CC 2021-04-13_08b Single Audit and Audit Report for the TDA Transportation FundMEMORANDUM
TO:
FROM:
BY:
CITY COUNCIL
WHITNEY MCDONALD, CITY MANAGER
NICOLE VALENTINE, ACCOUNTING MANAGER
SUBJECT: CONSIDERATION OF ACCEPTANCE OF THE SINGLE AUDIT AND
AUDIT REPORT FOR THE TRANSPORTATION DEVELOPMENT ACT
TRANSPORTATION FUND REPORTS
DATE: APRIL 13, 2021
SUMMARY OF ACTION:
Receive and file the Single Audit and Audit Report for the Transportation Development
Act Transportation Fund Reports for the fiscal year ended June 30, 2020.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
The proposed Single Audit and Audit Report was prepared as part of the City’s Annual
financial reports completed by the City’s outside auditor. Staff devoted four hours to
reviewing the reports.
RECOMMENDATION:
It is recommended the City Council receive and file the Single Audit and Audit Report for
the Transportation Development Act Transportation Fund Reports for the fiscal year
ended June 30, 2020.
BACKGROUND:
The Single Audit is an organization-wide audit of a non-federal entity that expends
$750,000 or more in federally-awarded funds in one year. The City has not completed a
Single Audit since the fiscal year that ended on June 30, 2011, because the City had not
expended federal funds in excess of the $750,000 threshold. This fiscal year the City
expended $1.3 million in federal funds.
The Transportation Development Act (TDA) provides a state funding source for use by
local jurisdictions at the county level to improve existing public transportation and to
encourage regional public transportation coordination. It also provides some funding for
bicycle and pedestrian projects and, when certain conditions are met, streets and roads.
The main purpose and priority of TDA, however, is to provide funding for public
transportation. The Local Transportation Fund (LTF) is a local fund into which the State
deposits sales tax revenue to be used for transportation purposes defined by TDA. The
Item 8.b. - Page 1
CITY COUNCIL
CONSIDERATION OF ACCEPTANCE OF THE SINGLE AUDIT AND AUDIT REPORT
FOR THE TRANSPORTATION DEVELOPMENT ACT TRANSPORTATION FUND
REPORTS
APRIL 13, 2021
PAGE 2
State Department of Tax and Fee Administration, based on sales tax collected in each
county, returns the general sales tax revenues to each county’s LTF.
The City has completed the TDA Audit report every year and posts the reports on the
City’s website. Though not formally presented to the City Council in prior years, this audit
report contains the results of the audit and it is proper procedure and a best practice to
include it to Council for their information and review.
ANALYSIS OF ISSUES:
The City’s Independent Auditor, Moss, Levy & Hartzheim, LLP completed the Single Audit
of federal awards for fiscal year ended June 30, 2020. The auditors opined that the City
complied, in all material respects, with requirements that could have a direct and material
effect on each of its major federal programs for the fiscal year ended June 30, 2020.
There were no findings issued or questioned costs.
The City provided the following list of federal funding expenditures as of June 30, 2020:
The City’s Independent Auditor, Moss, Levy & Hartzheim, LLP also completed the Audit
Report for the Transportation Development Act Transportation Fund. The auditors opined
that the City complied, in all material respects, with requirements that could have a direct
and material effect on each of its major federal programs for the year ended June 30,
2020. There were no findings issued or questioned costs.
The Audit Report for the Transportation Development Act Transportation Fund contained
two reports. The first is for the Transportation Fund, which is a special revenue fund of
the City. The Transportation Fund Audit reflected that the City’s allocations under Article
8, Section 99400(a) for the fiscal year ended June 30, 2020, was $380,247. The City’s
allocations under Article 3, Section 99233.3 for the fiscal year ended June 30, 2020, was
$15,845.
City of Arroyo Grande CDFA # 20.205
Project List
350.5608 Bridge Street Rehab 1,245,988.07$
350.5679 Traffic Way Bridge 52,532.56
350.5612 SSARP (Systemic Safety Analysis Report Program) 18,847.12
1,317,367.75$
City of Arroyo Grande
List of federal funding of expenditures
As of June 30, 2020
Item 8.b. - Page 2
CITY COUNCIL
CONSIDERATION OF ACCEPTANCE OF THE SINGLE AUDIT AND AUDIT REPORT
FOR THE TRANSPORTATION DEVELOPMENT ACT TRANSPORTATION FUND
REPORTS
APRIL 13, 2021
PAGE 3
The second report is for the Local Transportation Fund, which is also a special revenue
fund of the City. The Local Transportation Fund Audit reflected that the City’s allocations
under Section 99400(c) for the fiscal year ended June 30, 2020, was $20,000.
These reports are part of annual financial reporting and, in the future, will be presented
with the Comprehensive Annual Finance Report.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Receive and file the Single Audit and Audit Report for the Transportation Development
Act Reports; or
2. Provide other direction to staff.
ADVANTAGES:
By receiving and filing the Single Audit and Audit Report for the Transportation
Development Act Reports, the City will be accepting the auditors’ unqualified opinion.
DISADVANTAGES:
There are no disadvantages in relation to the recommended action.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1. Single Audit
2. Transportation Development Act Transportation Fund Reports
Item 8.b. - Page 3
CITY OF ARROYO GRANDE
SINGLE AUDIT REPORT
For the Fiscal Year Ended
June 30, 2020
Attachment 1
Item 8.b. - Page 4
CITY OF ARROYO GRANDE
TABLE OF CONTENTS
For the Fiscal Year Ended June 30, 2020
SINGLE AUDIT REPORT
Independent Auditors' Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit
of Financial Statements Performed in Accordance with
GovernmentAuditing Standards ................................................................................................................................................... 1
Schedule of Expenditures of Federal Awards ....................................................................................................................................... 3
Note to the Schedule of Expenditures of Federal Awards .................................................................................................................... 4
Independent Auditors' Report on Complíance for Each Major Program
and on Internal Control Over Compliance Required
bythe Uniform Guidance .............................................................................................................................................................. 5
FINDINGS AND RECOMMENDATIONS
Schedule of Audit Findings and Questioned Costs ............................................................................................................................... 7
Summary of Prior Fiscal Year Audit Findings and Questioned Costs .................................................................................................. 10
Item 8.b. - Page 5
Moss, Levy & Hartzheim LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER
MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITINGSTANDARDS
City Council
City of Arroyo Grande
Arroyo Grande, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of
the United States, the financial statements of the governmental activities, business-type activities, each major fund, and the
aggregate remaining fund information of City of Arroyo Grande (the City), as of and for the fiscal year ended June 30, 2020,
and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have
issued our report thereon dated January 7, 2021.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial
reporting (internal control) to determine the audït procedures that are appropriate in the circumstances for the purpose of
expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in intez•nal control exists when the design or operation of a control does not allow management or employees,
in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely
basis. A matez•ial weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected
on a timely basis. A significant deficiency ís a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not
designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given
these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material
weaknesses. However, material weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement,
we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we
do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
1
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS • CULVER CITY •SANTA MARIA
Item 8.b. - Page 6
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of
that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report
is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's
internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
`%~0`~d, ~~ ~ ~j~~~+r~c, .C,C/a
Santa Maria, California
January 7, 2021
2
Item 8.b. - Page 7
CITY Or ARROYO GRANDE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FISCAL YEAR ENDED JUNE 30, 2020
U.S. Deaartment ofTransportation
Federal
Catalog Identifying
Number Number Amount
Pass-Through Grants:
State of California Department of Transportation
Highway Bridge Program
Highway Bridge Program
Total Highway Planning and Construction
Total passed through the California Department of Transporation
Total Expenditures of Federal Awards
20.205 * BHLO-5199(027) $ ],380,707
20.205 * BRLS-5199(030) 52,533
1,433,240
1,433,240
$ 1,433,240
* Denotes major program
The note to the schedule of expenditures of federal awards is an integral part of this statement.
Item 8.b. - Page 8
CITY OF ARROYO GRANDE
NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Fiscal Year Ended June 30, 2020
NOTE 1 —BASIS OF PRESENTATION
The accompanying schedule of expendïtures of federal awards includes the federal grant activity of the City of Arroyo Grande and is
presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the
Title 2 U.S. Code of Federal Regulations Part 200, Uniform Ad»zinistrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from amounts presented in, or
used in the preparation of, the basic financial statements. The City has not elected to use the ten percent de minimus cost rate as covered
in Section 200.414 Indirect (F&A) costs of the Uniform Guidance.
4
Item 8.b. - Page 9
Moss, Levy & Hartzheim LLP
Cettüied Public Accountants
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND
ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE
City Council
City of Arroyo Grande
Arroyo Grande, California
Report on Compliance for Each Major Federal Program
We have audited City of Arroyo Grande's (the City) compliance with the types of compliance requirements described iri the
OM13 Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for
the fiscal year ended June 30, 2020. The City's major federal programs are identified in the summary of auditor's results
section of the accompanying schedule of findings and questioned costs.
Managemezrt's Respozzsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal
awards applicable to its federal programs.
Azzditors' Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit
of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing
standards generally accepted in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title
2U.S. Code of FederalRegttlationsPart200, Unifot•tnAdministrativeRequirements, Cost Principles, andAttditRequirements
for Federal Arvar•ds (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the
audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to
above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a
test basis, evidence about the City's compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However,
our audit does not provide a legal determination of the City's compliance.
Opinion on Eaclz Major Federal Program
In our opinion, the City of Arroyo Grande, complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the fiscal year ended
June 30, 2020.
Report on Internal Control Over Compliance
Management of the City of Arroyo Grande is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance,
we considered the City's internal control over compliance with the types of requirements that could have a direct and material
effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the
purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control
over compliance in accordance with Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness
of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal
control over compliance.
2400 Professionai Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mihcpas.com
BEVERLY HILLS • CULVER CITY •SANTA MARIA
Item 8.b. - Page 10
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not
allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and
correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness
in internal control over compliance is a deficiency, or combination of deficiencies, ín internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program
wí11 not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance
is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement
of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough
to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies ïn internal control over compliance that might be material weaknesses
or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be
materïal weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control
over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report
is not suitable for any other purpose.
Report on Schedule of Expenditure of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, business-type activities, each major fund, and the
aggregate remaining fund information of the City of Arroyo Grande, as of and for the fiscal year ended June 30, 2020, and
the related notes to the financial statements which collectively comprise the City of Arroyo Grande's basic financial
statements. We issued our report thereon January 7, 2021, which contained an unmodified opinion on those financial
statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for
purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. The information has been subjected to the
auditing procedures applied ín the audit of the financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial
statements or the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards
is fairly stated ín all material respects in relation to the basic financial statements as a whole.
`irj~, ~. ~".~~~.~.~. .c,cr~
Santa Maria, California
January 7, 2021
Item 8.b. - Page 11
FINDINGS AND RECOMMENDATIONS
Item 8.b. - Page 12
CITY OF ARROYO GRANDE
SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS
For the Fiscal Year Ended June 30, 2020
Sectíon I —Summary of Auditors' Results
Financial Statements
Type of auditors' report issued Unmodified
Internal control over financial reporting:
Material weaknesses identified? Yes X No
Significant deficiencies identified not considered
to be material weaknesses? Yes X None reported
Noncompliance material to financial statements noted? Yes X No
Federal Awards
Internal control over major programs:
Material weaknesses identified? Yes X No
Significant deficiencies identified not considered
to be material weaknesses? Yes X None reported
Type of auditors' report issued on compliance for major
programs: Unmodified
Any audit findings disclosed that are required to be
reported in accordance with the Uniform Guidance,
Section 200.516? Yes X No
Identification of major programs:
CFDA Numbers) Name of Federal Program
20.205 Highway Planning and Construction
Dollar threshold used to distinguish between Type A
and Type B programs: $ 750,000
Auditee qualify as low-risk auditee: Yes X No
11
Item 8.b. - Page 13
CITY OF ARROYO GRANDE
SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS
For the Fiscal Year Ended June 30, 2020
Financial Statement Findings:
There were no financial statement findings.
Item 8.b. - Page 14
CITY OF ARROYO GRANDE
SCHEDULE OF AUDIT FINDINGS AND QUESTIONED COSTS
For the Fiscal Year Ended June 30, 2020
Federal Award Findings and Questioned Costs:
There were no federal award audit findings or questioned costs.
Item 8.b. - Page 15
CITY OF ARROYO GRANDE
SUMMARY OF PRIOR FISCAL YEAR AUDIT FINDINGS AND QUESTIONED COSTS
For the Fiscal Year Ended June 30, 2020
Financial Statement Findings:
FINDING 2019-001
ACCOUI~ITS RECEIVABLE
Criteria:
The City uses the modified accrual basis of accounting for its governmental funds and the accrual basis of account for its business-type
funds and for the government-wide statements. Accordingly all receivables should be recognized in the fiscal year in which the resources
are measurable and become available (within 60 days for the governmental funds).
Condition:
During our examination of the accounts receivable and our testing of receipts subsequent to June 30, 2019, we noted that some material
receipts for revenue relating to the fiscal year ended June 30, 2019 but not received until after year-end were not properly accrued and
recorded as revenue for the fiscal year-end June 30, 2019.
Effect:
This caused an understatement of revenue.
Cause:
The City did not perform a thorough review of cash receipts subsequent to year-end to check for receipts that should be recorded as
revenue for the fiscal year-ended June 30, 2019.
Recommendation:
The City should ensure that internal control procedures are in place so that a designated staff or manager within the Administrative
Services Department performs a review of receipts subsequent to the fiscal year-end and properly accrues the receipts relating to the
fiscal year then ended.
Corrective Action Plan:
The City will implement controls to ensure that staff within the Administrative Services department review cash receipts subsequent to
the fiscal year-end and properly accrue the receipts relating to the fiscal year then ended.
Current Status:
Implemented.
10
Item 8.b. - Page 16
CITY OF ARROYO GRANDE
SUMMARY OF PRIOR FISCAL YEAR AUDIT FINDINGS AND QUESTIONED COSTS
For the Fiscal Year Ended June 30, 2020
FINDING 2019-002
CASH RECEIPTS
Criteria:
Internal control procedures for cash receipts should be in place to ensure all fees are correctly calculated in the system.
Conditïon:
During our testing of cash receipts, we found that certain building permits did not have the State SMIP and/or Green Building Permit
fees correctly calculated and billed to the customer.
Effect:
Certain building permit fees collected by the City for these two State fees were not collected in the proper amount which would lead to
either an under or over statement of revenues.
Cause:
The City did not robustly test the permit system to ensure all fees matched with State regulations.
Recommendation:
Ensure that internal control procedures are ïn place to input fee rate updates properly into the permit system and ensure that the fees are
thoroughly tested to ensure it generates accurate billing to customers.
Corrective Action Plan:
The City will implement controls to ensure system rates agree to State SMIP and Green Building Permit fees. Assigned staff will input
rates and alternative staff will review the new fees for accuracy. Periodically, manual billings will be recalculated and matched to ensure
the rates agree to State SMIP and Building Permit fees.
Current Status:
Implemented.
11
Item 8.b. - Page 17
CITY OF ARROYO GRANDE
SUMMARY OF PRIOR FISCAL YEAR AUDIT FINDINGS AND QUESTIONED COSTS
For the Fiscal Year Ended June 30, 2020
Federal Award Findings and Questïoned Costs:
There were no prior year federal award findings and questioned costs.
12
Item 8.b. - Page 18
CITY OF ARROYO GRANDE
AUDIT REPORT OF THE
TRANSPORTATION DEVELOPMENT ACT
TRANSPORTATION FUND
JUNE 30, 2020 AND JUNE 30, 2019
Attachment 2
Item 8.b. - Page 19
CITY OF ARROYO GRANDE
TABLE OF CONTENTS
June 30, 2020 and June 30, 2019
Transportation Fund
IndependentAuditors' Report ............................................................................................................................................................ 1
BalanceSheets .................................................................................................................................................................................... 2
Statements of Revenues, Expenditures, and Changes
inFund Balance ........................................................................................................................................................................... 3
Statements of Revenues, Expenditures, and Changes
inFund Balance —Budget and Actual ......................................................................................................................................... 4
Notesto Financial Statements ............................................................................................................................................................ S
Independent Auditors' Report on Transportation Development Act Compliance .............................................................................. 6
Transportation Fund Section 99400(c)
IndependentAuditors' Report ............................................................................................................................................................ 7
Statementsof Net Position ................................................................................................................................................................. 8
Statements of Revenues, Expenses, and Changes
inNet Position —Restricted ......................................................................................................................................................... 9
Statementsof Cash Flows ................................................................................................................................................................ 10
Supplemental Schedule of Revenues, Expenses, and Changes
inNet Fund Balance —Restricted .............................................................................................................................................. 11
Notesto Financial Statements .......................................................................................................................................................... 12
Independent Auditors' Report on Transportation Development Act Compliance ............................................................................ 13
Item 8.b. - Page 20
CITY OF ARROYO GRANDE
AUDIT REPORT OF THE
TRANSPORTATION FUND
JUNE 30, 2020 AND JUNE 30, 2019
Item 8.b. - Page 21
Moss, Levy & Hartzheim LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
City Council of the City of Arroyo Grande
Arroyo Grande, California
Report on the Financial Statements
We have audited the fnancïal statements of the City of Arroyo Grande's Transportation Fund as of and for the fiscal years ended June
30, 2020 and June 30, 2019, and the related notes to the financial statements, as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted ïn the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity's preparation and faïr presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the City of
Arroyo Grande's Transportation Fund as of June 30, 2020 and June 30, 2019, and the changes in financial position thereof for the
fiscal years then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Transportation Fund and do not purport to, and do not, present fairly
the financial position of the City of Arroyo Grande as of June 30, 2020 and June 30, 2019, and the changes in its financial position,
for the fiscal years then ended in accordance with accounting principles generally accepted in the United States of America. Our
opinion is not modified with respect to this matter.
Santa Maria, California
January 7, 2021
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS • CULVER CITY •SANTA MARIA Item 8.b. - Page 22
CITY OF ARROYO GRANDE
TRANSPORTATION FUND
BALANCE SHEETS
Sections 99400(a) and 99233.3 of the Public Utilities Code
June 30, 2020 and June 30, 2019
2020 2019
ASSETS
Cash and investments $ 296,897 $ 138,171
Interest receivable 363 221
Total assets $ 297,260 $ 138,392
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable $ - $ -
Total liabilities
Fund Balance:
Restricted 297,260 138,392
Total fund balance 297,260 138,392
Total liabilities and fund balance $ 297,260 $ 138,392
See accompanying notes to lïnancial statements
2
Item 8.b. - Page 23
CITY OF ARROYO GRANDE
TRANSPORTATION FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
Sections 99400(x) and 99233.3 of the Public Utilities Code
For the Fiscal Years Ended June 30, 2020 and June 30, 2019
2020 2019
REVENUES
Interest
Intergovernmental TDA Section 99234
Intergovernmental TDA Section 99400(x)
Total revenues
EXPENDITURES
Maintenance
Total expenditures
Net income (loss)
Fund balance, beginning of fiscal year
Prior-period adjustment
Fund balance, beginning of fiscal year, restated
Fund balance, end of fiscal year
$ 3,472 $ 1,272
15,845 15,253
380,247 334,905
399,564 351,430
240,696 24Q696
24Q696 24Q696
158,868 I 10,734
138,392 27,819
(161)
138,392 27,658
~ 297,260 $ 138,392
See accompanying notes to financial statements
3
Item 8.b. - Page 24
CITY OF ARROYO GRANDE
TRANSPORTATION FUND
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL
Sections 99400(a) and 99233.3 of the Public Utilities Code
For the Fiscal Years Ended June 30, 2020 and June 30, 2014
2020
Variance
Favorable
Budget Actual (Unfavorable)
$ - $ 3,472 $ 3,472
13,300 15,845 2,545
227,400 380,247 152,847
240,700 399,564 158,864
240,700 240,696 4
240,700 240,696 4
$ - 158,868 $ 158,868
138,392
$ 297,260
REVENUES
Interest
Intergovernmental TDA Section 99234
Intergovernmental TDA Section 99400(a)
Total revenues
EXPENDITURES
Maintenance
Total expenditures
Net income (loss}
Fund balance, beginning of fiscal year, restated
Fund balance, end of fiscal year
2019
Variance
Favorable
Budget Actual (Unfavorable)
$ - $ 1,272 $ 1,272
13,300 15,253 1,953
235,400 334,905 99,505
248,700 351,430 102,730
240,700 240,696 4
240,700 240,696 4
$ 8,000 110,734 $ 102,734
27,819
(161)
27,658
$ 138,392
~!
REVENUES
Interest
Intergovernmental TDA Section 99234
Intergovernmental TDA Section 99400(a)
Total revenues
EXPENDITURES
Maintenance
Total expenditures
Net income (loss)
Fund balance, beginning of fiscal year
Prior-period adjustment
Fund balance, beginning of fiscal year, restated
Fund balance, end of fiscal year
See accompanying notes to financial statements
Item 8.b. - Page 25
CITY OF ARROYO GRANDE
TRANSPORTATION FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2020 and June 30, 2019
NOTE 1 —FINANCIAL REPORTING ENTITY
The Transportation Fund is a special revenue fund of the City of Arroyo Grande, and the financial statements of the fund are included in the
basic financial statements of the City.
NOTE 2 —BASIS OF ACCOUNTING
The Transportation Fund is accounted for using the modified accrual basis of accounting whereby revenues are recognized when they
become both measurable and available to finance expenditures of the current period and expenditures are generally recognized when the
related fund liabilities are incurred.
NOTE 3 —ALLOCATIONS
The City of Arroyo Grande's allocations under Article 8, Section 99400(a) for the fiscal years ended June 30, 2020, and June 30, 2019,
were $380,247 and $334,905, respectively.
The City of Arroyo Grande's allocations under Article 3, Section 99233.3 for the fiscal years ended June 30, 2020, and June 30, 2019, were
$15,845 and $15,253, respectively.
NOTE 4 —INTERNAL ACCOUNTING CONTROL
As part of our audit, we made a study of the City's system of internal accounting control to the extent we considered necessary to evaluate
the system as required by auditing standards generally accepted in the United States of America. Under these standards, the purpose of
such evaluation is to establish a basis for reliance on the system of internal accounting control in determining the nature, timing, and extent
of other auditing procedures that are necessary for expressing an opinion on the financial statements and to assist in planning and
performing the audit of the financial statements. No material weaknesses in the internal control structure were noted.
Item 8.b. - Page 26
Moss, Levy & Hartzheim LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT ON
TRANSPORTATION DEVELOPMENT ACT COMPLIANCE
City Council of the City of Arroyo Grande
Arroyo Grande, California
Report on t/te Financial Statements
We have audited the financial statements of the City of Arroyo Grande Transportation Fund's compliance with the types of
compliance requirements described in the 7'ranspor•tation Development Act Guidebook, published by the State of California
Department of Transportation applicable for the fiscal year ended June 30, 2020.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to the
Transportation Development Act.
Auditors' Responsibility
Our responsibility is to express an opinion on the City's compliance based on our audit of the compliance with applicable statutes,
rules and regulations of the Transportation Development Act (TDA), Section 99400(a) and 99233.3, the California Code of
Regulations (CCR), and the allocation instructions and resolutions of San Luis Obispo Council of Governments as required by Section
6666 of the CCR. Section 6666 requires that for anon-transit claimant, the independent auditor shall perform at least the following
tasks: (a) Determine whether the funds received by the claimant pursuant to the Act were expended in conformance with those
sections of the Act specifying the qualified purposes, including Public Utilities Code section 99402 for streets and roads claimants and
section 99233.3 for claimants under that section for pedestrian and bicycle facilities and bicycle safety education programs, (b)
Determine whether the funds received by the claimant pursuant to the Act were expended in conformance with the applicable rules,
regulations, and procedures of the transportation-planning agency and in compliance with the allocation instructions, and (c)
Determine whether interest earned on funds received by the claimant pursuant to the Act were expended only for those purposed for
which the funds were allocated, in accordance with Public Utilities Code sections 99301 and 99301.5. We conducted our audit of
compliance in accordance with auditing standards generally accepted in the Uníted States of America; the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the
Transportation Development Act Guidebook. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material
effect on the state laws and regulations applicable to the City occurred. An audit includes examining, on a test basis, evidence about
the City's compliance with those requirements and performing such other procedures as we considered necessary in the
circumstances.
Opir:iorr on Compliance with the Transportation Development Act
In our opinion, the funds allocated to and received by the Cïty of Arroyo Grande's Transportation Fund, complied, in all material
respects, with the compliance requirements refened to above that are applicable to the statutory requirements of the Transportation
Development Act and the allocation instructions and resolutions of San Luis Obispo Council of Governments for the fiscal year ended
June 30, 2020.
This report is intended solely for the information of the management, the City Council of the City of Arroyo Grande, the San Luis
Obispo Council of Governments, and the State Controller's Office and is not intended to be and should not be used by anyone other
than those specified parties.
~o~its, e , ~CJd
Santa Maria, California
January 7, 2021
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS • CULVER CITY •SANTA MARIA Item 8.b. - Page 27
CITY OF ARROYO GRANDE
AUDIT REPORT OF THE
LOCAL TRANSPORTATION FUND
SECTION 99400(c)
JUNE 30, 2020 AND JUNE 30, 2019
Item 8.b. - Page 28
Moss, Levy & Hartzheim LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
City Council of the City of Arroyo Grande
Arroyo Grande, California
Report on the financial statements
We have audited the accompanying financial statements of the City of Arroyo Grande Local Transportation Fund as of and for the
fiscal years ended June 30, 2020 and June 30, 2019, and the related notes to the financial statements, as listed in the table of contents.
Management 's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the City of
Arroyo Grande Local Transportation Fund as of and for the fiscal years ended June 30, 2020 and June 30, 2019, and the changes in
financial position and cash flows thereof for the fiscal years then ended in accordance with accounting principles generally accepted
in the United States of America
Emphasis of Matter
As discussed in Note 1, the financïal statements present only the Local Transportation Fund and do not purport to, and do not, present
fairly the financial position of the City of Arroyo Grande, as of June 30, 2020 and June 30, 2019, the changes in its financial position,
or, where applicable, its cash flows for the fiscal years then ended in accordance with accounting principles generally accepted in the
United States of America. Our opinion is not modified with respect to this matter.
~~. ~. ~.~,,~.~~,,c.,cp
Santa Maria, California
January 7, 2021
7
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS • CULVER CITY •SANTA MARIA Item 8.b. - Page 29
CITY OF ARROYO GRANDE
LOCAL TRANSPORTATION FUND
STATEMENTS OF NET POSITION
Pertaining to Sections 99400(c) and 99260(a) of the Public Utilities Code
June 30, 2020 and June 30, 2019
2020 2019
Assets:
Cash $ 24,372 $ 11,912
Total assets 24,372 11,912
Liabilities:
Accounts payable
Total liabilities
Net Position:
Restricted
Total net position
391
391
23,981.
$ 23,981
2,202
2,202
9.710
$ 9,710
See accompanying notes to financial statements
8
Item 8.b. - Page 30
CITY OF ARROYO GRANDE
LOCAL TRANSPORTATION FUND
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION -
RESTRICTED
Pertaining to Sections 99400(c) and 99260(a) of the Public Utilities Code
For the Fiscal Years Ended June 30, 2020 and June 30, 2019
2020 2019
OPERATING REVENUES
Passenger fares $ - $ -
OPERATING EXPENSES
Purchased transportation services 5,729 8,493
Operating loss (5,729) (8,493)
NON-OPERATING REVENUES
Grant funds allocated for transit operations:
Local Transportation Fund 20,000 12,000
Net income 14,271 3,507
Net position -restricted, beginning of fiscal year 9,710 6,203
Net position -restricted, end of fiscal year $ 23,981 $ 9,710
See accompanying notes to financial statements
9
Item 8.b. - Page 31
CITY OF ARROYO GRANDE
LOCAL TRANSPORTATION FUND
STATEMENTS OF CASH FLOWS
Pertaining to Sections 99400(c) and 99260(a) of the Public Utilities Code
For the Fiscal Years Ended June 30, 2020 and June 30, 2019
2020 2019
Cash Flows from Operating Activities:
Payment to suppliers $ (7,540) $ (13,632)
Net cash used by operating activities (7,540) (13,632)
Cash Flows from Non-Capital Financing Activities:
Grants received
Net cash provided by non-capital financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginnïng of fiscal year
Cash and cash equivalents, end of fiscal year
Reconciliation of Operating Loss to Net Cash Used by
Operating Activities:
Operating Loss
Increase (decrease) in operating liabilities:
Accounts payable
Net cash used by operating activities
20,000 12,000
20,000 12,000
12,460 (1,632)
11,912 13,544
$ 24,372 $ 11,912
$ 0,729) $ (8,493)
(1,811) (5,139}
$ (7,540) $ (13,632}
See accompanying notes to financial statements
]0
Item 8.b. - Page 32
CITY OF ARROYO GRANDE
LOCAL TRANSPORTATION FUND
SUPPLEMENTAL SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN
FUND BALANCE -RESTRICTED
Pertaining to Sections 99400(c) and 99260(a) of the Public Utilities Code
For the Fiscal Year Ended June 30, 2020
Five Cities Shuttle
OPERATING REVENUES
Passenger fares
OPERATING EXPENSES
Purchased transportation services
Operating loss
NON-OPERATING REVENUES
Grant funds allocated for transit operations:
Local Transportation Fund
Net income
Fund balance -restricted, beginning of fiscal year
Fund balance -restricted, end of fiscal year
$ -
5,729
(5,729)
20,000
14,271
9,710
$ 23,981
See accompanying notes to f nancial statements
11 Item 8.b. - Page 33
CITY OF ARROYO GRANDE
TRANSPORTATION FUND SECTION 99400(C)
NOTES TO FINANCIAL STATEMENTS
June 30, 2020 and June 30, 2019
NOTE 1 —FINANCIAL REPORTING ENTITY
The Local Transportation Fund is a special revenue fund of the City of Arroyo Grande, and the financial statements of the fund are included
in the basic financial statements of the City.
NOTE 2 —BASIS OF ACCOUNTING
The Local Transportation Fund is accounted for using the accrual basis of accounting whereby revenues are recognized when earned and
expenditures are recognized when the related fund liabilities are incurred.
NOTE 3 —TRANSIT SERVICES PROVIDED BY THE SAN LUIS OBISPO REGIONAL TRANSIT AUTHORITY
The City ofArroyo Grande entered into ajoint-powers agreement with the Cities of Grover Beach, Pismo Beach, Atascadero, Morro Bay,
El Paso De Robles, San Luis Obispo, and the County of San Luis Obispo for the purposes of forming ajoint-power agreement with full
power and authority to own, operate and administer a countywide public transportation system. The City's allocation of the Local
Transportation Fund is distributed by the County directly to the San Luis Obispo Regional Transit Authority and therefore, all of the
accounting of this joint-powers agency is maintained by the San Luis Obispo Regional Transit Authority. Therefore, all aspects of internal
controls, compliance with applicable laws and regulations, and accounting for the Local Transportation Fund are the responsibilities ofthe
San Luis Obispo Regional Transit Authority.
NOTE 4 —INTERNAL ACCOUNTING CONTROL
As part of our audit, we made a study of the City's system of internal accounting control to the extent we considered necessary to evaluate
the system as required by auditing standards generally accepted in the United States of America. Under these standards, the purpose of
such evaluation is to establish a basis for reliance on the system of internal accounting control in determining the nature, timing, and extent
of other auditing procedures that are necessary for expressing an opinion on the financial statements and to assist in planning and
performing the audit of the financial statements. No material weaknesses in the internal control structure were noted.
NOTE 5 —ALLOCATIONS FROM LOCAL TRANSPORTATION FUND
The City was allocated the following funds:
Article Sections
8 99400(c)
Total Local Transportation Fund
2020 2019
Amount Amount
$ 20,000 $ 12,000
~ 20,000 ~ 12,000
12
Item 8.b. - Page 34
Moss, Levy & Hartzheim LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT ON
TRANSPORTATION DEVELOPMENT ACT COMPLIANCE
City Council of the City of Arroyo Grande
Arroyo Grande, California
Report on tfze financial statements
We have audited the financial statements of the City of Arroyo Grande Local Transportation Fund's compliance with the types of
compliance requirements described in the Transportation Development Act Guidebook, published by the State of California
Department of Transportation applicable for the fiscal year ended June 30, 2020.
Manage»rent's Respo~rsibiliry
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to the
Transportation Development Act.
Audïtors' Responsibility
Our responsibility is to express an opinion on the City's compliance based on our audit of the compliance with applicable statutes,
rules and regulations of the Transportation Development Act and the allocation instructions and resolutions of the San Luis Obispo
Council of Governments as required by Section 6667 of Title 21, Division 3, Chapter 2, Article S.S of the California Code of
Regulations during the fiscal year ended June 30, 2020. Section 6667 requires that for a transit claimant, the independent auditor shall
perform at least the following tasks: (a) Determ ine whether the claimant was an entity eligible to receive the funds allocated to it, (b)
Determine whether the claimant is maintaining its accounts and records on an enterprise fund. basis and is otherwise in compliance
with the uniform system of accounts and recorded adopted by the State Controller pursuant to Public Utilities Code Section 99234, (c)
Determine whether the funds received by the claimant, pursuant to the Act were expended in conformance with those sections of the
act specifying the qualifying purposes, including Public Utilities Code Sections 99262 and 99263 for operators receiving funds under
article 4, Sections 99275, 9927S.S and 99277 for Article 4.S claimants, and Section 99400(c}, (d), and (e) for Article 8 claimants for
service provided under contract, and Section 99405(d) for transportation services provided by cities and counties with populations of
less than 5,000, (d) Determine whether the funds received by the claimants pursuant to the Act were expended in conformance with
the applicable rules, regulations, and procedures of the transportation-planning agency and in compliance with the allocation
instructions and resolutions, (e) Determine whether interest earned on funds received by the claimant pursuant to the Act were
expended only for those purposes for which the funds were allocated in accordance with Public Utilities Code Sections 99234.1,
99301, 99301.5, 99301.6, (f) Verify the amount of the claimant's operating cost for the fiscal year, the amount of fare revenues
required to meet the ratios specified in Sections 6633.2 and 6633.5 and the amount of the sum of fare revenues and local support
required to meet the ratios specified in the Section 6633.2, (g) Verify the amount of the claimant's actual fare revenues for the fiscal
year, (h) Verify the amount of the claimant's actual local support far the fiscal year, (i) Verify the amount the claimants were eligible
to receive under the Act during the fiscal year in accordance with Sections 6634 and 6649, (j}Verify, if applicable, the amount of the
operator's expenditure limïtation in accordance with Section b633. 1, (k) In the case of an operator, determine whether the operator's
employee retirement system or private pension plan is in conformance with the provisions of Public Utilities Code Sections 99271,
99272, 99273, (1) In the case of an operator, determine whether the operator has had a certification by the Department of the
California Highway Patrol verifying that the operator is in compliance with Section 1808.1 of the Vehicle Code, as required in Public
Utilities Code Section 99251, (m) In the case of an operator, verify, if applicable, its State Transit Assistance eligibility, pursuant to
Public Utilities Code Section 99314.6 or 99314.7, and (n) In the case of a claimant for community transit services, determine whether
it is in compliance with Public Utilities Code Sections 991SS and 991SS.S.
13
2400 Professional Parkway, Suite 205 Santa Maria, CA 93455 Tel 805.925.2579 Fax 805.925.2147 mlhcpas.com
BEVERLY HILLS • CULVER CITY •SANTA MARIA
Item 8.b. - Page 35
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in GovernmentAuditingStandards, issued by the Comptroller General ofthe United
States; and the Transportation Development Act Guidebook. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and
material effect on the state laws and regulations applicable to the City occurred. An audit includes examining, on a test basis, evidence
about the City's compliance with those requirements and performing such other procedures as we considered necessary in the
circumstances.
Opït:iotr on Conrplïance wïtlt tïie Transportation Development Act
In our opinion, the funds allocated to and received by the City of Arroyo Grande's Transportation Development Act Fund allocated
for transit purposes, complied, in all material respects, with the compliance requirements referred to above that are applicable to the
statutory requirements of the Transportation Development Act and the allocation instructions and resolutions of San Luis Obispo
Council of Governments for the fiscal year ended June 30, 2020.
This report is intended solely for the information of the management, the City Council, the San Luis Obispo Council of Governments,
and the State Controller's Office and is not intended to be and should not be used by anyone other than those specified parties.
7Y~t, ~ .~ .~,d~r~h~, .~C,cA
Santa Maria, California
January 7, 2021
14
Item 8.b. - Page 36