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104-Pedestrian/Bicycle Facilities (TDA) Grant audit.pdf CITY OF CUPERTINO, CALIFORNIA Pedestrian/Bicycle Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III Independent Auditor’s Reports, Financial Statements and Supplementary Information For the Year Ended June 30, 2010 CITY OF CUPERTINO, CALIFORIA Pedestrian/Bicycle Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III For the Year Ended June 30, 2010 Table of Contents Page Financial Section Independent Auditor’s Report .................................................................................................................. 1 - 2 Balance Sheet ................................................................................................................................................ 3 Statement of Revenues, Expenditures, and Changes in Fund Balance ......................................................... 4 Notes to Financial Statements ....................................................................................................................... 5 Supplementary Information Schedule of Construction Projects with Capital Outlay Expenditures .......................................................... 6 Internal Control and Compliance Section Independent Auditor’s 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 and the Transportation Development Act.......................................... 7 - 8 City Council City of Cupertino, California Independent Auditor’s Report We have audited the accompanying balance sheet of the Pedestrian/Bicycle Facilities Grant (Grant) made to the City of Cupertino, California (the City), by the Metropolitan Transportation Commission, Transportation Development Act Funds, Article III as of June 30, 2010, and the related statement of revenues, expenditures, and changes in fund balance for the year then ended. These financial statements are the responsibility of the City’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our 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 we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over the Grant’s financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1, the financial statements present only the activities of the Grant and do not purport to, and do not, present fairly the financial position of the City as of June 30, 2010, and changes in its financial position for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Grant made to the City by the Metropolitan Transportation Commission, Transportation Development Act Funds, Article III as of June 30, 2010, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 17, 2010 on our consideration of the City’s internal control over the Grant’s 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 the Grant’s financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over the Grant’s financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Our audit was conducted for the purpose of forming an opinion on the Grant’s basic financial statements. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the Metropolitan Transportation Commission, the City Council and City management and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Walnut Creek, California November 17, 2010 CITY OF CUPERTINO, CALIFORNIA Pedestrian/Bicycle Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III Balance Sheet June 30, 2010 Assets Due from Metropolitan Transportation Commission147,022$ Liabilities and Fund Balance Liabilities Due to the City of Cupertino147,022$ Fund balance- Total liabilities and fund balance147,022$ See accompanying notes to the financial statements. CITY OF CUPERTINO, CALIFORNIA Pedestrian/Bicycle Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III Statement of Revenues, Expenditures, and Changes in Fund Balance For the Year Ended June 30, 2010 Revenues Grant$147,022 Expenditures Capital outlay147,022 Excess of revenues over expenditures- Fund balance - beginning- Fund balance - ending-$ See accompanying notes to the financial statements. CITY OF CUPERTINO, CALIFORIA Pedestrian/Bicycle Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III Notes to Financial Statements For the Year Ended June 30, 2010 NOTE 1 – DESCRIPTION OF REPORTING ENTITY The accompanying financial statements are prepared from the accounts and financial transactions of the City of Cupertino (City) for Pedestrian/Bicycle Facilities Grant projects funded under the Transportation Development Act of 1971 (TDA) Article III of the State of California, which include the construction of pedestrian and bicycle paths. The financial statements do not purport to present the financial position or changes in financial position of the City. The projects represent a portion of the activities of the City and, as such, are included in the City’s basic financial statements. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)Basis of Presentation The projects are accounted for as part of the Mary Avenue Bicycle Footbridge Capital Project Fund of the City, which is a governmental fund and is included in the City’s basic financial statements. (b)Basis of Accounting The accompanying financial statements have been prepared on the modified accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are recorded when the related governmental fund liabilities are incurred. Grant revenues, which are received as reimbursement for specific purposes or projects, are recognized when they become measurable and available (received within 60 days after year-end.) (c)Due to the City of Cupertino Cash has been advanced to the Pedestrian/Bicycle Facilities Grant projects for expenditures paid by the City’s capital projects fund for the benefit of the TDA Article III projects. The projects are obligated to immediately repay these advances upon reimbursement. (d)Use of Estimates The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. NOTE 3 – SECTION 99301 – INTEREST EARNED ON ALLOCATED FUNDS The City incurred and paid expenditures prior to the receipt of grant reimbursements; as a result, no interest was earned on grant funds. CITY OF CUPERTINO, CALIFORNIA Pedestrian/Bicycle Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III Schedule of Construction Projects with Capital Outlay Expenditures For the Year Ended June 30, 2010 Current Year ProjectCapital Outlay Status of Title of ProjectNumber Total Awards ExpendituresProject TDA 07-08 Mary Avenue Bicycle Footbridge08001076$ 31,982$ Completed31,982 TDA 08-09 Mary Avenue Bike and Pedestrian Footbridge09001059 115,040 115,040Completed $ 147,022$ 147,022 City Council City of Cupertino, California Independent Auditor’s 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 and the Transportation Development Act We have audited the accompanying balance sheet of the Pedestrian/Bicycle Facilities Grant (Grant) made to the City of Cupertino, California (the City), by the Metropolitan Transportation Commission, Transportation Development Act Funds, Article III as of June 30, 2010, and the related statement of revenues, expenditures, and changes in fund balance of the year then ended, and have issued our report thereon dated November 17, 2010. We conducted our 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City’s internal control over the Grant’s financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over the Grant’s financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over the Grant’s financial reporting. Adeficiency 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 misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the Grant’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Grant’s financial statements are free of material misstatement, we performed tests of the City’s compliance with certain provisions of laws, regulations, contracts, and grant agreements, including the applicable statutes, rules and regulations of the Transportation Development Act, including Section 6666 of Title 21, of the California Code of Regulations, and the allocation instructions and resolutions of the Metropolitan Transportation Commission, 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 or the Transportation Development Act. This report is intended solely for the information and use of the Metropolitan Transportation Commission, the City Council, City management and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Walnut Creek, California November 17, 2010