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CITY OF GLENDALEAudit ReportSPECIAL GAS TAX STREET IMPROVEMENT FUNDJuly 1, 2004, through June 30, 2011TRAFFIC CONGESTION RELIEF FUND ALLOCATIONSJuly 1, 2004, through June 30, 2011JOHN CHIANGCalifornia State ControllerMay 2012
JOHN CHIANGCalifornia State ControllerMay 18, 2012The Honorable Laura FriedmanMayor of the City of Glendale141 N. Glendale Avenue, Room 346Glendale, CA 91206Dear Mayor Friedman:The State Controller’s Office audited the City of Glendale’s Special Gas Tax StreetImprovement Fund—highway users tax—for the period of July 1, 2004, through June 30, 2011.We also audited the Traffic Congestion Relief Fund allocations recorded in the Special Gas TaxStreet Improvement Fund for the period of July 1, 2004, through June 30, 2011.Our audit disclosed that the city accounted for and expended its Special Gas Tax StreetImprovement Fund in compliance with requirements, and that no adjustment to the fund isrequired.If you have any questions, please contact Steven Mar, Chief, Local Government Audits Bureau,at (916) 324-7226.Sincerely,Original signed byJEFFREY V. BROWNFIELDChief, Division of AuditsJVB/vbcc: Scott Ochoa, City ManagerCity of GlendaleRobert Elliot, Director of FinanceCity of Glendale
City of GlendaleSpecial Gas Tax Street Improvement Fund and Traffic Congestion Relief Fund AllocationsContentsAudit ReportSummary .1Background .1Objective, Scope, and Methodology .1Conclusion .2Follow-Up on Prior Audit Findings .2Views of Responsible Officials .2Restricted Use .3Schedule 1—Reconciliation of Fund Balance .4
City of GlendaleSpecial Gas Tax Street Improvement Fund and Traffic Congestion Relief Fund AllocationsAudit ReportSummaryThe State Controller’s Office audited the City of Glendale’s Special GasTax Street Improvement Fund—highway users tax—for the period ofJuly 1, 2004, through June 30, 2011. We also audited the TrafficCongestion Relief Fund (TCRF) allocations recorded in the Special GasTax Street Improvement Fund for the period of July 1, 2004, throughJune 30, 2011.Our audit disclosed that the city accounted for and expended its SpecialGas Tax Street Improvement Fund in compliance with requirements, andthat no adjustment to the fund is required.BackgroundThe State apportions funds monthly from the highway users tax accountin the transportation tax fund to cities and counties for the construction,maintenance, and operation of local streets and roads. The highway userstaxes derive from state taxes on the sale of motor vehicle fuels. Inaccordance with Article XIX of the California Constitution and Streetsand Highways Code section 2101, a city must deposit all apportionmentsof highway users taxes in its Special Gas Tax Street Improvement Fund.A city must expend gas tax funds only for street-related purposes. Weconducted our audit of the city’s Special Gas Tax Street ImprovementFund under the authority of Government Code section 12410.Government Code section 14556.5 created a Traffic Congestion ReliefFund in the State Treasury for allocating funds quarterly to cities andcounties for street or road maintenance, reconstruction, and stormdamage repair. Cities must deposit funds received into the city accountdesignated for the receipt of state funds allocated for transportationpurposes. The city recorded its TCRF allocations in the Special Gas TaxStreet Improvement Fund. We conducted our audit of the city’s TCRFallocations under the authority of Revenue and Taxation Codesection 7104.Objective, Scope,and MethodologyOur audit objective was to determine whether the city accounted for andexpended the Special Gas Tax Street Improvement Fund in compliancewith Article XIX of the California Constitution, the Streets andHighways Code, and Revenue and Taxation Code section 7104. To meetthe audit objective, we determined whether the city: Properly deposited highway users tax apportionments and otherappropriate revenues in the Special Gas Tax Street ImprovementFund; Expended funds exclusively for authorized street-related purposes;and Made available unexpended funds for future expenditures.-1-
City of GlendaleSpecial Gas Tax Street Improvement Fund and Traffic Congestion Relief Fund AllocationsWe conducted this performance audit in accordance with generallyaccepted government auditing standards. Those standards require that weplan and perform the audit to obtain sufficient, appropriate evidence toprovide a reasonable basis for our findings and conclusions based on ouraudit objectives. We believe that the evidence obtained provides areasonable basis for our findings and conclusions based on our auditobjectives.We did not audit the city’s financial statements. We limited our auditscope to planning and performing the audit procedures necessary toobtain reasonable assurance that the city accounted for and expended theSpecial Gas Tax Street Improvement Fund in accordance with therequirements of the Streets and Highways Code and Revenue andTaxation Code section 7104. Accordingly, we examined transactions, ona test basis, to determine whether the city expended funds for streetpurposes. We considered the city’s internal controls only to the extentnecessary to plan the audit.ConclusionOur audit disclosed that the City of Glendale accounted for and expendedits Special Gas Tax Street Improvement Fund—highway users tax andTCRF allocations—in compliance with Article XIX of the CaliforniaConstitution and the Streets and Highways Code for the period of July 1,2004, through June 30, 2011.Our audit also disclosed that the city accounted for and expended itsTCRF allocations recorded in the Special Gas Tax Street ImprovementFund in compliance with Article XIX of the California Constitution, theStreets and Highways Code, and Revenue and Taxation Code section7104 for the period of July 1, 2004, through June 30, 2011.Follow-Up on PriorAudit FindingsOur prior audit report, issued on December 30, 2005, disclosed nofindings.Views ofResponsibleOfficialWe discussed the audit results with city representatives during an exitconference on February 16, 2012. Artak Khachatryan, AccountingSupervisor, agreed with the audit results. Mr. Khachatryan further agreedthat a draft audit report was not necessary and that the audit report couldbe issued as final.-2-
City of GlendaleRestricted UseSpecial Gas Tax Street Improvement Fund and Traffic Congestion Relief Fund AllocationsThis report is intended for the information and use of the City ofGlendale’s management and the SCO; it is not intended to be and shouldnot be used by anyone other than these specified parties. This restrictionis not intended to limit distribution of this report, which is a matter ofpublic record.Original signed byJEFFREY V. BROWNFIELDChief, Division of AuditsMay 18, 2012-3-
City of GlendaleSpecial Gas Tax Street Improvement Fund and Traffic Congestion Relief Fund AllocationsSchedule 1—Reconciliation of Fund BalanceJuly 1, 2010, through June 30, 2011Special Gas Tax Street Improvement FundHighwayUsers TaxTCRF1AllocationAllocation 2TotalsBeginning fund balance per city 14,750,037 491,218 15,241,2558,484,290—8,484,290Total funds ,798,374)(491,218)(9,289,592)Ending fund balance per city14,435,953—14,435,953———— 14,435,953RevenuesTotal SCO adjustmentEnding fund balance per audit 14,435,953 1The city receives apportionments from the state highway users tax account, pursuant to Streets and HighwaysCode sections 2105, 2106, 2107, and 2107.5. The basis of the apportionments for sections 2105, 2106, and 2107varies, but the money may be used for any street purpose. Streets and Highways Code section 2107.5 restrictsapportionments to administration and engineering expenditures, except for cities with populations of fewer than10,000 inhabitants. Those cities may use the funds for rights-of-way and for the construction of street systems.The audit period was July 1, 2004, through June 30, 2011; however, this schedule includes only the period ofJuly 1, 2010, through June 30, 2011.2Government Code section 14556.5 created a Traffic Congestion Relief Fund (TCRF) in the State Treasury forallocating funds quarterly to cities and counties for street and road maintenance, reconstruction, and storm damagerepair. The TCRF allocations were recorded in the Special Gas Tax Street Improvement Fund. The audit periodwas July 1, 2004, through June 30, 2011.-4-
State Controller’s OfficeDivision of AuditsPost Office Box 942850Sacramento, CA 94250-5874http://www.sco.ca.govC12-GTA-008
City of Glendale Special Gas Tax Street Improvement Fund and Traffic Congestion Relief Fund Allocations -1-Audit Report The State Controller's Office audited the City of Glendale's Special Gas Tax Street Improvement Fund—highway users tax—for the period of July 1, 2004, through June 30, 2011. We also audited the Traffic
