HomeMy WebLinkAbout2017/03/14 - Agenda Packet - West-Side Citizens' Oversight Committee CITY OF RANCHO r
MARCH 14, 2017 A10
WEST-SIDE CITIZENS' OVERSIGHT COMMITTEE AGENDA
RANCHO CUCAMONGA CITY YARD
8794 LION STREET
RANCHO CUCAMONGA, CA 91730
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Al. Pledge of Allegiance
A2. Roll Call: Joey Cataura
David DeMauro
Velma Gilbert
Sean Harvath
Theresa Marji
A3. Approval of Minutes: November 9, 2016
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This is the time and place for the general public to address the West-Side Districts Citizens' Oversight
Committee on any item listed or not listed on the agenda. State law prohibits the Committee from
addressing any issue not previously included on the Agenda. The Committee may receive testimony
and set the matter for a subsequent meeting. Comments are to be limited to five minutes per
individual.
Cl. Review and Approval of Annual Written Report to the City Council.
C2. Review and Discussion of Annual Independent Report.
C3. West-Side Districts Updates.
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I, Linda A.Troyan,City Clerk Services Director of the City of Rancho Cucamonga,or my designee,hereby
certifies that a true, accurate copy of the foregoing agenda was posted on March 9, 2017 at 5:30pm per
Government Code Section 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, CA 91730.
Lori Sassoon
Deputy City Manager/Administrative Services
CITY OF RANCHO CUCAMONGA
WEST-SIDE DISTRICTS CITIZENS' OVERSIGHT COMMITTEE
SPECIAL FOLLOW-UP MEETING MINUTES
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The City of Rancho Cucamonga West-Side Districts Citizens' Oversight Committee held a Special
meeting on Tuesday, November 9, 2016 in the Tri-Communities Conference Room at the Civic Center,
10500 Civic Center Drive, Rancho Cucamonga, California. Deputy City Manager/Administrative
Services called the meeting to order at 6:00 p.m.
Al. Pledge of Allegiance:
Led by Chair Harvath.
A2. Roll Call:
Present were Committee Members: Joey Catuara, David DeMauro, Velma Gilbert, Sean
Harvath and Theresa Marji.
Also present were: Lori Sassoon, Deputy City Manager/Administrative Services; Tamara Layne,
Finance Director; Bill Wittkopf, Public Works Services Director; Noah Daniels, Finance Manager;
Chris Bopko, Management Analyst III; Kelly Guerra, Special Districts; Administrative Secretary
Melinda Garcia.
A3. Approval of Minutes:
Committee Member Cataura motioned to approve the minutes from the meetings on August 30,
2016. The motion was seconded by Committee Member DeMauro and harmoniously approved.
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No public communications were made.
Cl. West-Side Districts Updates.
Committee Member Cataura expressed his interest in posting minutes created by the Committee
on the NextDoor website. He emphasized the dilemma of providing information to residents.
Director Wittkopf provided a map of the affected areas as well as a list of Capital Projects the
City has deferred due to the cost associated with the upkeep. Committee Member DeMauro
asked about the soccer or user fees. Staff explained how teams do not pay park fees, however,
their contribution consists of the teams maintaining the parks they use.
C2. Discussion of Community Outreach History in LMD-6 (Caryn Communities).
Deputy City Manager Sassoon introduced resident Rob Hill. Mr. Hill lives within the Caryn
Planned Community. She explained that Mr. Hill offered to speak to the Committee to help
provide the methods he and his neighbors utilized to ensure the success of passing a
Proposition 218 ballot measure in LMD 6. Mr. Hill proceeded to explain that due to lack of
participation by residents, the ballot measure failed the first time at the polls. He explained how
he, his neighbors and family members became a coalition of communication and the steps they
WEST-SIDE DISTRICTS CITIZENS' OVERSIGHT COMMITTEE ANNUAL MEETING MINUTES
NOVEMBER 9, 2016
PAGE 2
took to ensure the success of the ballot measure the second time at the polls. He provided the
Committee with a variety of different options for the Committee to pursue. Mr. Hill emphasized
the importance of the Committee earning residents' trust in order to ensure success of a
measure being placed on the ballot.
C3. Discussion of LIVID Newsletters and Other Means of Communication with Property Owners.
Finance Manager Daniels provided information concerning the distribution of the Newsletter to
residents. The Committee provided input they felt would help simplify the issue to residents.
They requested to review the Newsletter prior to being mailed. Options such as posting minutes
or flyers on NextDoor, scheduling community meetings and creating an email list to reach out to
residents were suggested. The Committee concurred that their ultimate goal is to create trust
with residents and create ideal goals that would benefit the community.
Committee Member Cataura motioned to adjourn the meeting. The motion was seconded by
Committee Member DeMauro. The meeting adjourned at 7:45 p.m.
Respectfully submitted,
Sean Harvath, Chair
Date:
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CITY OF ' • ONGA
STAFF REPORT
DATE: , 2017
TO: Mayor and Members of the City Council
FROM: West-side Districts Citizens' Oversight Committee
INITIATED BY: Lori Sassoon, Deputy City Manager/Administrative Services
Tamara L. Layne, Finance Director
Noah M. Daniels, Finance Manager
SUBJECT: SUMMARY OF REVIEW OF RESULTS OF ANNUAL INDEPENDENT AUDIT
OF LANDSCAPE MAINTENANCE DISTRIC,TR#1,
� STREET LIGHTING
DISTRICT#2 RESIDENTIAL, AND PAR!,(/114
IMPROVEMENT DISTRICT#85 FOR FISCAL YEAR 2015/16
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RECOMMENDATION: l' 'r%''
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It is recommended that the City Council receive and filesults of the Committee's review of
the annual independent audit of Landscape� ainte„nan a istrict #1, Street Light District #2
Residential, and Park and Recreation ImproVemen�tistrct #85 (collectively "the Districts") for
Fiscal Year 2015/16.
BACKGROUND: 16 if '%
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Established in Resolution 15-207,"trr'West-side Districts Citizens' Oversight Committee is
made up of five memic that reside, and own property, within one or more of the
Districts, and do not serve on anygth"anding City Commission or Committee. A primary
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purpose of the Committee is to rev ew the annual audit after it is prepared and report the results
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of its review to the City Council and the community on an annual basis.
The Committee has neitetary or operational decision-making authority, nor the
authority to allocate financial resources or direct staff.
ANALYSIS:
At our meeting of March 14, 2017, Tamara Layne, Finance Director, and Rich Kikuchi, Partner,
from the accounting firm of Lance, Soll & Lunghard LLP, provided the results of the annual audit
of the Districts.
The reports generated from the audit include:
• Statement of Revenues, Expenditures and Changes in Fund Balances for the Districts for
the year ended June 30, 2016
• Independent Auditors' Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters
• Audit Communication Letter
Paae 1 of 2
The auditor provided an overview for how they consider internal controls when determining the
appropriate audit procedures to express an opinion about whether the Districts'financial report is
free from material misstatement. As these processes were reviewed, a discussion was held
regarding the audit process, and how the City ensures that funds collected for the Districts are
spent for the operations. The staff from the City's Finance Department and the auditor confirmed
that the revenues received were accurately recorded and were expended for the maintenance
and operations of the Districts.
It was noted that, in accordance with the law, the City accounts for each individual district's
revenue and expenditures in separate funds.
The auditor also communicated information about their professional responsibilities, which
includes communication about significant aspects of the audit and other matters. We are pleased
to inform you that there were no audit findings, misstatements identified during the audit, or other
difficulties in performing the audit.
FISCAL IMPACT:
There is no fiscal impact. '
COUNCIL GOAL(S) ADDRESSED:
There are no City Council goals addressed. A pnmary purpose of the Committee is to review
the annual audit and report on the results to the Council,,"',,'and the community on an annual basis.
ATTACHMENTS:
Attachment 1 — Statement of Revenues; Expehcfitures and Changes in Fund Balances for the
Districts for the year ended June'30, 2016`
Attachment 2 — IndependentAuditors' Report"' '1111temal Control Over Financial Reporting and
on Compliance and Other,.Matters
Attachment 3—Audit Cornrriurncatiori Letter
Paqe 2 of 2
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY,
STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND
PARK AND RECREATION IMPROVEMENT DISTRICT#85
CITY OF RANCHO CUCAMONGA, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
YEAR ENDED JUNE 30, 2016
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY,
STREET LIGHTING DISTRICT#2 RESIDENTIAL,AND
PARK AND RECREATION IMPROVEMENT DISTRICT#85
CITY OF RANCHO CUCAMONGA, CALIFORNIA
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
YEAR ENDED JUNE 30, 2016
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY,
STREET LIGHTING DISTRICT#2 RESIDENTIAL, AND
PARK AND RECREATION IMPROVEMENT DISTRICT#85
YEAR ENDED JUNE 30, 2016
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS' REPORT............................................................................................... 1
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
INFUND BALANCES.................................................................................................................... 3
NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
INFUND BALANCES....................................................................................................................4
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INDEPENDENT AUDITORS' REPORT
To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
Report on the Statement of Revenues, Expenditures and Changes in Fund Balances
We have audited the accompanying statement of revenues, expenditures and changes in fund balances of
Landscape Maintenance District #1 General City, Street Lighting District #2 Residential and Park and
Recreation Improvement District#85 of the City of Rancho Cucamonga (collectively, the Districts), for the
year ended June 30, 2016, and the related notes to statement of revenues, expenditures and changes in
fund balances as listed in the table of contents.
Management's Responsibility for the Statement of Revenues, Expenditures and Changes in Fund
Balances
Management is responsible for the preparation and fair presentation of the statement of revenues,
expenditures and changes in fund balances 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 statement of revenues, expenditures and
changes in fund balances that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on the statement of revenues, expenditures and changes in fund
balances based on our audit. 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 State
Controller's Minimum Audit Requirements for California Special District. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the statement of revenues,
expenditures and changes in fund balances are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
statement of revenues, expenditures and changes in fund balances. The procedures selected depend on
the auditor's judgment, including the assessment of the risks of material misstatement of the statement of
revenues, expenditures and changes in fund balances, 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 statement of revenues, expenditures and changes in fund balances in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the statement
of revenues, expenditures and changes in fund balances.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
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To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
Opinions
In our opinion, the statement of revenues, expenditures and changes in fund balances referred to above
present fairly, in all material respects, the respective financial position of the revenues, expenditures and
changes in fund balances of Landscape Maintenance District #1 General City, Street Lighting District
#2 Residential and Park and Recreation Improvement District#85 of the City of Rancho Cucamonga for
the year ended June 30, 2016, in accordance with accounting principles generally accepted in the
United States of America.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November
29, 2016 on our consideration of the Districts' internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing,and not to provide an opinion on internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the Districts' internal control over financial reporting and
compliance.
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November 29, 2016
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY,STREET LIGHTING DISTRICT#2 RESIDENTIAL,
AND PARK AND RECREATION IMPROVEMENT DISTRICT#85
CITY OF RANCHO CUCAMONGA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE
YEAR ENDED JUNE 30,2016
Landscape Park and
Maintenance Street Lighting Recreation
District#1 District#2 Improvement
General City Residential District#85
Revenues:
Taxes $ 1,224,394 $ 364,778 $ 1,158,728
Charges for services 5,521 - 8,298
Use of money and property 39,940 937 137,430
Contributions from City - 350,170 -
Developer participation - 1,320 -
Miscellaneous 179 - 6,036
Total Revenues 1,270,034 717,205 1,310,492
Expenditures:
Current:
Community development:
Personnel services 26,685 - 469,211
Operating costs:
Operations and maintenance 50,392 - 35,973
Contract services 409,875 667 100,243
Tree maintenance 49,875 - 6,934
Utilities 278,742 666,986 236,622
Assessment administration 65,870 37,400 153,430
General overhead allocation 60,020 5,080 115,780
Total Expenditures 941,459 710,133 1,118,193
Excess(Deficiency)of Revenues
Over(Under) Expenditures 328,575 7,072 192,299
Net Change in Fund Balances 328,575 7,072 192,299
Fund Balance, Beginning of Year 620,153 191,571 1,018,852
Fund Balance, End of Year $ 948,728 $ 198,643 $ 1,211,151
See Notes to Financial Statements
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY,STREET LIGHTING DISTRICT#2
RESIDENTIAL,AND PARK AND RECREATION IMPROVEMENT DISTRICT#85
CITY OF RANCHO CUCAMONGA, CALIFORNIA
NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
JUNE 30,2016
Note 1: Description of the Reporting Entity
The City of Rancho Cucamonga was incorporated on November 30, 1977, under the laws of the
State of California and enjoys all the rights and privileges applicable to a General Law City. It is
governed by an elected five-member board.
The City of Rancho Cucamonga, California, has formed certain maintenance districts and
authorized the levy of assessments pursuant to the terms and provisions of the"Landscaping and
Lighting Act of 1972,"being Division 15, Part 2 of the Streets and Highways Code of the State of
California(commencing with Section 22500).The City levies annual assessments to finance the
costs and expenses necessary for maintenance and improvements in each District.
The City cannot levy and collect annual assessments within an assessment district without
complying with the procedures specified in the Landscaping and Lighting Act of 1972. On an
annual basis,an Engineer's Report must be prepared for each assessment district which contains
a full and detailed description of the improvements and the proposed assessments upon
assessable lots and parcels of land within the District.
The City Council must also adopt a resolution of intention which:
• Declares the intention of the City Council to levy and collect assessments within the
assessment district for the fiscal year stated therein.
• Generally describes the existing and proposed improvements and any substantial
changes proposed to be made in existing improvements.
• Refers to the assessment district by its distinctive designation and indicates the general
location of the district.
• Refers to the Engineer's Report for a full and detailed description of the improvements,
the boundaries of the assessment district and any zones therein, and the proposed
assessments upon assessable lots and parcels of land within the district.
• Gives notice of the time and place for public hearing by the City Council on the levy of the
proposed assessment.
• States whether the assessment is proposed to increase from the previous year.
The accompanying statement of revenues,expenditures and changes in fund balances contains
information relative only to the Landscape Maintenance District#1 General City, Street Lighting
District #2 Residential, and Park and Recreation Improvement District #85 of the City of
Rancho Cucamonga, which are an integral part of the City of Rancho Cucamonga.
Landscape Maintenance District No. 1 (LMD 1)was formed in 1979 and consists of
8,145 single family homes, 10,291 multi-family units,and 8.83 acres of vacant land,seven parks,
and trails. Landscape improvements provided in LMD 1 may include, but are not limited to: turf,
ground cover, shrubs and trees, sprinkler and irrigation systems, ornamental lighting, drainage
systems, masonry walls, entryway monuments, and associated appurtenances. These
improvements include all necessary services; operations; administration; and maintenance
required to keep the abovementioned improvements in healthy,vigorous,and satisfactory working
condition.
4
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY, STREET LIGHTING DISTRICT#2
RESIDENTIAL,AND PARK AND RECREATION IMPROVEMENT DISTRICT#85
CITY OF RANCHO CUCAMONGA,CALIFORNIA
NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
(CONTINUED)
JUNE 30, 2016
Note 1: Description of the Reporting Entity(Continued)
The assessment rates are as follows:
Fiscal year Fiscal year Percentage
2015-16 2016-17 Change
Single family home $ 92.21 $ 92.21 0.00%
Condominium unit 46.11 46.11 0.00%
Multi-family unit 46.11 46.11 0.00%
Commercial/industrial parcel per acre 184.42 184.42 0.00%
Street Lighting Maintenance District No.2(SLD 2)was formed in August 1983 and consists of
7,633 single family homes, 1,989 multi-family units,and 40.16 acres of non-residential land.The
SLD 2 assessments pay for energy and maintenance for streetlights within the public right-of-way
and dedicated easements within the boundaries of SLD 2.The assessment rates are as follows:
Fiscal year Fiscal year Percentage
2015-16 2016-17 Change
Single family home $ 39.97 $ 39.97 0.00%
Multi-family unit 39.97 39.97 0.00%
Commercial/industrial parcel per acre 79.94 79.94 0.00%
Park and Recreation Improvement District No. 85 (Red Hill and Heritage Park District)
(PD 85)was formed in April 1985. PD 85 is a combination Improvement and Maintenance District.
This special tax was issued to pay for bonds that were sold in 1985 and refinanced in 1993.The
bonds that were sold for the construction of the parks have been paid off as of 2005. However,all
parcels in PD 85 will continue to be assessed for the on-going maintenance of both parks. The
boundary of PD 85 is citywide except properties within the planned communities.The assessment
rates are as follows:
Fiscal year Fiscal year Percentage
2015-16 2016-17 Change
Single family home $ 31.00 $ 31.00 0.00%
Condominium unit 31.00 31.00 0.00%
Multi-family unit 31.00 31.00 0.00%
Commercial/industrial parcel
<1.50 acres 15.50/Lot 15.50/Lot 0.00%
1.51 -3.50 acres 46.50/Lot 46.50/Lot 0.00%
3.51 -7.00 acres 108.50/Lot 108.50/Lot 0.00%
7.01 - 14.00 acres 217.00/Lot 217.00/Lot 0.00%
14.01 -25.00 acres 434.00/Lot 434.00/Lot 0.00%
>25.01 acres 775.00/Lot 775.00/Lot 0.00%
LANDSCAPE MAINTENANCE DISTRICT#1 GENERAL CITY,STREET LIGHTING DISTRICT#2
RESIDENTIAL,AND PARK AND RECREATION IMPROVEMENT DISTRICT#85
CITY OF RANCHO CUCAMONGA,CALIFORNIA
NOTES TO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
(CONTINUED)
JUNE 30,2016
Note 2: Measurement Focus, Basis of Accounting and Financial Statement Presentation
The statement of revenues,expenditures and fund balances is reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues are
recognized as soon as they are both measurable and available. Revenues are considered to be
available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the government considers revenues to be
available if they are collected within 60 days of the end of the current fiscal period. Expenditures
are generally recorded when a liability is incurred, as under accrual accounting. However, debt
service expenditures,as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
Assessment Revenue
Assessment revenue is recognized on the modified accrual basis,that is, in the fiscal year for
which the assessments have been levied providing they become available.Available means
then due,or past due and receivable within the current period and collected within the current
period or expected to be collected soon enough thereafter to be used to pay liabilities of the
current period. The County of San Bernardino collects the assessments for the Landscape
Maintenance Districts.Assessment liens attach annually as of 12:01 A.M. on the first day in
January proceeding the fiscal year for which the assessments are levied.Assessments are
levied on real property as it exists on that date.The assessment levy covers the fiscal period
July 1 to June 30. One-half of the assessment is due November 1; the second half of the
assessment is due February 1. All assessments are delinquent if unpaid on December 10
and April 10, respectively.
Fund Type
The Landscape Maintenance District#1 General City and Street Lighting District#2 funds
included in this report are accounted for in the City's financial records as special revenue
funds.Special revenue funds account for and reportthe proceeds of specific revenue sources
that are restricted or committed to expenditures for specified purposes. Special revenue
funds are designed to help determine and demonstrate resources that must be used for a
specified purpose are, in fact, used for that purpose. The Park and Recreation Improvement
District#85 fund included in this report is accounted for in the City's financial records as an
agency fund. Agency funds are used to account for assets held by the City as trustee of
agent for individuals, private organizations,or other governmental unites,and/or other funds.
6
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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
To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, 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 statement of revenues, expenditures and
changes in fund balances of Landscape Maintenance District#1 General City, Street Lighting District#2
Residential, and Park and Recreation Improvement District #85 of the City of Rancho Cucamonga,
California, (collectively, the Districts) as of and for the year ended June 30, 2016, and the related notes to
statement of revenues, expenditures and changes in fund balances, and have issued our report thereon
dated November 29, 2016
Internal Control over Financial Reporting
In planning and performing our audit of the statement of revenues, expenditures and changes in fund
balances,we considered the Districts' internal control over financial reporting(internal control)to determine
the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion
on the statement of revenues, expenditures and changes in fund balances, but not for the purpose of
expressing an opinion on the effectiveness of the Districts' internal control. Accordingly,we do not express
an opinion on the effectiveness of the Districts' internal control.
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 Districts'
statement of revenues, expenditures and changes in fund balances will not be prevented, or detected and
corrected on a timely basis. 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.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Districts'statement of revenues,expenditures
and changes in fund balances 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.
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To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
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 Districts' internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the Districts' internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
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Brea, California
November 29, 2016
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CPAs AND ADVISOW,,'
November 29, 2016
To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
We have audited the statement of revenues, expenditures and changes in fund balances of the
Landscape Maintenance District #1 General City, Street Lighting District #2 Residential, and Park and
Recreation Improvement District#85 (collectively, the Districts) of the City of Rancho Cucamonga for the
year ended June 30, 2016. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards and Government Auditing Standards, as
well as certain information related to the planned scope and timing of our audit. We have communicated
such information in our letter to the City Council of Rancho Cucamonga dated May 11, 2016. Professional
standards also require that we communicate the following information related to our audit.
Significant Audit Findinas
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Districts are described in the notes to the financial statements. No new
accounting policies that impacted the statement of revenues, expenditures and changes in fund balances
of the Districts were adopted, and the application of existing policies was not changed during fiscal year
2015/16.
We noted no transactions entered into by the Districts during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements in the proper period.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management. No
misstatements were found.
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To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
Disagreements with Management
For purposes of this letter,a disagreement with management is a financial accounting, reporting, or auditing
matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or
the auditor's report. We are pleased to report that no such disagreements arose during the course of our
audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated November 29, 2016.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application
of an accounting principle to the Districts'statement of revenues,expenditures and changes in fund balance
or a determination of the type of auditor's opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the consultant
has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the Districts' auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
Other Matters
We applied certain audit procedures related to the audit. These procedures include, but are not limited to,
the following:
Proposed Segmentation of the Engagement
We utilize a governmental audit program which we will tailor to the Districts' operations. The
tailoring is necessary to accommodate specific client circumstances and to recognize differences
in organizational structure. Our audit programs are organized by financial statement category.This
approach takes full advantage of our accumulated experience. The primary benefit is that the risk
of omitting important procedures is substantially reduced. We believe that this approach tends to
be the most effective and efficient for an entity such as the Districts. The audit procedures are
listed in the most logical sequence which improves efficiency.The savings in effort and time gained
by using our audit program can free an auditor's attention for unusual or difficult situations that may
arise. The audit programs are designed to increase audit efficiency by linking financial statement
assertions, audit objectives, and procedures that are basic to most governmental audit
engagements.
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To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
Sample Size and Extent of Statistical Sampling
Our approach may be to utilize statistical sampling in the areas of receipts, disbursements, utility
billing and payroll. Here we develop a statistical conclusion based upon an initial computer selected
random sample which is based on the population and other risk factors identified. If errors are
noted in the sample, the sample size will be expanded.We believe that a random selection can be
efficient, while providing each item in the population an equal chance of being selected.
Additionally, we may select a stratified sample of all transactions over a specified dollar limit for
review. This allows us to cover all high dollar value transactions not otherwise selected in the
random sample. Our samples are selected randomly utilizing IDEA data analysis software.
Extent of EDP Software
Our traditional approach is to "audit around"the computer, which means that we verify output by
agreeing it, through our audit tests, with corresponding source input transactions. We do not
choose to use audit software that runs through the Districts'computer system,such as a test deck.
Like other aspects of the internal control structure, computer controls are documented in our
memoranda and questionnaires. We will consider whether specialized skills are needed to
consider the effect of computer processing on the audit,to understand the internal control structure
policies and procedures or to design and perform audit procedures.The decision to use a computer
specialist in audit planning is a matter of our professional judgment.We will consider the complexity
of the computer system and assess whether we can identify the types of misstatements that might
occur. LSL's IT Specialist will be involved in the planning and performance of the audit and also in
assessing the IT controls of the District.
Analytical Procedures
We use analytical procedures as an overall review of the financial information in the preliminary
and final stages of the audit. These procedures are designed to assist us in planning our audit and
in assessing the propriety of the conclusions reached and in the evaluation of the overall financial
statement presentation. The procedures to be utilized consist of determining expectations for
percentage increases and decreases between significant revenue, expenditure and balance sheet
accounts, reading the financial statements and related notes,and we focus on overall relationships
within the financial statements. Once determined, these are reviewed to determine if the changes
appear reasonable or require further analysis. For all significant differences, explanations are
obtained as to why the situation occurred and additional substantive procedures may be applied
and related evidence gathered to resolve concerns and questions.
Approach to Understanding District's Internal Control Structure
To gain an understanding of the Districts' internal control structure, we will perform procedures as
required by the new Auditing Standards, primarily SAS 104-111. This will include documenting the
major transaction classes, purpose of funds, the structure of the District and to quantify materiality.
We will review and make recommendations on the internal control structure, which consists of
Control Environment,Accounting System and Control Procedures. We will review internal controls
in the area of cash; investments; revenues and receivables; expenditures and accounts payable;
payroll; inventories; property and equipment, debt and debt service; insurance and claims. Based
on the result of our review, we will issue a formal internal control report(SAS 115 Letter)that will
identify any significant deficiencies and or material weaknesses which we identify. This report is
required by the Government Auditing Standards issued by the Comptroller General of the United
States. In addition, we will also issue a separate communication letter directly to the governing
board.
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To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
This letter would communicate any significant deficiencies or material weaknesses we identify in
the internal control system and other matters that we feel should be communicated to the governing
board. All internal control issues will initially also be discussed with management of the District.
Approach to Determining Laws and Regulations Subject to Audit
The Laws and Regulations that will be subject to audit test work are determined from the applicable
laws, regulations, contracts, and grant agreements which we identify through the understanding
we obtain of the Districts and our extensive experience with governmental entities.
Approach to be Taken in Drawing Audit Samples
For the purpose of tests of controls and tests of compliances with laws and regulations, we use
audit sampling. Tests of controls are procedures directed towards determining the effectiveness of
the design or operation of an internal structure policy or procedures. Normally, audit sampling is
used for tests of controls that involve inspection of documents and reports indicating performance
of the policy or procedures and, in many cases, re-performance of the application of the policy or
procedures. These sampling procedures test the operating effectiveness of an internal control
structure policy or procedures by determining how the policy or procedure was applied, the
consistency with which it was applied during the audit period, and by whom it was applied. To
achieve this goal,we draw samples in the area of disbursements, receipts, utility billing and payroll.
Each document selected will be tested for various attributes that are designed to verify compliance
with different aspects of internal controls. Additionally, each sample item will be tested for coding
to the proper accounts and posting to the general ledger.
The following new Governmental Accounting Standards Board (GASB) pronouncements were effective for
the fiscal year 2015/16 audit:
GASB Statement No. 72, Fair Value Measurement and Application.
GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and
Local Governments.
GASB Statement No. 79, Certain External Investment Pools and Pool Participants.
The following GASB pronouncements are effective in the following fiscal year audit and should be reviewed
for proper implementation by management:
Fiscal year 2016/17:
GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets
That Are Not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions
of GASB Statement Nos. 67 and 68.
GASB Statement No. 74, Financial Reporting for Postemp/oyment Benefit Plans Other Than
Pension Plans.
GASB Statement No. 77, Tax Abatement Disclosures.
GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit
Pension Plans.
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To the West-Side Districts Citizens' Oversight Committee
City of Rancho Cucamonga, California
GASB Statement No. 80, Blending Requirements for Certain Component Units-an amendment of
GASB Statement No. 14.
GASB Statement No. 82, Pension Issues—an amendment of GASB Statement Nos. 67, No. 68,
and No. 73.
Fiscal year 2017/18:
GASB Statement No. 75, Accounting and Financial Reporting for Postemp/oyment Benefits Other
Than Pensions.
GASB Statement No. 81, Irrevocable Split Interest Agreements.
Restriction on Use
This information is intended solely for the use of the West-Side Districts Citizens'Oversight Committee and
management of the Districts and is not intended to be, and should not be, used by anyone other than these
specified parties.
Very truly yours,
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Brea, California