Oakland City

CITY OF OAKLAND Audit Report BUSINESS TAX REPORTING REQUIREMENTS PROGRAM Chapter 1490, Statutes of 1984 July 1, 1998, through June 30, 1999 STEVE WESTLY California State Controller August 2003 STEVE WESTLY California State Controller August 29, 2003 Ms. Deborah Taylor Johnson Revenue Manager Financial Services Agency City of Oakland 150 Frank H. Ogawa Plaza, Suite 5215 Oakland, CA 94612 Dear Ms. Johnson: The State Controller’s Office has completed an audit of the claim filed by the City of Oakland for costs of the legislatively mandated Business Tax Reporting Requirements Program (Chapter 1490, Statutes of 1984) for the period of July 1, 1998, through June 30, 1999. The city claimed and was paid $509,121 ($510,121 in costs less a $1,000 penalty for filing late) for the mandated program. Our audit disclosed that the entire amount is allowable. If you have any questions, please contact Jim L. Spano, Chief, Compliance Audits Bureau, at (916) 323-5849. Sincerely, Original Signed By: WALTER BARNES Chief Deputy State Controller, Finance WB:ams cc: Deborah Edgerly, Director Financial Services Agency City of Oakland Ace Tago Principal Grants Coordinator Financial Services Agency City of Oakland Calvin Smith, Program Budget Manager Corrections and General Government Department of Finance City of Oakland Business Tax Reporting Requirements Program Contents Audit Report Summary............................................................................................................................ 1 Background........................................................................................................................ 1 Objective, Scope, and Methodology................................................................................. 1 Conclusion.......................................................................................................................... 2 Views of Responsible Official........................................................................................... 2 Restricted Use.................................................................................................................... 2 Schedule 1—Summary of Program Costs........................................................................... 3 Steve Westly • California State Controller City of Oakland Business Tax Reporting Requirements Program Audit Report Summary The State Controller’s Office (SCO) has completed an audit of the claim filed by the City of Oakland for costs of the legislatively mandated Business Tax Reporting Requirements Program (Chapter 1490, Statutes of 1984) for the period of July 1, 1998, through June 30, 1999. The last day of fieldwork was January 24, 2003. The city claimed and was paid $509,121 ($510,121 in costs less a $1,000 penalty for filing late) for the mandated program. The audit disclosed that the entire amount is allowable. Background Chapter 1490, Statutes of 1984, established new business tax reporting requirements for certain cities. Covered cities are required to provide the Franchise Tax Board (FTB) specified information for all businesses subject to the tax in the preceding fiscal year. The specified information required includes: business name and address, federal tax number or social security account number of the business or its owner, type of business activity, amount of annual business tax, and any other information that FTB requires. The reports must be filed on magnetic media or in other machine-readable form. The reports are to be filed on an annual basis. On July 14, 1986, the Commission on State Mandates determined that Chapter 1490, Statutes of 1984, resulted in state-mandated costs that are reimbursable pursuant to Government Code Section 17561. Parameters and Guidelines, adopted by the Commission on State Mandates, establishes the state mandate and defines criteria for reimbursement. In compliance with Government Code Section 17558, the SCO issues claiming instructions for each mandate requiring state reimbursement to assist local agencies in claiming reimbursable costs. Objective, The audit objective was to determine whether costs claimed are increased costs incurred as a result of the legislatively mandated Business Tax Scope, and Reporting Requirements Program (Chapter 1490, Statutes of 1984) for Methodology the period of July 1, 1998, through June 30, 1999. The auditor performed the following procedures: • Reviewed the costs claimed to determine if they were increased costs resulting from the mandated program; • Traced the costs claimed to the supporting documentation to determine whether the costs were properly supported; • Confirmed that the costs claimed were not funded by another source; and • Reviewed the costs claimed to determine that the costs were not unreasonable and/or excessive. Steve Westly • California State Controller 1 City of Oakland Business Tax Reporting Requirements Program The SCO conducted the audit in accordance with Government Auditing Standards, issued by the Comptroller General of the United States. The SCO did not audit the city’s financial statements. The scope was limited to planning and performing audit procedures necessary to obtain reasonable assurance concerning the allowability of expenditures claimed for reimbursement. Accordingly, transactions were examined, on a test basis, to determine whether the amounts claimed for reimbursement were supported. Review of the city’s management controls was limited to gaining an understanding of the transaction flow and claim preparation process as necessary to develop appropriate auditing procedures. Conclusion For the audit period, the City of Oakland claimed and was paid $509,121 ($510,121 in costs less a $1,000 penalty for filing late) for expenditures incurred as a result of the legislatively mandated Business Tax Reporting Requirements Program. The audit disclosed no material instances of noncompliance with the requirements outlined above. The audit results were discussed with the city’s representative during an Views of exit conference held on January 24, 2003. Deborah Taylor Johnson, Responsible Revenue Manager in the Financial Services Agency, agreed with the Official audit results. Ms. Johnson 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 the City of Oakland, the California Department of Finance, 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 Steve Westly • California State Controller 2 City of Oakland Business Tax Reporting Requirements Program Schedule 1— Summary of Program Costs July 1, 1998, through June 30, 1999 Actual Costs Allowable Audit Cost Elements Claimed per Audit Adjustments Salaries $ 246,793 $ 246,793 $ — Benefits 111,551 111,551 — Subtotals 358,344 358,344 — Indirect costs 151,777 151,777 — Total costs 510,121 510,121 — Less late filing penalty (1,000) (1,000) — Net costs $ 509,121 $ 509,121 $ — Less amount paid by the State (509,121) Allowable costs claimed in excess of (less than) amount paid $ — Steve Westly • California State Controller 3 State Controller’s Office Division of Audits Post Office Box 942850 Sacramento, California 94250-5874 http://www.sco.ca.gov S03-MCC-014