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Type:
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Informational Report
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Status:
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Filed
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On agenda:
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7/19/2017
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Final action:
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7/19/2017
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Title:
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RECEIVE AND FILE the Consolidated Audit financial and compliance audit reports completed by Vasquez and Company (Vasquez) and Simpson and Simpson, CPA's (Simpson & Simpson) for the Fiscal Year ending June 30, 2016.
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Indexes:
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Access Services Inc., Audit, Burbank, C Line (Green) Extension to Torrance, Commerce, Compton, Consolidated Audit, Design build, Evaluation and assessment, Ez Pass, Federal Transit Administration, Financial Audit, Formula Allocation / Local Return, Gateway Cities (Southeast LA County) Service Sector, Gateway Cities subregion, Glendale, Guidelines, Immediate Needs Transportation Program, Informational Report, LADOT Transit, Local Returns, Measure R, Memorandum Of Understanding, Metro Green Line, Metro Rail C Line, Metrolink, Program, Proposition A, Proposition C, Redondo Beach, Subsidies, Support for Homeless on Re-entry Program, Torrance, Transit operators, Transit System, Transportation Development Act - Article 4, Transportation Development Act of 1971
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Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
JULY 19, 2017
Subject
SUBJECT: CONSOLIDATED AUDIT FOR FISCAL YEAR 2016
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE the Consolidated Audit financial and compliance audit reports completed by Vasquez and Company (Vasquez) and Simpson and Simpson, CPA's (Simpson & Simpson) for the Fiscal Year ending June 30, 2016.
Issue
ISSUE
As the Regional Transportation Planner for Los Angeles County, we are responsible for planning, programming and allocating transportation funding to Los Angeles County jurisdictions, transit operators and other transportation programs. We have the fiduciary responsibility to provide assurance that recipients of funds included in the Consolidated Audit are adhering to the statutes, program guidelines, and/or agreements of each applicable funding source and that operations data used to allocate funds is fair and in accordance with Federal Transportation Authority (FTA) guidelines.
The Consolidated Audit process includes financial and compliance audits of the following programs:
* Local Funding Program to 88 cities and Unincorporated Los Angeles County
* Proposition A Local Return
* Proposition C Local Return
* Measure R Local Return
* Transit Development Act (TDA) Article 3 and Article 8 Programs
* Proposition A Discretionary Incentive Program
* Transit System Funds to Commerce, Redondo Beach, Torrance
* Transit Development Act (TDA) Article 4
* State Transit Assistance (STA)
* Proposition A 95% of 40% Discretionary
* Proposition C 5% Security
* Proposition C 40% Discretionary
* Proposition 1B Funds
* Measure R 20% Bus Operations and Clean Fuel Bus Funds
* Proposition A 40% Discretionary - Growth Over Inflation (GOI) Fund to Burbank, Glendale, LADOT and Pasadena Transit System Operators
* Fare Subsidies Programs
* Immediate Needs Transportation Program (INTP)
* Rider Relief Transportation Program (RRTP)
* Support for Homeless Re-Entry (SHORE) Program
* Metrolink Program
* EZ Transit Pass Program
* Access Services
* LADOT Operating Data (Proposition A Incentive Programs)
We allocate over $400 million annually to these programs and distribute them to 88 cities in Los Angeles County, the County of Los Angeles and other agencies. Audits of these programs are needed to ensure that the agencies comply with the applicable rules, regulations, policies, guidelines and executed Memorandums of Understanding (MOU). The audits also serve as a program management tool for effectively managing and administering these programs.
Vasquez and Simpson & Simpson performed the financial and compliance audits to assure management that recipients of subsidies included in the Consolidated Audit are adhering to the statutes of each applicable funding source and that operations data used to allocate funds is fair and in accordance with Federal Transportation Administration (FTA) guidelines. The audits were conducted in accordance with generally accepted government auditing standards and the American Institute of Certified Public Accountants' Standards.
Discussion
DISCUSSION
Local Return
Vasquez and Simpson & Simpson found that the Cities and County, with the exception of the City of Compton, complied in all material respects, with the Guidelines and Requirements referred to above that could have a direct and material effect on the Local Return Programs for the year ended June 30, 2016. The Measure R Local Return audit results were presented to the Measure R Independent Taxpayer Oversight Committee (MRITOC) on March 6, 2017. A Public Hearing for MRITOC was also conducted to receive public input on April 26, 2017.
The auditors found that the cities and Los Angeles County generally complied with the requirements applicable to the Proposition A and C and Measure R Local Return Guidelines, with the exception of the City of Compton due to materiality of the questioned costs. The auditors found 62 and 29 instances of non-compliance for Proposition A and C and Measure R, respectively. Questioned costs totaling $1.7 million, $5.2 million, and $1.5 million for Proposition A, Proposition C and Measure R, respectively represent approximately 1%, 3% and 1% of each total fund reviewed. The Local Return Program Manager is working with the cities to resolve the findings. The respective auditors will validate the resolution of the findings identified in these audits in the following years' audits.
Non-Local Return
The auditors found that schedules/financial statements for the various programs included in the Consolidated Audit present fairly, in all material respects. They also found that the entities complied, in all material respects, with the compliance requirements of their respective guidelines. However, the auditors noted several compliance findings; two findings for Metrolink program, five findings for the TDA Article 3 program, one finding for the TDA Article 8 program and seven for the EZ Transit Pass Program, all of which were resolved during the audit. Four compliance findings were also identified for the INTP (2), and RRTP (1) programs. Four findings on internal controls over financial reporting for the Access Services were also identified. Metro Program Managers are working with the funds recipients to resolve the findings. The respective auditors will validate the resolution of the findings identified in these audits in the following years' audits.
Due to the considerable size of the documents, we have attached the Report on Compliance with Requirements Applicable to Proposition A and C and Measure R Ordinances and Proposition A and C and Measure R Local Return Guidelines by each of the firms (Attachment A through D). As a savings measure the remaining Consolidated Audit reports can be accessed online.
For the audit reports issued by Vasquez, please visit: http://libraryarchives.metro.net/DB_Attachments/Board%20Report%20Links/0444/Final%20reports%20-%20Vasquez/
For the audit reports issued by Simpson & Simpson, please visit:
http://libraryarchives.metro.net/DB_Attachments/Board%20Report%20Links/0444/Final%20reports%20-%20Simpson%20and%20Simpson/
Attachments
ATTACHMENTS
A. Report on Compliance with Requirements Applicable to Proposition A and Proposition C Ordinances and Proposition A and Proposition C Local Return Guidelines (Vasquez)
B. Report on Compliance with Requirements Applicable to Proposition A and Proposition C Ordinances and Proposition A and Proposition C Local Return Guidelines (Simpson & Simpson)
C. Report on Compliance with Requirements Applicable to Measure R Ordinance and Measure R Local Return Guidelines (Vasquez)
D. Report on Compliance with Requirements Applicable to Measure R Ordinance and Measure R Local Return Guidelines (Simpson & Simpson)
Prepared_by
Prepared by: Lauren Choi, Sr. Manager, Audit, (213) 922-3926
Monica Del Toro, Audit Support Manager, (213) 922-7494
Reviewed_by
Reviewed by: Diana Estrada, Chief Auditor, (213) 922-2161
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