 216,022 Total expenditures $ 72,424,222 $ 61,027,111 $ 11,397,111 ______________ 1 The grant award G07-SB031 (funding year 2007-08) covered multiple years under audit. Per the interagency agreement between CARB and the SCO, the LESBP fiscal years under audit are FY 2008-09 and FY 2009-10. -C1- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix C (continued) Schedule 1: Revenue Funding Fiscal Program Administrative Total Year Year Award Amount Award Amount Awarded Funds 2007-08 2009-10 $ 66,382,254 $ 25,200 $ 66,407,454 2007-08 2010-11 2,484,043 2,288,138 4,772,181 Total $ 68,866,297 $ 2,313,338 $ 71,179,635 Schedule 2: Expenditures2 Funding Fiscal Program Administrative Total Year Year Expenditures Expenditures Expenditures 2007-08 2009-10 $ 271,925 $ - $ 271,925 2007-08 2010-11 36,131,781 743,078 36,874,859 2007-08 2011-12 32,937,044 13,416 32,950,460 2007-08 2012-13 - 512,037 512,037 2007-08 2013-14 507,163 63,191 570,354 Total $ 69,847,913 $ 1,331,722 $ 71,179,635 Schedule 3 : Interest Earned and Expended Funding Interest Interest Year Earned Expended Balance3 2009-10 $ 152,025 $ - $ 1 52,025 2010-11 869,315 - 869,315 2011-12 209,689 1 ,229,219 ( 1,019,530) 2012-13 9 ,586 - 9,586 2013-14 3 ,137 13,592 (10,455) 2014-15 1 ,003 1 ,776 (773) 2015-16 3 8 - 38 2016-17 3 - 3 Total $ 1,244,796 $ 1 ,244,587 $ 2 09 ______________ 2 South Coast AQMD does not have a match requirement for the LESBP. 3 The remaining unexpended interest balance of $209 accrued after the liquidation deadline of June 30, 2014; however, the amount is not significant. -C2- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix D— Air Quality Improvement Program Revenues and Expenditures Period of July 1, 2008, through June 30, 2017 Recorded Audited Unaudited Amount Amount Amounts Revenue:1 Grant G10-AQIP-09 $ 494,314 $ 494,314 $ - Grant G10 AQIP-10 372,493 372,493 - Grant G10-AQIP-15 5 1,667 51,667 - Interest earned2 - - - Total revenue 918,474 918,474 - Expenditures: Program 843,130 843,130 - Administrative 7 5,344 75,344 - Interest - - - Total expenditures $ 918,474 $ 918,474 $ - ______________ 1 Per the interagency agreement between CARB and the SCO, the AQIP funding year under audit is FY 2010-11. 2 Although AQIP could not accrue interest because it was a reimbursement grant, interest in the amount of $15,196 was erroneously allocated to and recorded in the AQIP subsidiary ledger between August 2012 and August 2018. See the Conclusion for more details. -D1- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix D (continued) Schedule 1: Revenue Funding Fiscal Program Administrative Total Identified Year Year Award Amount Award Amount Awarded Funds Issues 2010-11 2010-11 $ - $ 49,431 $ 4 9,431 $ 4 9,431 2010-11 2011-12 - 6 ,820 6,820 - 2010-11 2012-13 6 44,883 7 ,754 6 52,637 - 2010-11 2013-14 1 98,247 1 1,339 2 09,586 - Total $ 8 43,130 $ 75,344 $ 918,474 $ 49,431 Schedule 2: Expenditures Funding Fiscal Program Administrative Total Identified Year Year3 Expenditures Expenditures Expenditures Issues 2010-11 2012-13 $ 246,501 $ - $ 246,501 $ - 2010-11 2013-14 151,746 - 151,746 - 2010-11 2018-19 444,883 75,344 520,227 5 20,227 Total $ 843,130 $ 75,344 $ 918,474 $ 520,227 Schedue 3: Match Requirements Funding Grant Required Match Year Agreement4 District Match Expenditures 2010-11 G10-AQIP-09 $ 444,883 $ 444,883 2010-11 G10-AQIP-10 439,114 439,114 2010-11 G10-AQIP-15 52,872 5 2,872 Total $ 936,869 $ 936,869 Schedule 4: AQIP Interest Fiscal Interest Interest Identified Year Recorded Expended Balance Issues5 2011-12 $ 7 $ - $ 7 $ 7 2012-13 1,622 - 1 ,622 1,622 2013-14 2,346 - 2 ,346 2,346 2014-15 3,176 - 3 ,176 3,176 2015-16 3,610 - 3 ,610 3,610 2016-17 3,859 - 3 ,859 3,859 2017-18 6,154 - 6 ,154 6,154 2018-19 1,753 - 1 ,753 1,753 Total $ 2 2,527 $ - $ 22,527 $ 22,527 ______________ 3 The FY 2018-19 expenditures of $444,883 and $75,344 were incurred within the grant period; however, they were not recorded in the AQIP subsidiary ledger until August/September 2018. See the Conclusion for details. 4 The time frame since project completion surpassed the record retention requirements of Grant Agreements Nos. G10-AQIP-10 and G10-AQIP-15 and of South Coast AQMD’s retention policy; applicable match requirement records were not analyzed. 5 South Coast AQMD improperly allocated $22,527 in interest in the AQIP subsidiary ledger due to inaccurate recording of revenues and expenditures; see the Conclusion for details. -D2- South Coast Air Quality Management District State-Sponsored Air Pollution Reduction Incentive Programs Appendix E— Assembly Bill 923 Receipts, Expenditures, and Interest Earned1 Fiscal Year Receipts Expenditures Interest Earned Balance 2008-09 $ 30,227,435 $ 17,723,409 $ 3,794,380 $ 16,298,406 2009-10 40,465,875 20,577,777 6 47,778 20,535,876 2010-11 9 ,260,078 11,364,373 9 35,314 (1,168,981) 2011-12 40,660,950 21,638,359 8 85,986 19,908,577 2012-13 28,586,446 6 ,004,737 5 18,182 23,099,891 2013-14 29,973,493 52,981,847 5 25,874 ( 22,482,480) 2014-15 26,522,290 28,186,998 6 77,944 (986,764) 2015-16 26,270,860 ( 16,221,065) 7 68,234 43,260,159 2016-17 28,051,302 23,955,315 1,167,555 5 ,263,542 Total $ 260,018,729 $ 166,211,750 $ 9 ,921,247 $ 103,728,226 ______________ 1 AB 923 funds are private funds obtained from a $2 DMV surcharge, and were not subject to audit. -E1- State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, CA 94250 http://www.sco.ca.gov S18-ARB-0001