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Title:
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Receive and file the Independent Auditor's Report on:
A. Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines for the Fiscal Year ended June 30, 2019 completed by Vasquez & Company, LLP;
B. Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines for the Fiscal Year ended June 30, 2019 completed by Simpson and Simpson, CPAs; and
C. Schedule of Revenues and Expenditures for Measure M Special Revenue Fund for the Fiscal Year ended June 30, 2019 completed by BCA Watson Rice, LLP (BCA).
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Indexes:
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Audit, Evaluation and assessment, Financial Audit, Guidelines, Informational Report, Local Returns, Measure M, Measure R, Schedules and scheduling
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Meeting_Body
MEASURE M INDEPENDENT TAXPAYER
OVERSIGHT COMMITTEE
MARCH 4, 2020
Subject
SUBJECT: INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO MEASURE M ORDINANCE AND MEASURE M LOCAL RETURN GUIDELINES; AND MEASURE M SPECIAL REVENUE FUND AUDIT
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
Receive and file the Independent Auditor's Report on:
A. Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines for the Fiscal Year ended June 30, 2019 completed by Vasquez & Company, LLP;
B. Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines for the Fiscal Year ended June 30, 2019 completed by Simpson and Simpson, CPAs; and
C. Schedule of Revenues and Expenditures for Measure M Special Revenue Fund for the Fiscal Year ended June 30, 2019 completed by BCA Watson Rice, LLP (BCA).
Issue
ISSUE
On November 9, 2016, Los Angeles County voters approved Measure M that imposed a half-cent transaction and use tax for transportation and the indefinite extension of an existing half-cent sales tax (Measure R) also dedicated to transportation and originally set to expire in 2039. Measure M, also known as the Los Angeles County Traffic Improvement Plan Ordinance (Ordinance) establishes an Independent Taxpayer Oversight Committee and an oversight process to ensure that the Los Angeles County Metropolitan Transportation Authority (LACMTA) complies with the terms of the Ordinance. The oversight process requires that an annual audit be completed within six months after the end of the fiscal year to determine compliance with the provisions of the Ordinance related to the receipt and expenditure of sales tax revenues during the fiscal year. The audit must be provided to the Oversight Committee so that the Oversight Committee can determine whether LACMTA and local subrecipients have complied with the Measure M requirements.
Discussion
DISCUSSION
The following summarizes the independent auditor's report on Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines:
Management Audit Services contracted with two firms, Simpson and Simpson, CPAs (Simpson and Simpson) and Vasquez and Company (Vasquez), to conduct the audits of Measure M sales tax revenues used by the 88 cities (Cities) as well as the County of Los Angeles (County). This report covers the audits of 39 Cities completed by Vasquez as listed in Attachment A; and audits of 49 Cities and the County completed by Simpson and Simpson as listed in Attachment B. The firms conducted the audit of compliance 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 the independent auditors plan and perform the audit to obtain reasonable assurance about whether noncompliance with the requirements in the Ordinance which could have a direct and material effect on the Measure M Local Return program occurred.
Vasquez concluded that the Cities, except for the City of South El Monte, complied in all material respects, with the requirements in the Ordinance that are applicable to the Measure M Local Return program for the fiscal year ended June 30, 2019. Vasquez found seven instances of noncompliance, which are summarized in Schedule 2 of Attachment C.
Simpson and Simpson concluded that the Cities and County complied, in all material respects, with the requirements in the Ordinance that are applicable to the Measure M Local Return program for the fiscal year ended June 30, 2019. Simpson and Simpson found 13 instances of noncompliance, which are summarized in Schedule 2 of Attachment D.
The following summarizes the independent auditor's report on Schedule of Revenues and Expenditures for Measure M Special Revenue Fund:
Management Audit Services contracted with BCA to perform the independent audit of the LACMTA, as required by the Ordinance. BCA conducted the audit 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 BCA plan and perform the audit to obtain reasonable assurance about whether the Schedule of Measure M Revenues and Expenditures (Schedule) is free of material misstatement.
The auditors found that the Schedule referred to above present fairly, in all material respects, the Measure M Revenues and Expenditures of LACMTA for the fiscal year ended June 30, 2019, in accordance with accounting principles generally accepted in the United States of America. The auditors also found that LACMTA complied, in all material respects, with the requirements of the Ordinance for the fiscal year ended June 30, 2019.
Next_Steps
NEXT STEPS
A public hearing will be scheduled.
Attachments
ATTACHMENT(S)
A. List of Entities Audited by Vasquez
B. List of Entities Audited by Simpson and Simpson
C. Report on Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines (Vasquez)
D. Report on Compliance with Requirements Applicable to Measure M Ordinance and Measure M Local Return Guidelines (Simpson and Simpson)
E. Independent Auditor's Report on Schedule of Revenues and Expenditures for Measure M Special Revenue Fund for the Fiscal Year Ended June 30, 2019
Prepared_by
Prepared by: Lauren Choi, Sr. Director (Interim), Audit, (213) 922-3926
Monica Del Toro, Audit Support Manager, (213) 922-7494
Reviewed_by
Reviewed by: Shalonda Baldwin, Chief Auditor (Interim), (213) 418-3265