REPORT TO THE CITY COUNCIL
FROM: RUTH F. QUINTO, CPA, Assistant City Manager
Office of the Mayor & City Manager
BY: SANTINO DANISI, MBA, Finance Director/City Controller
Finance Department
SUBJECT
Title
Submission and Acceptance of the City of Fresno Clean and Safe Neighborhood Parks Tax (Measure P) Report for Fiscal Year 2022.
Body
RECOMMENDATION
Staff recommends that the City Council accept the Fresno Clean and Safe Neighborhood Parks Tax (Measure P) Report for the fiscal year ended June 30, 2022 (FY 2022).
EXECUTIVE SUMMARY
The Measure P Report of the City of Fresno (City) for the fiscal year ended June 30, 2022, is hereby formally submitted for the Council's acceptance. This report issued December 7, 2022, is the official publication of the City's financial position for Measure P as of June 30, 2022; presenting the operational results for all Measure P activities and funds. The Measure P Report is prepared in conformity with accounting principles generally accepted in the United States of America.
The Auditor's Opinion on the Measure P Report is an unqualified or unmodified opinion. This means that there are no reservations concerning the financial statements and that the auditors believe them to be fairly presented. City management is responsible for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures.
BACKGROUND
On July 18, 2018, the City Clerk received an Initiative Petition proposing the Fresno Clean and Safe Neighborhood Parks Tax (Measure P). On February 18, 2021, the City Council certified Measure P as passed, and collection of the special sales tax began July 1, 2021, and the first deposits of the special sales tax were received in September 2021. The revenues generated by the Measure P sales tax shall be allocated by the City on an annual basis with additional independent oversight provided by a new Parks, Recreation and Arts Commission (Commission) consisting of nine (9) members.
As written under the City’s Municipal Code Section 7-1504(d), the ordinance requires an annual Measure P financial report from an independent auditor filed with the City Council no later than December 31st of every year.
On August 24, 2022, a Notice Inviting Proposals was published in the Business Journal and the Request for Proposals was posted on Planet Bids with links available on the City of Fresno’s website with proposals due on September 7, 2022. No firms responded. As a result, staff reached out directly to multiple local firms, one of which being Price Paige & Company Accountancy Corporation who submitted a response to the request from the City.
The Auditor's opinion on the Measure P Report, issued December 7, 2022, is an unqualified or unmodified opinion, which is the highest quality opinion available. This means that there are no reservations concerning the financial statements and that the auditors believe them to be fairly presented. City management is responsible for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures.
In accordance with Government Auditing Standards, the auditor also issued a report dated December 7, 2022, regarding the City’s internal control over financial reporting and tests of compliance. The purpose of that report is solely to describe the scope of testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. The report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
The auditors identified one finding regarding a deficiency in internal controls, as described in the schedule of findings and questioned costs as item 2022-001. The finding describes that the City did not properly record prepaid expenses for pre-billing. Pre-billing has been a decades-long practice at the City, however, in this case the year-end closing process missed flagging a pre-bill and instead expensed the purchase. This resulted in prepaid expenses being initially understated, and expenses being initially overstated. The auditors identified this error and proposed the necessary accounting entry to correct the balances of the related accounts.
Staff have implemented additional safeguards to prevent this occurrence from happening in the future. Additional procedures and controls have been added to properly review and record billings near year-end. The additional processes will be embedded into year-end closing tasks annually including updating status of prior year on ordered equipment, two-party review of pre-billings, and two-party review of the journal to record appropriate adjusting tracking journal the due to/due from between Fleet Internal Service Fund and other City funds.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, this item does not qualify as a “project” and is therefore exempt from the CEQA requirements. Projects that may be funded under Measure P will be subject to project-specific review.
LOCAL PREFERENCE
Local preference was not a factor due to the fact that there is no bid involved, nor is State or federal money involved with this item. Activities in which local preference is a factor may be funded under Measure P but will be subject to independent review.
FISCAL IMPACT
This report relates only to the submission of informational financial accounting data and calls for no approval for spending or acceptance of receipts.
Attachment: City of Fresno, California Measure P Fund Financial Statements and Compliance Report for the Year Ended June 20, 2022