4105 - 911 Emer Communication System Finan and Compli Audit.Final

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OFFICE OF THE CONTROLLER CITY OF PHILADELPHIA PENNSYLVANIA 911 EMERGENCY COMMUNICATION SYSTEM FINANCIAL AND COMPLIANCE AUDIT FISCAL 1997, 1998 and 1999 Jonathan A. Saidel City Controller November 29, 2001 Andres Perez, Commissioner Department of Public Property 1030 Municipal Services Building 1401 John F. Kennedy Boulevard Philadelphia, PA 19102 As you requested, the City Controller's Office performed an audit of the City of Philadelphia's 911 funds for the triennial period July 1, 1996 to June 30, 1999. We performed the audit pursuant to the Commonwealth of Pennsylvania's Public Safety Emergency Telephone Act, as amended. Attached is our audit report on the use of 911 Contribution Rate Revenues by the City of Philadelphia. We discussed our findings and recommendations with your staff, including the 911 coordinator, during the course of our audit and have included your written response to our comments as part of our report. We believe that our recommendations, if implemented by management, would improve internal control and ensure continued compliance with the 911 Act. We would like to express our thanks to your department for the courtesy and cooperation displayed to us during the conduct of this audit. Respectfully submitted, JONATHAN A. SAIDEL City Controller cc: Honorable John F. Street, Mayor Honorable Anna C. Verna, President, and Honorable Members of City Council ...
Published : Friday, September 23, 2011
Reading/s : 12
Number of pages: 20
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OFFICE OF THE CONTROLLER   CITY OF PHILADELPHIA PENNSYLVANIA    
 
 911 EMERGENCY COMMUNICATION SYSTEM  FINANCIAL AND COMPLIANCE AUDIT  FISCAL 1997, 1998 and 1999  
 Jonathan A. Saidel City Controller  
 November 29, 2001
  Andres Perez, Commissioner Department of Public Property 1030 Municipal Services Building 1401 John F. Kennedy Boulevard Philadelphia, PA 19102   As you requested, the City Controller's Office performed an audit of the City of Philadelphia's 911 funds for the triennial period July 1, 1996 to June 30, 1999. We performed the audit pursuant to the Commonwealth of Pennsylvania's Public Safety Emergency Telephone Act, as amended. Attached is our audit report on the use of 911 Contribution Rate Revenues by the City of Philadelphia.   We discussed our findings and recommendations with your staff, including the 911 coordinator, during the course of our audit and have included your written response to our comments as part of our report. We believe that our recommendations, if implemented by management, would improve internal control and ensure continued compliance with the 911 Act.   We would like to express our thanks to your department for the courtesy and cooperation displayed to us during the conduct of this audit.          cc: Honorable John F. Street, Mayor  Honorable Anna C. Verna, President,  and Honorable Members of City Council  Ms. Janice D. Davis, Director of Finance  
Respectfully submitted,
JONATHAN A. SAIDEL City Controller
 
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CONTENTS
  Page  CITY OF PHILADELPHIA 911 FUNDS — PUBLIC SAFETY EMERGENCY TELEPHONE ACT (ACT 78 OF 1990, P.L. 340, NO. 78 AS AMENDED)   Independent Auditor’s Report ....................................................................................................... 1   Statement of Revenues and Expenditures for the period July 1, 1996 through June 30, 1999................................................................................................................. 3   Notes to Financial Statement ......................................................................................................... 4   REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE CITY OF PHILADELPHIA 911 FUNDS STATEMENT OF REVENUES AND EXPENDITURES PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ................................................... 8   Findings And Recommendations   Matters of Noncompliance .................................................................................................... 10  Matters of Internal Control .................................................................................................... 10  Status of Prior Audit Findings ............................................................................................... 12  Other Matters Requiring Management’s Attention ............................................................... 14   AGENCY RESPONSE   Andres Perez, Commissioner, Department of Public Property ................................................... 15    
 
 
INDEPENDENT AUDITOR’S REPORT
 
  Commissioner Philadelphia Department of Public Property Philadelphia, PA 19102   We have audited the special-purpose statement of 911 revenues and expenditures of the City of Philadelphia, Pennsylvania for the period July 1, 1996 through June 30, 1999. This financial statement is the responsibility of the City of Philadelphia management. Our responsibility is to express an opinion on this financial statement 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 statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes 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.   The accompanying special-purpose financial statement was prepared for the purpose of complying with the financial provisions of the Commonwealth of Pennsylvania’s “Public Safety Emergency Telephone Act” Act 78 of 1990, P.L. 340, No.78 As Amended and, as explained in Note 1 to the financial statement, it is not intended to be a complete presentation of the revenues and expenditures of the City of Philadelphia’s 911 Emergency Communication System for the period July 1, 1996 through June 30, 1999.   In our opinion, the special-purpose financial statement referred to above presents fairly, in all material respects, the revenues and expenditures of the City of Philadelphia’s 911 Emergency Communication System funded with contributions assessed against telephone subscribers for the period July 1, 1996 through June 30, 1999, on the basis of accounting described in Note 1.    
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C I T Y O F P H I L A D E L P H I A  O F F I C E O F T H E C O N T R O L L E R
 In accordance with Government Auditing Standards , we have also issued our report dated August 31, 2001 on our consideration of the City of Philadelphia’s internal control over financial reporting for 911 funds and on our tests of its compliance with the financial provisions of the Commonwealth of Pennsylvania’s “Public Safety Emergency Telephone Act” Act 78 of 1990, P.L. 340, No. 78 As Amended.   That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.   This report is intended solely for the information and use of the Philadelphia Department of Public Property and the Pennsylvania Emergency Management Agency and is not intended to be and should not be used by anyone other than these specified parties.       August 31, 2001   
ALBERT F. SCAPEROTTO Deputy City Controller
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CITY OF PHILADELPHIA 911 FUNDS PUBLIC SAFETY EMERGENCY TELEPHONE ACT (ACT 78 OF 1990, P.L. 340, NO. 78 AS AMENDED) STATEMENT OF REVENUES AND EXPENDITURES  FOR THE PERIOD JULY 1, 1996 THROUGH JUNE 30, 1999
      1997 1998 1999 Total                 Revenue:                Telephone fees (net of collection charges) $ 11,212,219 $ 11,279,639 $ 11,455,642 $ 33,947,500 Interest  929,983 1,254,421 1,387,767 3,572,171         Total revenues 12,142,202 12,534,060 12,843,409 37,519,671         Expenditures:                Staff salaries 6,726,993 6,765,628 6,878,458 20,371,079 Capital outlay 899,397 1,505,847 2,245,160 4,650,404         Total expenditures 7,626,390 8,271,475 9,123,618 25,021,483         Excess revenues over expenditures $ 4,515,812 $ 4,262,585 $ 3,719,791 12,498,188         Unexpended balance, July 1, 1996  15,274,762         Unexpended balance, June 30, 1999  $ 27,772,950                    The accompanying notes to the Statement of Revenues and Expenditures are an integral part of this report   
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CITY OF PHILADELPHIA 911 FUNDS PUBLIC SAFETY EMERGENCY TELEPHONE ACT (Act 78 of 1990, P.L. 340, No. 78 As Amended) NOTES TO FINANCIAL STATEMENT  FOR THE PERIOD JULY 1, 1996 THROUGH JUNE 30, 1999    1.  Summary of Significant Accounting Policies  The statement of revenues and expenditures for the City of Philadelphia 911 funds has been prepared for the purpose of complying with Chapter 120b of the Commonwealth of Pennsylvania's "Public Safety Emergency Telephone Act" of 1990, as amended (the Act). This statement is not intended to be a complete presentation of the assets and liabilities associated with the city's 911 Emergency Communication System, or the total expenditures incurred by the city in operating the system. The accounting policies used by the city in preparing this statement are described below.   A.  Public Safety Emergency Telephone Act  The Act provides for a statewide telephone number 911 system. Under the Act, the General Assembly of Pennsylvania declared it to be in the public interest for each county within the Commonwealth to provide a toll-free 911 number to permit or to enable any individual to gain rapid, direct access to emergency aid. The purpose of the system is to effect a more rapid response capability to emergency situations.  B.  Funding  The Act establishes a method for funding a 911 Emergency Communication System by allowing counties (including those that had a 911 system in place prior to the Act) 1  to require a fee (contribution rate) assessed against telephone subscribers for recurring and nonrecurring costs of the system. To begin assessing contributions, counties must submit a Surcharge Plan to the Commonwealth for approval. The City of Philadelphia submitted its Surcharge Plan to the Commonwealth in August 1992. The Commonwealth subsequently approved this plan, which outlined the 911 system and established a monthly $1.00 customer contribution rate for telephone subscribers within Philadelphia. Effective December 1992, the city was required to comply with the provisions set forth in the Act. Provisions of the Act require triennial audits of the city’s collection and disbursement of contribution-rate funds and expenditures for non-recurring and recurring costs incurred in the establishment, upgrade, expansion, and operation of the 911 emergency communication system.                                                            1  The City of Philadelphia first implemented its 911 system in March of 1974.   4
 
 
  
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CITY OF PHILADELPHIA 911 FUNDS PUBLIC SAFETY EMERGENCY TELEPHONE ACT (Act 78 of 1990, P.L. 340, No. 78 As Amended) NOTES TO FINANCIAL STATEMENT  FOR THE PERIOD JULY 1, 1996 THROUGH JUNE 30, 1999   911 System The city's primary Public Safety Answering Point (PSAP), located in Police Headquarters at 8 th and Race Streets, receives all 911 calls and provides radio dispatch services for all 22 Police Districts in the city. Fire and emergency medical service calls are initially received in the primary PSAP, but are immediately transferred for call handling and dispatch to the city's secondary PSAP in the Fire Administration Building, located at 3 rd and Spring Garden Streets.  With the approval of the city's surcharge plan by the Commonwealth in 1992, the Department of Public Property's director of communications became the city's 911 coordinator. He and his staff work closely with individuals in the city's Police and Fire Departments who are responsible for management of the day-to-day on site operations. Basis of Accounting The accompanying statement of revenues and expenditures has been prepared using the modified accrual basis of accounting, under which revenues are recognized in the accounting period in which they become both measurable and available. "Measurable" means the amount of the transaction can be determined. "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded in the accounting period in which the liability is incurred, if measurable. Interest Earned To comply with the Act, on August 22, 1996, the City of Philadelphia established a separate mutual fund where 911 telephone fees are deposited to earn interest until expended. Interest rates vary daily and are applied to the closing position of money held in the fund each day. The city earned interest income of $1.3 million from the start of this separate fund through June 30, 1999.  Prior to opening the separate fund, the city deposited 911 telephone fees into its consolidated cash bank account, which is under the custody of the City Treasurer. Interest was computed using the interest rate in effect for the consolidated bank account and compounded monthly on the balance of unexpended 911 funds. Interest of $4,100 was earned on 911 funds deposited into the city’s consolidated bank account for the period July 5  
 
 
 
CITY OF PHILADELPHIA 911 FUNDS PUBLIC SAFETY EMERGENCY TELEPHONE ACT (Act 78 of 1990, P.L. 340, No. 78 As Amended) NOTES TO FINANCIAL STATEMENT  FOR THE PERIOD JULY 1, 1996 THROUGH JUNE 30, 1999   1, 1996 to August 21, 1996 and was subsequently transferred to the separate 911 mutual fund account. Additionally, from December 1, 1992 through June 30, 1996 the city had set aside $14.9 million, representing 40% of the net amount received from the major telephone service provider. This “set aside”amount, designated for the design and implementation of a new 800 MHz trunked municipal radio system, had been transferred to the city’s capital improvement fund, where it has been restricted to 911 system uses. Interest earned on the unexpended portion of this “set aside” amount iscalculated again using the interest rate in effect for the city’s consolidated bank account and compounded monthly on the accumulated sum. During the period July 1, 1996 through June 30, 1999, interest totaling $2.3 million was earned on the unexpended balance of the “set aside” amount remaining in the capital improvement fund. This interest has been transferred annually to the separate 911 mutual fund account. F.  Capital Outlay for Nonrecurring Costs  Capital outlay expenditures include nonrecurring costs, which under the Act the city is required to amortize over a minimum of three years. Costs incurred by the city along with related amortization amounts for fiscal years 1997, 1998, and 1999 are presented below. The amortized cost amounts shown have been computed using a straight-line method over asset lives that range from 3 to 40 years.  (Amounts in thousands)   Capital Outlay for Nonrecurring Costs  Amortization Year of Billing Network Expenditure System Changes Equipment Other Total 1997 1998 1999           Prior years $ 511 $ 10 $ 137 $ - $ 658 $ 148 $ 90 $ 2 1997 - 899 - - 899 50 110 180 1998 - 371 983 $ 152 1,506 - 86 187 1999 - 467 1,778 - 2,245 - - 361           Totals $ 511 $ 1,747 $ 2,898 $ 152 $ 5,308 $ 198 $ 286 $ 730            Accumulated amortization at July 1, 1997  Accumulated amortization at June 30, 1999
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 Total  $ 240 340 273 361  1,214  413 $ 1,627
 
CITY OF PHILADELPHIA 911 FUNDS PUBLIC SAFETY EMERGENCY TELEPHONE ACT (Act 78 of 1990, P.L. 340, No. 78 As Amended) NOTES TO FINANCIAL STATEMENT  FOR THE PERIOD JULY 1, 1996 THROUGH JUNE 30, 1999   2. Limitation on Recovery of Certain Recurring Costs  Section 120b.106. of 4 Pa. Code Chapter 120b provides for the 911 contribution rate to be used for specified recurring and non-recurring costs associated with implementing, expanding, upgrading and operating a 911 emergency communications system. The Code limits recovery of certain recurring costs as follows:  Section 120b.106. (2)(ii) – Telephone company administrative costs for billing and collection of the contribution rate are limited to a maximum of 2% of the contribution rate monies collected. During the triennial period July 1, 1996 through June 30, 1999, such costs were as follows:  June 30 Percent of contribution year ended Amount rate monies collected     1997 $ 170,557 1.5 1998 171,547 1.5 1999 178,065 1.5 Total $ 520,169 1.5  Section 120b.106. (2)(iii) – County costs for the administration of the contribution rate is limited to a maximum of 1% of the gross receipts collected. During the triennial period July 1, 1996 through June 30, 1999, the City of Philadelphia did not charge such costs to the program.  Section 120b.106. (2)(vii) – Personnel salary and benefit costs directly related to the provision of 911 services were subject to a maximum of 60% of the contribution rate revenue. In April 1998, the Commonwealth increased this maximum to 70%. During the period July 1, 1996 through June 30, 1999, such costs were as follows:  June 30 Percent of year ended Amount contribution rate revenue     1997 $ 6,726,993 60.0 1998 6,765,628 60.0 1999 6,878,458 60.0 Total $ 20,371,079 60.0  7  
 
 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE CITY OF PHILADELPHIA 911 FUNDS STATEMENT OF REVENUES AND EXPENDITURES PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS     Commissioner Philadelphia Department of Public Property Philadelphia, PA 19102   We have audited the special-purpose statement of 911 revenues and expenditures of the City of Philadelphia, Pennsylvania for the period July 1, 1996 through June 30, 1999, and have issued our report thereon dated August 31, 2001. As stated in our audit opinion, 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.  Compliance   As part of obtaining reasonable assurance about whether the City of Philadelphia's special-purpose financial statement is free of material misstatement, we performed tests of its compliance with the financial provisions of the Commonwealth of Pennsylvania’s “Public Safety Emergency Telephone Act” Act 78 of 1990, P.L. 340, No. 78 As Amended,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 that are required to be reported under Government Auditing Standards . However, we did note an immaterial instance of noncompliance that is listed in the "Findings and Recommendations" section of this report.   
 
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