HomeMy WebLinkAbout01-16-2018 Item 10 Comprehensive Annual Financial Report Single Audit Report & Annual Audit of Transportation Development Act Funds for 2016-17
Meeting Date: 1/16/2018
FROM: Xenia Bradford, Finance Director
Prepared By: Rico Pardo, Accounting Manager/Controller
SUBJECT: ACCEPTANCE OF THE COMPREHENSIVE ANNUAL FINANCIAL
REPORT, SINGLE AUDIT REPORT, AND ANNUAL AUDIT OF
TRANSPORTATION DEVELOPMENT ACT FUNDS FOR 2016-17
RECOMMENDATION
Accept the Comprehensive Annual Financial Report, Single Audit Report, and annual audit of the
Transportation Development Act Funds for Fiscal Year 2016-17.
DISCUSSION
The accompanying Comprehensive Annual Financial Report (CAFR) has been prepared as required
by the City’s Charter and applicable State laws requiring financial reporting. The CAFR provides a
final and audited representation of the City’s financial condition across all funds for the fiscal year
that ended June 30, 2017. The CAFR was also published on the City’s website by December 31,
2017, as required by City Charter, and hard copies were provided to the City Council in January
2018.
As required by City Charter, the financial statements have been audited by independent certified
public accountants Glenn Burdette. The objective of a financial audit is to provide users of the
financial reports with reasonable assurance from an independent source that the reports are reliable.
The auditor issued the financial statements with an unqualified opinion which means that they are
presented fairly and in conformity with generally accepted accounting principles (see pages 1-3 of
the CAFR).
The accompanying Single Audit Report, which is prepared by Glenn Burdette, provides information
about the City’s expenditures of federal awards for the period ending on June 30, 2017.
The Transportation Development Act annual audit was prepared by the same independent
certified public accounting firm and provides information on the City’s compliance with statutes,
rules and regulations of the Transportation Development Act (TDA), the California Code of
Relations, and instructions and resolutions of San Luis Obispo Council of Government for the
period ending on June 30, 2017. This report did not reflect any negative findings regarding the
City’s administration of the TDA monies.
During fiscal year 2014-15, the City adopted the following two Governmental Accounting
Standards Board (GASB) Statements related to pension activities:
• Statement No. 68, “Accounting and Financial Reporting or Pensions – an amendment of
GASB Statement No. 27,” and
• Statement No. 71, “Pension Transition for Contributions Made Subsequent to the
Packet Pg 181
10
Measurement Date – an amendment of GASB Statement No. 68.”
GASB Statement No. 68 establishes standards of accounting and financial reporting, but not
funding or budgetary standards, for the City’s defined benefit pension plans. This statement
replaces the requirements of prior GASB statements impacting accounting and disclosure of
pensions.
The significant impact to the City of implementing GASB Statement No. 68 is the reporting of the
City’s unfunded pension liability on the full accrual basis of accounting in the government-wide
financial statements. There are also note disclosure requirements and supplementary schedules
required by the Statement. The measurement date for the pension liabilities is a one-year lag and is
reflected as of June 30, 2016. Activity (i.e. pension contributions made by the City) occurring
during fiscal year 2016-17 are reported as deferred outflows of resources in accordance with
Statement No. 71.
A representative from Glenn Burdette will attend the January 16, 2018 Council meeting to present
the results of the audits and to respond to any questions the Council may have relating to these
audits.
Financial Results Highlighted in the CAFR
Within the CAFR, the Transmittal Memorandum and Management’s Discussion and Analysis
provide a comprehensive analysis of the City’s financial position as of June 30, 2017, as well as
summaries of significant City fiscal policies, practices and financial results. Key variances from
projected ending balances for 2016-17 are also highlighted in the Transmittal Memorandum.
Financial results for the year compare favorably with budget estimates in virtually all areas of the
City’s operations. For the General Fund, financial results for the year were better than final
estimates for revenues by $0.4 million, or 1%. Expenditures and other uses were $7.7 million, or
below final estimates, which includes Local Revenue Measure appropriated funds for Capital
Improvement Projects. The net result of the overall difference leads to the ending fund balance
of $26.5 million. Of this amount $2.72 million is unassigned and $3.17 million represents
prepaid funds for 2017-18 fiscal year, which represents $5.89 million available for
appropriations at Council’s discretion. Staff will return with a recommendation during the 2017-
2018 Mid Year to recommend the uses for these funds.
Changes in 2016-17 2016-17 Variance
General Fund Balance Estimated Actual Amount %
Fund balance, beginning of year 29,625,532 29,625,532
Revenues 67,030,197$ 67,434,696$ 404,499$ 1%
Expenditures 66,231,033 58,912,698 (7,318,335) -11%
Other sources (uses)(11,249,403) (11,651,376) (401,973)4%
Excess of revenues and sources
over (under) expenditures & uses (10,450,239) (3,129,378) 7,320,861
Fund balance, end of year 19,175,293$ 26,496,154$ 7,320,861$
Less:
Nonspendable (3,173,248)
Restricted/Committed (9,556,136)
Assigned (11,043,478)
Unassigned Fund Balance, end of year 2,723,292$
Packet Pg 182
10
The City’s top three key revenue sources, Sales Tax, Property Tax, and Transient Occupancy
Tax (TOT), substantially exceed the per capita average for the County. These revenue sources
also account for 50% of all funding sources in the General Fund.
In an effort to contain and control operating costs and long-term liabilities, the City implemented
2nd and 3rd tier retirement benefit programs and now 40% of the workforce is enrolled in these
and PEPRA tiers. See Note 7: Pension Plans and Other Post-Employment Benefits of the CAFR
for supplementary information. Since fiscal year 2013-14, the City Council has also approved
lump sum prepayments against the safety side fund retirement liability in order to begin making
reductions to the unfunded liability of retirement.
CAFR Organization
In accordance with generally accepted accounting principles for state and local governments, the
City’s CAFR is organized into three major sections: Introduction, Financial Reports and Statistical
Tables. The following is a brief summary of the contents of each of these sections.
Introduction. The Transmittal Memorandum and other information of general interest are
presented in this section, including: directory of officials, advisory bodies, and organization chart.
Financial Reports. This section includes the City’s primary financial statements in five major
parts:
1. Auditors’ opinion regarding the financial statements.
2. Management’s discussion and analysis providing a narrative overview of City-wide finances.
3. The basic financial statements presenting the government-wide results combining the activities
of the major funds (General, Capital Outlay and all Enterprise Funds) into governmental and
business-type categories; the fund financial statements; and the notes to the financial statements.
4. Required supplementary information presenting the General Fund actual results with both the
original and final adjusted budgets.
5. Other supplemental schedules and financial statements providing financial information for each
of the City’s non-major governmental and agency funds. This includes a financial schedule
presenting Half Percent Sales Tax Measure revenues and uses in 2016-17.
Statistical Tables. This section provides demographic and financial tables showing current and
historical trend information for the City and is organized into six major parts:
1. Statistical overview. General information about the San Luis Obispo community.
2. General financial trends. Ten-year summary information on net assets, governmental
revenues and expenditures and fund balances.
3. Revenue capacity. Ten-year summary information on property and sales tax trends.
4. Debt capacity. Ten-year summary information on debt service requirements.
5. Economic and demographic trends. Ten-year summaries of taxable sales, building permits
and valuations, housing, population and other demographic trends.
6. Operating information. Ten-year trend information on operating indicators by function.
Packet Pg 183
10
Recognition for Excellence in Financial Reporting
Beginning in fiscal year 1983-84, all of the City’s CAFRs have been awarded the certificate of
achievement for excellence in financial reporting from the Government Finance Officers
Association of the United States and Canada (GFOA). This is a prestigious national award
recognizing the City’s use of the highest standards in preparing our annual financial report. The
City received the award for its 2015-2016 CAFR and has submitted the award application for the
2016-2017 CAFR.
Additional Reporting
The Federal Single Audit Act requires agencies expending $500,000 or more of Federal assistance
funding to undergo organization-wide audits of their internal controls. Accordingly, the
accompanying Single Audit Report provides a Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters. In the findings section of this report, the auditors noted
several deficiencies. In response to these findings listed below, staff has already taken the steps
necessary to address these issues in the future as has provided formal audit responses within the
report.
In the Recommendations of the Report, the auditors recommended the following:
• Evaluate and update a documented year-end process, including the reconciliation of balance
sheet accounts to identify and record year-end closing entries.
• Review and revise the bank reconciliation procedures to ensure month and year-end
reconciliations are properly performed and complete and unreconciled items are processed
in a timely manner to ensure cash balances are properly stated on the balance sheet.
• Evaluate and document the cash receipts process, communicate to staff the principles of
proper revenue recognition, and implement procedures to link the cash receipts process to
recording of revenue.
• Continue to maintain the capital asset software and review on a timely basis to address
any discrepancies between the software and the City’s general ledger in order to
accurately capture depreciation expense and capital activity in the current period.
FISCAL IMPACT
There is no fiscal impact associated with accepting and filing the Comprehensive Annual
Financial Report, Single Audit Report, and annual audit of the Transportation Development Act
Funds for fiscal year 2016-17.
ALTERNATIVES
The City Council could decide to revise or not accept the Comprehensive Annual Financial
Report, Single Audit Report, and annual audit of the Transportation Development Act Funds for
fiscal year 2016-17. This is not recommended as the reports have been prepared in conformance
with a variety of accounting and other reporting requirements and represent the professional
evaluation and analysis by the City’s independent auditors. They have rendered an unqualified
opinion which means that they are presented fairly and in conformity with generally accepted
accounting principles.
Packet Pg 184
10
Attachments:
a - City of SLO 6-30-17 Federal Awards Reports 6-30-17
b - City of SLO Final TDA Funds FS 6-30-17
c - Council Reading File - City of SLO 2017 CAFR
Packet Pg 185
10
City of San Luis Obispo, California
Federal Awards
Reports and Schedule
Year Ended June 30, 2017
Packet Pg 186
10
2
City of San Luis Obispo, California
Table of Contents
June 30, 2017
Page
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 Government Auditing Standards 3-4
Independent Auditors’ Report on Compliance for Each Major Program and on Internal
Control Over Compliance and on the Schedule of Expenditures of Federal Awards
Required by the Uniform Guidance 5-7
Schedule of Expenditures of Federal Awards 8
Notes to Schedule of Expenditures of Federal Awards 9
Findings and Recommendations Section
Schedule of Audit Findings and Questioned Costs and Status of Prior Audit Findings and
Questioned Costs 10-16
Packet Pg 187
10
G GLENN BURDETTE
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 Government Auditing Standards
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, 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, the business-type activities, each
major fund, and the aggregate remaining fund i nformation of the City of San Luis Obispo, California (the City) as of and
for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the
City's basic financial statements, and have issued our report thereon dated December 20, 2017.
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 audit 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.
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 and therefore, material weaknesses or significant deficiencies may exist that have not been identified .
However, as described in the accompanying schedule of findings and questioned costs, we identified certain
deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.
A deficiency in internal 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 material 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
GLENN BURDETTE.COM
3
SAN LUIS OBISPO
1150 Palm Street
San Luis Obispo, CA 93401
p 805 544 1441
f 805 5444351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93446
p 805 237 3995
f 805 239 9332
SANTA MARIA
2222 South Broadway, Ste. A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4286 Packet Pg 188
10
4
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Page 2
not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies described in the
accompanying schedule of findings and questioned costs to be material weaknesses: 2017.100, 2017.200, and
2017.300.
A significant deficiency is 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. We consider the
deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies:
2017.400.
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.
City of San Luis Obispo’s Responses to Findings
The City’s responses to the findings identified in our audit are described in the accompanying schedule of audit
findings and questioned costs. The City’s responses were not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on them.
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 purposes.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 20, 2017
Packet Pg 189
10
CERTIFIED PUBLIC ACCOUNTANTS G GLENN BURDETTE
Independent Auditors' Report on Compliance for Each Major Program
and on Internal Control Over Compliance and on the Schedule of Expenditures of Federal Awards
Required by the Uniform Guidance
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Report on Compliance for Each Major Federal Program
We have audited the City of San Luis Obispo, California 's (the City) compliance with the types of compliance
requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of
the City's major federal programs for the year ended June 30 , 2017 . The City's major federal programs are identified
in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its
federal awards applicable to its federal programs.
Auditor's 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 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (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.
GLENN BURDETTE.COM
5
SAN LUIS OBISPO
1150 Palm Street
San Luis Obispo, CA 93401
p 805 544 1441
f 805 544 4351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93446
p 805 23? 3995
f 805 239 9332
SANTA MARIA
2222 South Broadwa~. Ste. A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4286 Packet Pg 190
10
6
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Page 2
Opinion on Each Major Federal Program
In our opinion, the City 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 year ended June 30,
2017.
Report on Internal Control over Compliance
Management of the City 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 the 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.
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 a combination of deficiencies, in internal
control over compliance, such that there is a reasonable possibility that material noncompliance with a type of
compliance requirement of a federal program will 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 in 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 material 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.
Packet Pg 191
10
7
The Honorable City Council of the
City of San Luis Obispo, California
San Luis Obispo, California
Page 3
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City as of and for the year ended June 30, 2017, and the related
notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our
report thereon dated December 20, 2017, which contained unmodified opinions 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 in 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 to 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 in all material respects in relation to the basic financial statements as
a whole.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 20, 2017
Packet Pg 192
10
8
City of San Luis Obispo, California
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2017
Federal Expenditures
CFDA Federal to
Number Expenditures Subrecipients
US Department of Justice
Public Safety Partnership and Community Policing Grant 16.710 58,258$ $
Edward Byrne Memorial Justice Assistance Grant Program 16.738 14,031
Total US Department of Justice 72,289 -
US Department of Housing and Urban Development
Community Development Block Grants/Entitlement Grants 14.218 101,548
Total US Department of Housing and Urban Development 101,548 -
US Department of Transportation
Highway Planning and Construction
Marsh Street Bridge Rehab 20.205 43,195
Calle Joaquin Park & Ride 20.205 2,109
50 Higuera Widening 20.205 12,623
Total Highway Planning and Construction 57,927 -
Federal Transit Formula Grants (Urbanized Area Program)20.507 1,730,418
Total US Department of Transportation 1,788,345 -
Total Expenditures of Federal Awards 1,962,182$ -$
Program Title
Federal Grantor/
Pass-Through Grantor/
See independent auditors’ report.
See the accompanying notes to schedule.
Packet Pg 193
10
9
City of San Luis Obispo, California
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2017
Note 1: Basis of Presentation
The purpose of the accompanying schedule of expenditures of federal awards (the schedule) is to present a summary
of those activities of the City of San Luis Obispo (the City) for the year ended June 30, 2017, which have been financed
by federal awards. For purposes of the schedule, federal awards include all federal grants received directly from the
federal government and sub-awards from nonfederal organizations made under federally sponsored agreements.
Because the schedule presents only a selected portion of the activities of the City, it is not intended to and does not
present either the financial position or changes in net position of the City.
The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from amounts
presented in the basic financial statements.
Note 2: Expenditures
For new awards or modifications of existing awards after December 26, 2014, the expenditures reported in the
Schedule follow the cost principles contained in the Uniform Guidance. For existing awards prior to December 26,
2014, the expenditures follow the cost principles contained in OMB Circular A-87, Cost Principles for State, Local and
Indian Tribal Governments and Administrative Requirements for Grants and Cooperative Agreements to State and
Local Governments (OMB Common Rule). The cost principles indicate that certain types of expenditures are not
allowable and certain allowable costs are limited as to reimbursement.
Note 3: Indirect Cost Rate
The City has not elected to use the ten percent de minimis indirect cost rate as allowed under the Uniform Guidance,
but rather the rates established directly with the respective federal agencies.
Packet Pg 194
10
10
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Section I: Summary of Auditors’ Results
Financial Statements
(a) Type of auditors’ report issued on financial statements: Unmodified.
(b) Internal control over financial reporting:
• Material weakness(es) identified: Yes. See Findings 2017.100, 2017.200, and 2017.300
• Significant deficiencies identified not considered to be material weaknesses: Yes. See Finding 2017.400.
(c) Noncompliance material to financial statements noted: No.
Federal Awards
(d) Internal control over major programs:
• Material weakness(es) identified: No.
• Significant deficiencies identified not considered to be material weaknesses: None reported.
(e) Type of auditors’ report issued on compliance for major programs: Unmodified.
(f) Any audit findings disclosed that are required to be reported in accordance with 2 CFR Section 200.516(a): No.
(g) Dollar threshold used to distinguish between Type A and Type B programs: $750,000.
(h) Major Programs:
• Federal Transit Formula Grants (Urbanized Area Program) (CFDA Number 20.507)
(i) Auditee qualified as low-risk auditee: No.
Packet Pg 195
10
11
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Page 2
Section II: Findings Relating to the Financial Statements which are Required to be Reported in
Accordance with Government Auditing Standards
Finding 2017.100: Year‐End Close and Balance Sheet Account Reconciliations (Material Weakness)
Condition: During audit testwork, we noted that year‐end reconciliation and analysis procedures were not performed
on numerous balance sheet accounts at June 30, 2017. Therefore we identified numerous material year‐end closing
entries at the fund level that had not been recorded by the City or were recorded incorrectly, including: accruals for
receivables, prepaid expenses, deferred revenue, and liabilities from prior years that were not properly reversed and
recognized as expenses or revenues in the current year; investment accounts that were not properly marked to
market value, causing an overstatement of assets; and vendor liabilities that were not properly accrued for in the
current year, causing an understatement of liabilities and expenditures. In addition, we identified numerous instances
of current year transactions that were recorded in incorrect funds, which attributed to some of the aforementioned
stale accrual balances.
Criteria: The City should have policies and procedures in place to reconcile year‐end balance sheet accounts to ensure
they are properly stated in accordance with generally accepted accounting principles. Those policies and procedures
should require the City staff to perform reconciliation and analysis procedures to identify and record year‐end closing
entries.
Cause: Policies and procedures are not in place to ensure that balance sheet accounts are reconciled and year‐end
closing entries are identified and recorded.
Effect: Numerous year‐end balance sheet items were stated incorrectly. Material audit adjustments were posted to
the audited financial statements at the fund level to correct these issues.
Recommendation: We recommend that the City evaluate and update a documented year‐end closing process,
including the reconciliation of balance sheet accounts to identify and record year‐end closing entries so they are
properly stated in accordance with generally accepted accounting principles.
Views of Responsible Officials and Planned Corrective Actions: In fiscal year 2015‐16 the Government Finance Officers
Association (GFOA) performed an assessment of the City’s Finance and Information Technology department and
recommended reorganization separating the Finance and Information Technology functions into distinct departments
and reorganization of the Finance Department. In fiscal year 2016‐17, the City’s Finance Operations Manager retired,
and the City hired an Accounting Manager/Controller in mid‐October 2016 and reorganized the department based on
GFOA’s recommendations. Several months were allotted for in‐person training and the transition. The City at the time
did not maintain written procedures describing revenue and expenditure procedures. In addition, policies and
Packet Pg 196
10
12
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Page 3
procedures were partially documented for the year-end closing process. Through the process of year-end closing for
fiscal year 2016-17, documentation was created along the way to address proper postings to balance sheet accounts,
proper reconciliation of investment fair market value, posting of transactions correctly and consistently, and
communicating how the year-end process works with other members of the Finance staff. Accounting processes and
procedures will be fully documented to establish formal procedures for revenue and expenditure postings and
ongoing reconciliations as well as documenting the process of how reconciliations should be completed. The City also
had a vacancy in the Budget Manager position, which will formally provide secondary oversight and analysis of any
material variances between budget and actuals during the year-end close. Furthermore, the City is in the final stages
of vendor selection for an Enterprise Resource Planning System. The current financial system is limited in its capacity
requiring many shadow systems to supplement. Formal documentation of new processes in accordance with best
practices is being developed through the Enterprise Resource System implementation process.
Finding 2017.200: Cash Receipts and Revenue Recognition (Material Weakness)
Condition: During audit testwork, we identified multiples instances where revenue was double-counted due to the
correct recording of an accrual in the prior year, but the incorrect recording of related cash receipts as new revenue in
the current year. We identified another instance where current year-end revenue accruals had been recorded twice,
resulting in double-counted property tax revenue. We identified a third instance where a cash receipt was recorded in
an incorrect amount, causing sales tax revenue to be materially understated. We identified a fourth instance in which
cash receipts for sales tax were recorded as new revenue or against accounts receivable in an incorrect fund, leaving
the related prior year receivables outstanding in the correct fund or creating credit balances in receivable accounts.
Criteria: Under generally accepted accounting principles, revenue should be recognized in the proper period and with
the correct amounts. In addition, the City should have procedures in place to ensure that cash receipts are
consistently processed and reconciled in a manner that facilitates this recognition.
Cause: Procedures are not in place to ensure that cash receipts are consistently processed and reconciled in the
proper period.
Effect: Revenue was overstated in some instances and understated in others. Material audit adjustments were posted
to the audited financial statements at the fund level to correct these issues.
Recommendation: We recommend that the City evaluate and document the cash receipts process, communicate to
staff the principles of proper revenue recognition under governmental accounting, and implement procedures to link
the cash receipts process to the process for recording revenue.
Packet Pg 197
10
13
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Page 4
Views of Responsible Officials and Planned Corrective Actions: Based on the GFOA’s recommendation, the revenue
division was created in fiscal year 2016-17. Due to a lack of written procedures for revenue recognition including cash
reconciliation, new management staff worked through shadow systems to recreate the revenue management
procedures. Further formal controls and written procedures will be established between the revenue division and the
accounting division to ensure accuracy of records and reconciliation.
Finding 2017.300: Cash Reconciliations (Material Weakness)
Condition: Although the City performs regular monthly reconciliations of individual transactions between the general
ledger and the monthly bank statements, outstanding checks and deposits in transit were not known at June 30, 2017,
and bank account balances could not readily be reconciled to the general ledger cash balances at June 30, 2017. As a
result, additional analysis of the reconciliation was required which resulted in material adjustments to cash as of
June 30, 2017.
Criteria: To properly state cash balances at month and year-end in accordance with generally accepted accounting
principles, monthly and year-end bank reconciliations at specific cut-off dates should be performed and completed,
and remaining unreconciled items should be processed in a timely manner.
Cause: Although regular and frequent reconciliations of cash activity were being performed, the reconciliation
procedures at the year-end cut-off date of June 30, 2017 were not timely in comparing the general ledger cash
balances to the bank account balances.
Effect: If bank reconciliations are not properly performed at month and year-end cutoff dates, internal balance sheets
and other financial reports may not be reliable. Also, the chance of accounting errors at month and year-end cut-off
dates being caught is less likely if the reconciliations are not completed consistently and on a timely basis.
Repeat Finding: 2016.200.
Recommendation: We recommend bank reconciliation procedures be reviewed and revised to ensure month and
year-end reconciliations to the general ledger are properly performed and complete, outstanding reconciling items
and ending balances are known, and unreconciled items are processed in a timely manner to ensure cash balances at
month and year-end dates are properly stated on the balance sheet.
Views of Responsible Officials and Planned Corrective Actions: The City has taken action in response to the previous
fiscal year material weakness finding and staff have performed comprehensive reviews and created improved bank
reconciliation processes in terms of presentation, identification of recording items, and support. Although
unreconciled items were identified as of June 30, 2017, there was delay in corrective action during the audit. Upon
Packet Pg 198
10
14
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Page 5
completion of the fiscal year 2016‐17 audit, staff will address the reconciling items on an ongoing timely basis and will
ensure that corrective action has been taken for all reconciling items prior to the beginning of next fiscal year end
audit. Further improvements to bank reconciliation processes will take place once the Enterprise Resource Planning
System is implemented which will enable the City to take advantage modern technologies and automated bank
reconciliation services offered by the bank.
Finding 2017.400: Capital Assets (Significant Deficiency)
Condition: The City has established basic procedures to ensure that capital asset additions are properly capitalized,
capital asset disposals are properly recorded, and current year depreciation expense for capital assets are recorded at
the fund‐financial statement level for proprietary funds. However, testwork in the current year discovered that the
capital asset module system maintained by the City does not agree to general ledger balances for various funds. The
largest differences were found in accumulated depreciation for the Sewer Fund, and by working with City staff, it was
determined that the fixed asset module was not properly calculating depreciation expense (and accumulated
depreciation) for several large assets. While the variances between the City’s fixed asset module and general ledger
were not material, the variances have not been reconciled by the City to determine if adjustments need to be made in
the general ledger. Further, it was noted that the City’s fixed asset module is not properly rolling forward beginning
balances as of July 1, 2017, causing reports to be unreliable for reconciliation purposes.
Criteria: Generally accepted accounting principles for state and local governments require governments to report
capital assets, related accumulated depreciation and depreciation expense at the fund‐financial level for proprietary
funds and at the government‐wide financial statement level for governmental funds.
Cause: Procedures are not in place to reconcile the general ledger capital asset balances to the City’s fixed asset
module.
Effect: While the differences in the current year were not material to the City, these variances may become material
in future years if reconciliations between the two systems are not performed and differences resolved in a timely
manner.
Repeat Finding: 2016.100.
Recommendation: We recommend that the capital asset software continue to be maintained and reviewed by
management on a timely basis and any discrepancies between the software and the City’s general ledger are
reconciled in order to accurately capture depreciation expense and capital activity in the current period. These
reconciliations may need to be performed using manual schedules in order to properly capture and track the
differences between the two systems.
Packet Pg 199
10
15
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Page 6
Views of Responsible Officials and Planned Corrective Actions: Fiscal year 2015-16 was the year that fixed assets were
rolled over from Fox Pro into Finance Plus, the City’s financial system. Fiscal year 2016-17 was the first year of post
implementation of the Capital Asset module in Finance Plus where the automated journal entry process and related
reporting went live and were tested. Upon processing the automated journal entry and reviewing the reports in fiscal
year 2016-17, it was discovered that there were some issues with the reporting process in that prior year ending
balances did not appropriately roll forward as current year beginning balances in the Historical Deprecation Report.
The issue was raised with Finance Plus’ support team, Superion, during the audit. However, being that the City is
running an older version of Finance Plus that is supported by a legacy team of two-part time staff at Superion, the
reporting issue could not be fully addressed during the audit.
With regard to the calculation of depreciation expense, it appears that the roll forward of assets from the Fox Pro
module into Finance Plus in prior year did not occur correctly. The fixed asset migration should be reviewed to ensure
that the following were transferred properly: 1) estimated useful life and 2) date acquired. Management will maintain
an external spreadsheet of the assets listed in Finance Plus to include a manual calculation of depreciation and
accumulated depreciation for the City’s fixed assets and compare this with what is in Finance Plus to verify that
migration occurred correctly and resolve any discrepancies until the City implements the Enterprise Resource System
to fully implement a capital assets module.
Section III: Findings and Questioned Costs for Federal Awards
None noted.
Section IV: Status of Prior Year Findings and Questioned Costs – 2015/16
Finding 2016.100: Capital Assets (Material Weakness)
Condition: During a fixed asset software conversion in 2016, the City’s new fixed asset software identified differences
between the City’s general ledger and the historical fixed asset numbers imported from the old software. Due to this
previously unknown issue, the fiscal year 2015 financial statements did not properly reflect the value of the City’s fixed
assets. During the fiscal year 2016 audit, a prior year restatement was recorded to amend the differences.
Recommendation: We recommended that the capital asset software continue to be maintained and reviewed by
management on a timely basis, and any discrepancies between the software and the City's general ledger be
reconciled in a timely manner in order to accurately capture depreciation expense and capital activity in the current
period.
Current Status: See current year finding 2017.400.
Packet Pg 200
10
16
City of San Luis Obispo, California
Schedule of Audit Findings and Questioned Costs
and Status of Prior Year Findings and Questioned Costs
Year Ended June 30, 2017
Page 7
Finding 2016.200: Cash Reconciliations (Material Weakness)
Condition: Although the City performs regular monthly cash account reconciliations, during our testing of cash we
noted each month had an unreconciled balance comprised of items that cleared the bank but that staff were unable
to identify and so left unrecorded. In addition, several voided checks were included on the bank reconciliation at
June 30, 2016 although the original check had not been issued.
Recommendation: We recommended that bank reconciliation procedures be reviewed and revised to ensure monthly
reconciliations are complete and unreconciled items are processed in a timely manner, and to prevent voided checks
from being applied to bank reconciliations before the initial check issuance date.
Current Status: Partially implemented. See current year finding 2017.300.
Packet Pg 201
10
City of San Luis Obispo
Transportation
Development Act Funds
Report and Financial Statements Year End
June 30, 2017 and 2016
Packet Pg 202
10
City of San Luis Obispo, California
Transportation Development Act Funds
Report and Financial Statements
Years Ended June 30, 2017 and 2016
Packet Pg 203
10
2
City of San Luis Obispo, California
Transportation Development Act Funds
Report and Financial Statements
Year Ended June 30, 2017 and 2016
Table of Contents
Page
Transit Fund
Independent Auditors’ Report 5-6
Statements of Fund Net Position – June 30, 2017 and 2016 7
Statements of Revenues, Expenses and Changes in Fund Net Position –
Years Ended June 30, 2017 and 2016 8
Statements of Cash Flows – Years Ended June 30, 2017 and 2016 9-10
Notes to Financial Statements 11-18
Transportation Development Act (TDA) Fund
Independent Auditors’ Report on Transportation Development Act Compliance
and State Bond Compliance 21-22
Independent Auditors’ Report 23-24
Balance Sheets – June 30, 2017 and 2016 25
Statements of Revenues, Other Uses and Changes in Fund Balance –
Years Ended June 30, 2017 and 2016 26
Notes to Financial Statements 27-29
Independent Auditors’ Report on Transportation Development Act Compliance 30-31
TDA Fund Supplementary Information
Schedule of Revenues and Other Uses – Budget and Actual –
Years Ended June 30, 2017 and 2016 32
Packet Pg 204
10
3
City of San Luis Obispo, California
Transit Fund
Years Ended June 30, 2017 and 2016
Packet Pg 205
10
4
THIS PAGE INTENTIONALLY LEFT BLANK
Packet Pg 206
10
G GLENN BURDETTE
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Transit Fund of the City of San Luis Obispo, California,
as of June 30, 2017 and 2016, 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 the 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 audits
in accordance with 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.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of 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 do not express such an
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 .
GLENN BURDETTE .COM
5
SAN LUIS OBISPO
1150 Palm Street
San Luis Obispo, CA 93401
p 805 544 1441
f 805 544 4351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93445
p 805 237 3995
J 805 239 9332
SANTA MARIA
2222 South Broadway, Ste. A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4285 Packet Pg 207
10
6
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of the Transit Fund of the City of San Luis Obispo, California, as of June 30, 2017 and 2016, and the changes in financial
position and cash flows thereof for the 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 Transit Fund of the City of San Luis Obispo, California
and do not purport to, and do not, present fairly the financial position of the City of San Luis Obispo, California, as of
June 30, 2017 and 2016, the changes in its financial position, or, where applicable, its cash flows for the 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.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 20, 2017
Packet Pg 208
10
City of San Luis Obispo, California
Transit Fund
Statements of Fund Net Position
June 30, 2017 and 2016
7
2017 2016
Assets
Current assets:
Cash and cash equivalents 37,401$ 7,285$
Investments 1,655,098 722,236
Accounts receivable 89 38
Interest receivable 5,513 1,884
Due from other governments 1,390,141 2,481,470
Total current assets 3,088,242 3,212,913
Capital assets:
Infrastructure 110,972 110,972
Buildings and improvements 5,055,076 4,905,259
Transit operating equipment 9,262,399 7,727,129
Construction in progress 47,344 67,220
Total capital assets 14,475,791 12,810,580
Less accumulated depreciation (7,340,033) (6,680,559)
Total capital assets, net of accumulated depreciation 7,135,758 6,130,021
Total assets 10,224,000 9,342,934
Deferred Outflows of Resources
Pension related 151,060 96,501
Liabilities
Current liabilities:
Accounts payable 337,376 205,016
Accrued salaries and compensated absences 17,040 24,184
Total current liabilities 354,416 229,200
Noncurrent liabilities:
Compensated absences, net of current portion 2,216 4,352
Net pension liability 616,636 551,065
Total noncurrent liabilities 618,852 555,417
Total liabilities 973,268 784,617
Deferred Inflows of Resources
Pension related 56,728 83,004
Net Position
Net investment in capital assets 7,135,758 6,130,021
Restricted - subsequent year expenditures 41,519 1,552,730
Unrestricted 2,167,787 889,063
Total net position 9,345,064$ 8,571,814$
The accompanying notes are an integral part of these financial statements.
Packet Pg 209
10
City of San Luis Obispo, California
Transit Fund
Statements of Revenues, Expenses and Changes in Fund Net Position
Years Ended June 30, 2017 and 2016
8
2017 2016
Operating revenues:
Passenger fares 218,658$ 230,948$
Special transit fares 439,810 427,653
Total operating revenues 658,468 658,601
Operating expenses:
Purchased transportation 2,012,315 1,909,992
Other transportation services 538,782 469,078
Fuel and lubricants 264,883 240,297
Other materials and supplies 15,491 56,090
Salaries and wages 224,373 207,741
Fringe benefits 72,558 68,793
General and administrative 288,995 277,329
Depreciation 659,474 859,103
Total operating expenses 4,076,871 4,088,423
Operating loss (3,418,403) (3,429,822)
Nonoperating revenues:
Transportation Development Act operating grants 1,575,080 1,475,134
Federal Transit Administration operating grants 2,605,306 1,413,686
Interest 3,439 11,202
Other nonoperating revenues 7,828 870
Total nonoperating revenues 4,191,653 2,900,892
Change in net position 773,250 (528,930)
Net position - beginning of year 8,571,814 9,100,744
Net position - end of year 9,345,064$ 8,571,814$
The accompanying notes are an integral part of these financial statements.
Packet Pg 210
10
City of San Luis Obispo, California
Transit Fund
Statements of Cash Flows
Years Ended June 30, 2017 and 2016
9
2017 2016
Cash flows from operating activities:
Cash received from customers 658,417$ 658,733$
Cash payments to suppliers for goods and services (2,699,111) (2,710,272)
Cash payments to General Fund for interfund services (288,995) (277,329)
Cash payments to employees for services (321,475) (297,004)
Other nonoperating cash receipts 7,828 870
Net cash used in operating activities (2,643,336) (2,625,002)
Cash flows from noncapital financing activities:
Operating grants received 5,271,715 1,514,872
Net cash provided by noncapital financing activities 5,271,715 1,514,872
Cash flows from capital and related financing activities:
Acquisition and construction of capital assets (1,665,211) (131,999)
Disposition of capital assets 31,336
Net cash provided used in capital and related financing activities (1,665,211) (100,663)
Cash flows from investing activities:
Interest on investments (190) 12,674
Net cash provided by (used in) investing activities (190) 12,674
Net increase (decrease) in cash and cash equivalents and investments 962,978 (1,198,119)
Cash and cash equivalents and investments - beginning of year 729,521 1,927,640
Cash and cash equivalents and investments - end of year 1,692,499$ 729,521$
The accompanying notes are an integral part of these financial statements.
Packet Pg 211
10
City of San Luis Obispo, California
Transit Fund
Statements of Cash Flows, Continued
Years Ended June 30, 2017 and 2016
10
2017 2016
Reconciliation of operating loss to net cash used in operating activities:
Operating loss (3,418,403)$ (3,429,822)$
Adjustments to reconcile operating loss to net cash used in operating activities:
Depreciation 659,474 859,103
Other revenues 7,828 870
Changes in operating assets, deferred outflows, liabilities, and deferred inflows:
Accounts receivable (51) 132
Accounts payable 132,360 (34,815)
Accrued salaries and compensated absences (9,280) 755
Pension related deferred outflows and inflows and net pension liability (15,264) (21,225)
Net cash used in operating activities (2,643,336)$ (2,625,002)$
Reconciliation of cash and cash equivalents and investments to the statement
of fund net position:
Cash and cash equivalents 37,401$ 7,285$
Investments 1,655,098 722,236
Total cash and cash equivalents and investments 1,692,499$ 729,521$
The accompanying notes are an integral part of these financial statements.
Packet Pg 212
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
11
Note 1: The Reporting Entity
The City of San Luis Obispo (the City) operates a fixed route public transportation system within the City limits and
to the California Polytechnic State University (Cal Poly). Vehicle operations and vehicle maintenance are provided
under contract by a private transportation company. Nonvehicle-related support and administrative services are
provided by City staff.
The Transit Fund (the Fund) is an enterprise fund of the City created by resolution of the City Council to account for
the revenues received pursuant to the Transportation Development Act (TDA), Federal Transit Authority (FTA) and
the revenues received from the transit operations described above. Such revenues are allocated under specific
statutes and are legally restricted to finance expenditures made for transit operations, the development of public
transportation systems and transportation planning. When both restricted and unrestricted resources are available
for the same purpose, it is the City’s policy to use restricted funds first.
Note 2: Summary of Significant Accounting Policies
Measurement Focus, Basis of Accounting and Basis of Presentation
The Fund’s financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred regardless
of the timing of related cash flows. The Fund distinguishes operating revenues and expenses from nonoperating
items. Operating revenues and expenses generally result from providing services in connection with the Fund’s
principal ongoing operations. The principal operating revenues of the Fund are charges to customers for transit
services. Operating expenses for the Fund include cost of services, administrative expenses, and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses, including non-exchange transactions such as TDA and FTA grants.
Nonexchange transactions, in which the Fund receives value without directly giving equal value in return, include
grants. Revenue from grants is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Eligibility requirements include timing requirements, which specify the fiscal year when the resources are to be used
or the fiscal year when use is first permitted; matching requirements, in which the Fund must provide local resources
to be used for a specific purpose; and expenditures requirements, in which the resources are provided to the Fund
on a reimbursement basis.
Cash, Cash Equivalents and Investments
Cash and cash equivalents consist of cash on hand, cash balances in checking and money market accounts and short-
term investments, with an original maturity of three months or less. Investments which are in the City’s internal
investment pool are also treated as cash equivalents for the purposes of the statement of cash flows.
Packet Pg 213
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
12
Note 2: Summary of Significant Accounting Policies (Continued)
Amounts Due from Other Governments
Generally, amounts due from other governments are recorded as revenues when earned. However, when the use
of funds is the prime factor for determining eligibility for grants, revenue is accrued when the related expenses have
been made on an approved grant.
Capital Assets
Capital assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives,
ranging from 5 to 20 years. Capital assets are defined by the City as assets with an initial, individual cost of more
than $25,000. Detailed capital assets can be found in Note 5.
Net Pension Liability, Deferred Outflows and Deferred Inflows
The City recognizes a net pension liability, which represents the City’s proportionate share of the excess of the total
pension liability over the fiduciary net position of the pension reflected in the actuarial reports provided by the
California Public Employees’ Retirement System (CalPERS) plans (Plans). The City has allocated a proportionate share
of the net pension liability, deferred outflows, deferred inflows and pension expense to the Transit Fund. The net
pension liability is measured as of the City’s prior fiscal year-end. Changes in the net pension liability are recorded,
in the period incurred, as pension expense or as deferred inflows of resources or deferred outflows of resources
depending on the nature of the change. The changes in the net pension liability that are recorded as deferred inflows
of resources or deferred outflows of resources (that arise from changes in actuarial assumptions or other inputs and
differences between expected or actual experience) are amortized over the weighted average remaining service life
of all participants in the respective pension plan and are recorded as a component of pension expense beginning
with the period in which they are incurred.
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions,
and pension expense, information about the fiduciary net position of the City’s CalPERS Plans and additions
to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported
by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when
due and payable in accordance with the benefit terms. Investments are reported at fair value. Projected earnings
on pension investments are recognized as a component of pension expense.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from those estimates.
Packet Pg 214
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
13
Note 2: Summary of Significant Accounting Policies (Continued)
Subsequent Events
Events subsequent to June 30, 2017 have been evaluated through December 20, 2017, which is the date the financial
statements were available to be issued. Management did not identify subsequent events that required disclosure.
Note 3: Cash and Cash Equivalents and Investments
At June 30, 2017 and 2016, cash and cash equivalents consisted of the following:
2017 2016
Deposits:
Cash in bank 37,401$ 7,285$
Investment Fair Value Measurements
Investments held at June 30, 2017 and 2016 are not subject to the fair value hierarchy.
Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. Cash
balances held in banks are insured up to $250,000 by the Federal Depository Insurance Corporation. For custodial
credit risk associated with deposits, the City follows California Government Code, which requires California financial
institutions to secure the City’s deposits by pledging government securities as collateral. The market value of the
pledged securities must equal 110% of the City’s deposits. California law also allows financial institutions to secure
the City’s deposits by pledging first trust deed mortgage notes equal to 150% of the City’s deposits. All deposits held
by financial institutions are fully insured or collateralized with securities, held by the pledging financial institutions’
trust departments in the City’s name.
At June 30, 2017 and 2016, investments consisted of the following:
2017 2016
Pooled Investment Funds:
Local Agency Investment Fund (LAIF)1,655,098$ 722,236$
The City follows the practice of pooling cash and investments for all funds under its direct daily control. Funds held
by outside fiscal agents under provisions of bond indentures are maintained separately.
Packet Pg 215
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
14
Note 3: Cash and Cash Equivalents and Investments (Continued)
Interest earned on pooled cash and investments is allocated quarterly to the various funds based on the respective
fund’s average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited
directly to such funds.
Interest Rate Risk
This is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. In
accordance with its policies in the Investment Management Plan, the City mitigates interest rate risk by:
Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing
operations, thereby avoiding the need to sell securities on the open market before maturity.
Investing operating funds primarily in shorter-term securities.
The City’s investment policy also includes portfolio maturity targets. A minimum of 20% of the portfolio will be
invested in securities maturing in one year or less. Up to 80% of the portfolio can be invested in securities with a
maturity over one year, with no more than 10% of the portfolio invested in securities with a maturity over five years.
Credit Risk
This is the risk of loss due to the failure of the security issuer or backer. The City’s policies to mitigate credit risk
include:
Limiting investments to the safest types of securities. The California Government Code limits the investment
vehicles available to local agencies. The credit risk of these securities is measured by the assignment of a
rating by a nationally recognized statistical rating organization.
Pre-qualifying the financial institutions, broker/dealers, intermediaries and advisors with which the City will
do business.
Concentration of Credit Risk
The City’s policies contained in the Investment Management Plan provide guidelines (by type of investment that
limits either the dollar amount, the percent of the portfolio or the maturity term) for diversifying the investment
portfolio so that potential losses on individual securities will be minimized.
Packet Pg 216
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
15
Note 3: Cash and Cash Equivalents and Investments (Continued)
The City’s Investment Management Plan outlines the following criteria related to portfolio diversification:
No more than 5% of the City’s portfolio (exclusive of government agency issues or LAIF) shall be placed with
any financial institution.
No more than 25% of the City’s portfolio shall be invested in collateralized certificates of deposit issued by
financial institutions.
Certificates of deposit (negotiable and collateralized) placed by the City shall not constitute more than 15%
of the total assets of the institution; and negotiable certificates of deposit will only be placed with
institutions with total assets in excess of $200 million and that maintain a ratio of equity to total assets of
at least 5%.
Additional Cash and Investment Disclosures
See the City of San Luis Obispo June 30, 2017 and 2016 Comprehensive Annual Financial Reports for additional cash
and investment disclosures.
Note 4: Due from Other Governments
At June 30, 2017 and 2016, the amounts due from other governments were as follows:
2017 2016
Federal Transit Administration - capital and operating grants 1,390,141$ 2,481,470$
1,390,141$ 2,481,470$
Packet Pg 217
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
16
Note 5: Capital Assets
Capital assets activity for the fiscal year ended June 30, 2017, was as follows:
Balance Balance
June 30, 2016 Additions Deletions June 30, 2017
Capital assets not being depreciated:
Construction in progress 67,220$ 2,800$ (22,675)$ 47,345$
Capital assets being depreciated:
Infrastructure 110,972 110,972
Buildings and improvements 4,905,259 127,142 22,675 5,055,076
Transit operating equipment 7,727,129 1,535,269 9,262,398
Total capital assets being depreciated 12,743,360 1,662,411 22,675 14,428,446
Less accumulated depreciation (6,680,559) (659,474) (7,340,033)
Total capital assets, net of accumulated depreciation 6,130,021$ 1,005,737$ ‐$ 7,135,758$
Capital assets activity for the fiscal year ended June 30, 2016, was as follows:
Balance Balance
June 30, 2015 Additions Deletions June 30, 2016
Capital assets not being depreciated:
Construction in progress 60,038$ 67,219$ (60,037)$ 67,220$
Capital assets being depreciated:
Infrastructure 110,972 110,972
Buildings and improvements 4,905,259 4,905,259
Transit operating equipment 7,633,648 64,780 28,701 7,727,129
Total capital assets being depreciated 12,649,879 64,780 28,701 12,743,360
Less accumulated depreciation (5,821,456) (859,103) (6,680,559)
Total capital assets, net of accumulated depreciation 6,888,461$ (727,104)$ (31,336)$ 6,130,021$
Note 6: Intergovernmental Allocations
The City has been allocated the following funds from the State Transit Assistance Fund (STAF) and Local
Transportation Fund (LTF) for the years ended June 30, 2017 and 2016. The amounts have been used for both
operating expenses and capital assets.
Packet Pg 218
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
17
Note 6: Intergovernmental Allocations (Continued)
Article Section 2017 2016
LTF 4.0 99260 1,447,168$ 1,312,716$
STAF 6.5 99313 102,599 124,828
STAF 6.5 99314 25,313 37,590
Total Transportation Development Act revenue 1,575,080$ 1,475,134$
Applicable
Allocating TDA Statute Amount
The City also directly allocated for the years ended June 30, 2017 and 2016, with $583,204 and $673,290,
respectively of LTF Article 4.0, Section 99260 funds to San Luis Obispo Regional Transit Authority (SLORTA), which
are not shown in the accompanying financial statements.
Note 7: Fare Revenue Ratios
For the years ended June 30, 2017 and 2016 the City had fare revenue ratios of 21% and 22%, respectively, computed
as follows:
2017 2016
Operating revenues ‐ fares 658,468$ 658,601$
(a) Net Operating revenues ‐ fares 658,468 658,601
Net operating costs, net of depreciation and vehicle lease costs 3,417,397 3,229,320
Exclude capital expenses under uniform system of accounts
for purposes of calculating fare revenue ratios but
treated as operating expenses for financial statements (327,073) (264,010)
(b) Adjusted operating costs for purposes of calculating fare revenue ratios 3,090,324$ 2,965,310$
(c) Fare revenue ratio [(a) / (b)]21%22%
The City is in compliance with applicable TDA regulations pertaining to acceptable fare revenue ratios which require
a minimum ratio of 20%.
Note 8: Pensions
The City contributes to the California Public Employees’ Retirement System (CalPERS) for its employees and
participates in an agent‐multiple employer plan (Miscellaneous Plan) for its miscellaneous employees. The City has
allocated a portion of the Miscellaneous Plan that relates to the Fund. The portion of the net pension liability
allocated to the Fund for the years ended June 30, 2017 and 2016 was $616,636 and $551,065, respectively. The
portion of the deferred outflows of resources allocated to the Fund for the years ended June 30, 2017 and 2016 are
$151,060 and $96,501, respectively. The portion of the deferred inflows of resources allocated to the Fund for the
Packet Pg 219
10
City of San Luis Obispo, California
Transit Fund
Notes to Financial Statements
June 30, 2017 and 2016
18
Note 8: Pensions (Continued)
years ended June 30, 2017 and 2016 are $56,728 and $83,004, respectively. The portion of the pension expense
allocated to the Fund for the years ended June 30, 2017 and 2016 is $45,609 and $32,832, respectively, and is shown
as a part of total salaries and wages in the related fiscal year.
Additional Pension Disclosures
See the City of San Luis Obispo June 30, 2017 and 2016 Comprehensive Annual Financial Reports for additional
pension disclosures as well as required supplementary information.
Packet Pg 220
10
19
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
June 30, 2017 and 2016
Packet Pg 221
10
20
THIS PAGE INTENTIONALLY LEFT BLANK
Packet Pg 222
10
G GLENN BURDETTE
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report On
Transportation Development Act Compliance
and State Bond Compliance
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
We have audited the financial statements of the Transit Fund of the City of San Luis Obispo as of and for the years ended
June 30, 2017 and 2016, and have issued our report thereon, dated December 20, 2017.
Management's Responsibility
Management is responsible for the compliance with the applicable statutes, rules and regulations of the Transportation
Development Act (TDA), the California Code of Regulations (CCR) and the allocation instructions and resolutions of San
Luis Obispo Council of Governments as required by Section 6662 of the CCR.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance with the applicable statutes, rules and regulations referred to
above . We conducted our audit 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 applicable statutes, rules and regulations referred to above. Those
standards and the applicable statutes, rules and regulations referred to above require that we plan and perform the
audit to obtain reasonable assurance about whether noncompliance with the applicable statutes, rules and regulations
referred to above occurred. An audit also includes examining, on a test basis, evidence about the City's compliance with
the applicable statutes, rules and regulations and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a
legal determination of the City's compliance with the applicable statutes, rules and regulations referred to above .
In connection with our audit, we performed tests of the City's compliance with applicable statutes, rules and regulations
of the TDA, the CCR, and the allocation instructions and resolutions of San Luis Obispo Council of Governments as
required by Section 6662 of the CCR. During our audit, we performed to the extent applicable the tasks contained in
Section 6667 of the CCR. Such audit tests would not necessarily disclose all instances of noncompliance because they
were based on selective tests of accounting records and related data.
GLENN BURDETTE .COM
21
SAN LUIS OBISPO
1150 Palm Street
San Luis Obispo, CA 93401
p 805 544 1441
J 805 544 4351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93446
p 805 23? 3995
J 805 239 9332
SANTA MARIA
2222 South Broadway, Ste. A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4286 Packet Pg 223
10
22
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page 2
Opinion
In our opinion, the funds allocated to and received by the Transit Fund of the City of San Luis Obispo, California, pursuant
to the TDA were expended and accounted for in compliance with the applicable statutes, rules and regulations of the
TDA, the CCR and the allocation instructions and resolutions of the San Luis Obispo Council of Governments, in all
material respects, for the year ended June 30, 2017.
The purpose of this report over compliance is solely to describe the scope of our testing of compliance and the results
of that testing based on the applicable statutes, rules and regulations of the TDA, the CCR, and the allocation instructions
and resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR. Accordingly, this
report is not suitable for any other purpose.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 20, 2017
Packet Pg 224
10
G GLENN BURDETTE
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
Report on the Financial Statements
We have audited the accompanying financial statements of the Transportation Development Act (TDA) Fund of the City
of San Luis Obispo, California, as of June 30, 2017 and 2016, 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 the 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 audits
in accordance with 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.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of 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 do not express such an
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 .
GLENN BURDETTE .COM
23
SAN LUIS OBISPO
1150 Palm Street
San Luis Obispo, CA 93401
p 805 544 1441
f 805 5444351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93445
p 805 23? 3995
f 805 239 9332
SANTA MARIA
2222 South Broadway, Ste. A
Santa Maria, CA 93454
p 805 922 4010
f 805 922 4285 Packet Pg 225
10
24
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page 2
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 Transportation Development Act (TDA) Fund of the City of San Luis Obispo, California, as of June 30, 2017 and
2016, and the changes in financial position for the 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 TDA Fund of the City of San Luis Obispo, California and
do not purport to, and do not, present fairly the financial position of the City of San Luis Obispo, California, as of June 30,
2017 and 2016, the changes in its financial position, or, where applicable, its cash flows for the 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.
Other Information
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Transportation Development Act (TDA) Fund of the City of San Luis Obispo, California’s basic financial statements. The
schedule of revenues and other uses – budget and actual is presented for purposes of additional analysis and is not a
required part of the financial statements. The schedule of revenues and other uses – budget and actual 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. Such information has been subjected to the auditing procedures applied
in the audit of the basic 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 to 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 revenues and other uses – budget
and actual is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 20, 2017
Packet Pg 226
10
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Balance Sheets
June 30, 2017 and 2016
25
2017 2016Assets
Total assets -$ -$
Liabilities and Fund Balance
Total liabilities and fund balance -$ -$
The accompanying notes are an integral part of these financial statements.
Packet Pg 227
10
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Statements of Revenues, Other Uses and Changes in Fund Balance
June 30, 2017 and 2016
26
2017 2016
Revenues - intergovernmental allocations 40,501$ 40,531$
Other financing uses - operating transfers to City of
San Luis Obispo (40,501) (40,531)
Excess of revenues over other financing uses - -
Fund balance - beginning of year - -
Fund balance - end of year - $ - $
The accompanying notes are an integral part of these financial statements.
Packet Pg 228
10
27
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Notes to Financial Statements
June 30, 2017 and 2016
Note 1: The Reporting Entity
The Transportation Development Act (TDA) Fund (the Fund) of the City of San Luis Obispo, California (the City) is a
special revenue fund created by resolution of the City Council to account for the revenues received pursuant to the
TDA. Such revenues allocated under specific state statutes are legally restricted to financial expenditures made of
the development and construction of local streets and roads, including pedestrian and bicycle facilities.
Note 2: Summary of Significant Accounting Policies
Measurement Focus and Basis of Accounting
The Fund’s financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized when measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough thereafter to pay the
liabilities of the current period. For this purpose, the City considers interest and grant revenues earned but not
received as susceptible to accrual under this method. Expenditures are generally recognized at the time liabilities
are incurred.
Fund Equity
The Fund’s financial statements report fund balance in classifications that comprise a hierarchy based primarily on the
extent to which the City is bound to honor constraints on the specific purpose for which amounts in the funds can be
spent. The Fund does not have a fund balance in the current fiscal year, therefore classification is not necessary.
However, GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, identifies five
components of fund balance – nonspendable, restricted, committed, assigned and unassigned.
Nonspendable. This component includes amounts that cannot be spent because they are either (a) not in spendable
form or (b) legally or contractually required to be maintained intact.
Restricted. This component consists of amounts that have constraints placed on them either externally by third-parties
(creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional
provisions or enabling legislation. Enabling legislation authorizes the City to assess, levy, charge or otherwise mandate
payment of resources (from external resource providers) and includes legally enforceable requirements (compelled by
external parties) that those resources be used only for the specific purposes stipulated in the legislation.
Packet Pg 229
10
28
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Notes to Financial Statements
June 30, 2017 and 2016
Note 2: Summary of Significant Accounting Policies (Continued)
Committed. This component consists of amounts that can only be used for specific purposes pursuant to constraints
imposed by minute order authorized by the City Council. Also included in this component are encumbrances which
represent legal and binding obligations for the acquisition of future goods and services. Those committed amounts
established by minute order cannot be used for any other purpose unless the City Council adopts a new minute order so
directing. With respect to encumbered amounts, the City may take steps to cancel the order for goods or services and
thereby terminate the obligation.
Assigned. This component consists of amounts that are constrained by the City’s intent to be used for specific purposes,
but are neither restricted nor committed. The City Manager or Director of Finance are authorized to assign amounts to
a specific purpose. Constraints imposed on the use of assigned amounts can be removed with no formal Council actions.
Unassigned. This classification represents amounts that have not been restricted, committed or assigned to specific
purposes.
Fund Balance Spending Policy
The City follows a practice in which restricted, committed, assigned, and unassigned fund balances are spent when
more than one amount is available for a specific purpose. When both restricted and unrestricted resources are
available for use, it is the City’s policy to use restricted resources first, then unrestricted resources (committed,
assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned)
are available for use, it is the City’s policy to use committed resources first, then assigned, and then unassigned as
they are needed.
Budgets and Budgetary Accounting
The City has received national recognition for its use of a two-year Financial Plan and budgetary process that
emphasizes long-range planning and effective program management. Significant features of the City’s two-year
Financial Plan include the integration of Council goal-setting into the budgetary process and the extensive use of
formal policies and measureable objectives. The Financial Plan includes operating budgets for two years and a
capital improvement plan (CIP) for five years.
Under this multi-year approach, appropriations continue to be made annually; however, the Financial Plan is the
foundation for preparing the budget for the second year. Additionally, unexpended operating appropriations from
the first year may be carried over for specific purposes into the second year with the approval of the City Manager.
Packet Pg 230
10
29
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Notes to Financial Statements
June 30, 2017 and 2016
Note 2: Summary of Significant Accounting Policies (Continued)
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results could differ from those estimates.
Subsequent Events
Events subsequent to June 30, 2017 have been evaluated through December 20, 2017, which is the date the financial
statements were available to be issued. Management did not identify subsequent events that required disclosure.
Note 3: Intergovernmental Allocations
For the years ended June 30, 2017 and 2016, the City has been allocated the following funds from the Local
Transportation Funds (LTF):
Amount
Article Section 2017 2016
LTF 3.0 99233.3 40,501$ 40,531$
Allocating TDA Statute
Applicable
Note 4: Operating Transfers
The City expends all amounts for alternate transportation projects in its General Fund or Capital Outlay Fund. LTF
monies received by the City are initially deposited in the Fund and subsequently transferred to the General Fund,
where such funds are expended or transferred to the Capital Outlay Fund to be expended on designated
transportation projects.
Packet Pg 231
10
G GLENN BURDETTE
CERTIFIED PUBLIC ACCOUNTANTS
Independent Auditors' Report On
Transportation Development Act Compliance
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
San Luis Obispo, California
We have audited the financial statements of Transportation Development Act (TOA) Fund of the City of San Luis
Obispo, California as of and for the years ended June 30, 2017 and 2016, and have issued our report thereon, dated
December 20, 2017 .
Management's Responsibility
Management is responsible for the compliance with the applicable statutes, rules and regulations of the
Transportation Development Act (TOA), the California Code of Regulations (CCR) and the allocation instructions and
resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance with the applicable statutes, rules and regulations referred
to above.
We conducted our audit 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 applicable statutes, rules and regulations referred to above. Those standards
and the applicable statutes, rules and regulations referred to above require that we plan and perform the audit to
obtain reasonable assurance about whether noncompliance with the applicable statutes, rules and regulations
referred to above occurred. An audit also includes examining, on a test basis , evidence about the City's compliance
with the applicable statutes, rules and regulations and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit
does not provide a legal determination of the City's compliance with the applicable statutes, rules and regulations
referred to above.
In connection with our audit, we performed tests of the City's compliance with applicable statutes, rules and
regulations of the TOA , the CCR, and the allocation instructions and resolutions of San Luis Obispo Council of
Governments as required by Section 6662 of the CCR.
GLENNBURDETTE.COM
30
SAN LUIS OBISPO
1150 Palm Street
San Luis Obispo, CA 93401
p 805 544 1441
f 805 544 4351
PASO ROBLES
102 South Vine Street, Ste. A
Paso Robles, CA 93446
p 805 23? 3995
J 805 239 9332
SANTA MARIA
2222 South Broadwa~. Ste. A
Santa Maria, CA 93454
p 805 922 4010
J 805 922 4285 Packet Pg 232
10
31
The Honorable City Council of the City of San Luis Obispo, California
and San Luis Obispo Council of Governments
Page 2
During our audit, we performed to the extent applicable the tasks contained in Section 6667 of the CCR. Such audit
tests would not necessarily disclose all instances of noncompliance because they were based on selective tests of
accounting records and related data.
Opinion
In our opinion, the funds allocated to and received by the TDA Fund of the City of San Luis Obispo, California,
pursuant to the TDA were expended and accounted for in compliance with the applicable statutes, rules and
regulations of the TDA, the CCR and the allocation instructions and resolutions of San Luis Obispo Council of
Governments, in all material respects, for the year ended June 30, 2017.
The purpose of this report over compliance is solely to describe the scope of our testing of compliance and the
results of that testing based on the applicable statutes, rules and regulations of the TDA, the CCR, and the allocation
instructions and resolutions of San Luis Obispo Council of Governments as required by Section 6662 of the CCR.
Accordingly, this report is not suitable for any other purpose.
Glenn Burdette Attest Corporation
San Luis Obispo, California
December 20, 2017
Packet Pg 233
10
City of San Luis Obispo, California
Transportation Development Act (TDA) Fund
Supplementary Information
Schedules of Revenues and Other Uses – Budget and Actual
June 30, 2017 and 2016
32
Variance with
Final Budget
2017 Original Final Actual Positive (Negative)
Revenues - intergovernmental allocations 41,100$ 41,100$ 40,501$ (599)$
Other financing uses - operating transfers
to City of San Luis Obispo (41,100) (41,100) (40,501) 599
Excess of revenues over other financing uses - $ - $ - $ - $
Variance with
Final Budget
2016 Original Final Actual Positive (Negative)
Revenues - intergovernmental allocations 41,100$ 41,100$ 40,531$ (569)$
Other financing uses - operating transfers
to City of San Luis Obispo (41,100) (41,100) (40,531) 569
Excess of revenues over other financing uses - $ - $ - $ - $
Budget
Budget
Packet Pg 234
10
Packet Pg 235
10
Packet Pg 236
10