SACOG Audit - 2003 & 2002 final

SACOG Audit - 2003 & 2002 final

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SACOG-04-024FinancialStatementsAND SUPPLEMENTARY INFORMATION FOR THE FISCAL YEARS ENDEDJUNE 30, 2003 AND 2002Sacramento Area Council of Governments1415 L StreetSuite 300Sacramento, CA 95814tel: 916.321.9000fax: 916.321.9551www.sacog.org SACOGMISSIONBOARDDelivering MEMBERStransportation Sandra Hilliard City of Yuba Cityprojects; Christopher Cabaldon (Chair)Muriel JohnsonCity of West Sacramentoproviding public Sacramento CountyTed Gaines (Vice-Chair)information Kathy LundPlacer CountyMEMBERCity of Rocklinand serving Ruth Asmundson COUNTIES &Paul McNamaraCity of Davis CITIES as a dynamic forum City of MarysvilleSherrie Blackmunfor regional Steve MiklosCity of ColfaxCity of FolsomEl Dorado Countyplanning and Linda BudgePlacer CountyRoger NielloCity of Rancho CordovaSacramento Countycollaboration in the Sacramento CountySutter CountyRobert ChapmanRocky Rockholmgreater Sacramento Yolo CountyCity of WintersCity of Roseville Yuba CountyMetropolitan Area. Darryl Clare City of AuburnDonald SchraderCity of Galt City of Citrus HeightsYuba CountyCity of ColfaxJim CooperCity of DavisJames ShelbyCity of Elk GroveCity of Elk GroveCity of Citrus HeightsCity of FolsomTom CosgroveDan Silva City of GaltCity of LincolnSutter County City of IsletonRoger Dickinson City of Lincoln Helen ThomsonSacramento County City of Live OakYolo County Town of LoomisAlice DowdinCity of MarysvilleGary UlmanCity of AuburnCity of PlacervilleCity ...

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SACOG-04-024
Financial Statements AND SUPPLEMENTARY INFORMATION FOR THE FISCAL YEARS ENDED JUNE 30, 2003 AND 2002
Sacramento Area Council of Governments
1415 L Street Suite 300 Sacramento, CA 95814 tel: 916.321.9000 fax: 916.321.9551 www.sacog.org
 
SACOG MISSION Delivering transportation projects; providing public information and serving as a dynamic forum for regional planning and collaboration in the greater Sacramento Metropolitan Area.
1415 L Street, Suite 300 Sacramento, CA 95814 tel: 916.321.9000 fax: 916.321.9551 tdd: 916.321.9550 www.sacog.org
BOARD MEMBERS Sandra Hilliard City of Yuba City Christopher Cabaldon (Chair) Muriel Johnson City of West Sacramento Sacramento County Ted Gaines (Vice-Chair) Placer CountyKCiattyhoyf  LRuoncdklin Ruth Asmundson City of Davis CPiatuylofM cMNaarymsavrilale Sherrie Blackmun City of ColfaxSCitteyv eo fMFiokllsoosm Linda Budge Roger Niello City of Rancho Cordova Sacramento County Robert Chapman City of Winters CRiotyc koyf  RRoocskevhiolllem Darryl Clare City of GaltDYuobnaa lCdoSucnhtryader Jim Cooper James Shelby City of Elk Grove City of Citrus Heights Tom Cosgrove City of LincolnDan Silva Sutter County Roger Dickinson Sacramento CountyHelen Thomson Yolo County Alice Dowdin City of AuburnGary Ulman City of Wheatland Rusty Dupray El Dorado CountyMarian Washburn City of Placerville Heather Fargo City of SacramentoMel Wilkins David FloryCity of Live Oak City of WoodlandJody Jones (Ex-Officio Member) Guy FusonCaltrans District 3 Town of Loomis Michael Gomez City of Isleton Lauren Hammond City of Sacramento
MEMBER COUNTIES & CITIES El Dorado County Placer County Sacramento County Sutter County Yolo County Yuba County City of Auburn City of Citrus Heights City of Colfax City of Davis City of Elk Grove City of Folsom City of Galt City of Isleton City of Lincoln City of Live Oak Town of Loomis City of Marysville City of Placerville City of Rancho Cordova City of Rocklin City of Roseville City of Sacramento City of West Sacramento City of Wheatland City of Winters City of Woodland City of Yuba City
Sacramento Area Council of GovernmentsFinancial Statements and Supplementary Information For the Fiscal Years Ended June 30, 2003 and 2002 and Independent Auditors Report
Sacramento Area Council of Governments TABLE OF CONTENTS June 30, 2003 and 2002
Independent Auditors Report Managements Discussion and Analysis General Purpose Financial Statements:  Statement of Net Assets - Proprietary Funds  Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds  Statement of Cash Flows - Proprietary Fund  Statement of Net Assets - SAFE Component Unit  Statement of Revenues, Expenses and Changes in Fund Net Assets - SAFE Component Unit  Statement of Cash Flows - SAFE Component Unit  Statement of Changes in Fiduciary Net Assets  Notes to Financial Statements S U P P L E M E N T A R Y I N F O R M A T I O N Schedule 1 Comparison of Budget to Actual - Proprietary Fund Schedule 2 Comparison of Budget to Actual - SAFE Component Unit Schedule 3 Statement of Activities - Functional Format Schedule 4 Combining Statement of Fiduciary Net Assets - Private Purpose Trust Funds Schedule 5 Combining Statement of Fiduciary Net Assets - Private Purpose Trust Funds Schedule 6 Indirect Service Costs - Analysis and Reconciliation Schedule 7 Schedule of Expenditures of Federal Awards Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance withGovernment Auditing Standards Report on Compliance with Requirements Applicable to each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 Schedule 8 Schedule of Findings and Questioned Costs
Page 4 - 5 6 - 13
15 16 17 - 18 19 20 21 22 23 - 35
37 - 38 39 - 40 41 42 43 44 45 46 - 4748 - 49 50
INDEPENDENT AUDITORS REPORT Board of Directors Sacramento Area Council of Governments We have audited the accompanying general purpose financial statements of the Sacramento Area Council of Governments, as of and for the fiscal years ended June 30, 2003 and 2002 as listed in the table of contents. These general purpose financial statements are the responsibility of the Sacramento Area Council of Governments management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We did not audit the financial statements of the Transportation Development Act (TDA) private purposes trust funds, comprised of the following entities which statements reflect total assets of $17,638,601 and $19,570,000 as of June 30, 2003 and 2002 and total revenues of $58,181,290 and $58,846,376 for the fiscal years then ended: Sacramento County Local Transportation Trust Fund Yuba County Local Transportation Trust Fund Yolo County Local Transportation Trust Fund Sutter County Local Transportation Trust Fund State Transit Assistance Fund Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to amounts included for the private purpose trust funds is based solely on the reports of the other auditors. 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 inGovernment 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the reports of other auditors, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Sacramento Area Council of Governments, as of June 30, 2003 and 2002 and the results of its operations and cash flows of its proprietary fund types for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1, SACOG adopted the provisions of the Government Accounting Standards Board (GASB) Statement No. 34,Managements Discussion and Analysis - For State and LocalBasic Financial Statements - Governmentsand GASB Statement No. 33,Accounting and Financial Reporting for Nonexchange Transactions, as of July 1, 2001. The adoption of Statement No. 34 and Statement No. 33 affected the classification of net assets in accordance with the statements and the presentation of capital contributions as a change in net assets.
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Sacramento Area Council of Governments October 31, 2003 Page2 In accordance withGovernment Auditing Standards, we have also issued our report dated October 31, 2003 on our consideration of the Sacramento Area Council of Governments internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance withGovernment Auditing Standards should be read in conjunction and with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of Sacramento Area Council of Governments, taken as a whole. The accompanying schedules 1-6, 8 and expenditures of federal awards (schedule 7) are presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations, and are not a required part of the general purpose financial statements of Sacramento Area Council of Governments. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. Managements Discussion and Analysis on pages 6-13 is not a required part of the financial statements but is supplemental information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquires of management regarding the methods of measurement and presentation of the supplemental information. However, we did not audit the information and express no opinion on it. DAMORE, HAMRIC& SCHNEIDER, INC. Certified Public Accountants October 31, 2003
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Sacramento Area Council of Governments MANAGEMENTS DISCUSSION AND ANALYSIS June 30, 2003 and 2002
As management of the Sacramento Area Council of Governments (SACOG), we offer readers of SACOGs financial statements this narrative overview and analysis of SACOGs financial performance during the fiscal year ending June 30, 2003. Please read it in conjunction with SACOGs financial statements, which follow this section. FINANCIAL HIGHLIGHTS On June 30, 2003, SACOG sold its building located at 3000 S Street in Sacramento for $2.6 million in cash, generating a book gain on the sale of $.9 million. SACOG used a percentage of the sale proceeds to payoff a $2.0 million short-term loan that provided the funding for the investment in the new building, Meridian Plaza. A portion of the sales proceeds ($.6 million) are reported as Cash in Escrow at year-end and these funds will be used to offset costs related to the move. SACOG moved its operations to the Meridian Plaza building in August 2003. In August 2002, SACOG acquired a 13.33% ownership interest in the Meridian Plaza building/parking garage complex located at 1415 L Street and the corner of 15th and K Street. This ownership was facilitated through the formation of the SACOG Financing Corporation, which is controlled by the SACOG Board of Directors. The SACOG Financing Corporations financial data is blended with SACOGs financial information due to the nature and significance of its relationship to its primary government, SACOG. increased to $6.0 million at June 30, 2003, of which $5.6 million is related to SACOGsCapital Assets 13.33% investment in building/CIP and land costs. Loan Payable was $3.2 million at year-end. This balance was SACOG Financing Corporations proportionate share of the Meridian Plaza on-going construction loan balance at June 30, 2003, which was $23.9 million. The final loan balance on the building will be $43.5 million once construction is complete increase of $.8 million (12%), primarily due to the $0.9 million gain on theSACOGs net assets reflect an sale of the 3000 S Street building.  SECAT, Sacramento Emergency Clean Air and Transportation program, activity impacts SACOGs total assets and liabilities with large dollar amounts; however, the net impact is negligible because of the type of activity. For the past three years, SACOG has had a continuing fiduciary responsibility for SECATs fund management. SECAT cash increased $3.3 million at fiscal year 2002 to $13.4 at June 30, 2003. Deferred revenues are $13.6 million including interest. The accumulated interest is to be remitted to the state upon completion of the program. During the year, SACOG received most of the Phase II funding ($14.8 million); however future funding of Phase II and Phase III monies ($34.5 million) are pending the outcome of Californias budget crisis. Service Authority for Freeway Emergencies, is shown as a component unit of SACOG becauseSAFE, The of SACOGs policy oversight responsibilities (essentially the same Board of Directors), financial reporting accountability, and the financial interdependency between the two agencies. SAFEs net assets at June 30, 2003 were $5.5 million compared to $5.3 million last year. Operating revenues and expenses were virtually unchanged when comparing the two years.
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Sacramento Area Council of Governments MANAGEMENTS DISCUSSION AND ANALYSIS June 30, 2003 and 2002
OVERVIEW OF THE FINANCIAL STATEMENTS This annual report includes this managements discussion and analysis report, the independent auditors report and the basic financial statements of SACOG. The financial statements also include notes that explain in more detail some of the information in the financial statements. REQUIRED FINANCIAL STATEMENTS The financial statements report information of SACOG and its component units using accounting methods similar to those used by private sector companies and offer short- and long-term financial information about the current financial activities. The Statement of Net Assets includes all assets and liabilities and provides information about the nature and amounts of investments in resources (assets) and the obligations to creditors (liabilities). It also provides the basis for evaluating the capital structure of SACOG and its component units and assessing their liquidity and financial flexibility. All of the current years revenues and expenses are accounted for in the Statement of Revenues, Expenses, and Changes in Net Assets. This statement measures the success of operations over the past year and can be used to determine whether SACOG and its component units have successfully recovered all their costs through member dues, Federal, State and local reimbursements, Transportation Development Act apportionments, and other revenues. The final required financial statement is the Statement of Cash Flows. This statement reports cash receipts, cash disbursements, and net changes in cash resulting from operations, investing, and financing activities and provides answers to such questions as where did the cash come from, what was cash used for, and what was the net change in the cash balance during the reporting period. FINANCIAL ANALYSIS OF SACOG One of the most important questions asked is Is SACOG as a whole better off or worse off as a result of this years activities? The Statement of Net Assets, and Statement of Revenues, Expenses, and Changes in Net Assets report information about SACOGs activities in a way that will help answer this question. These two statements report the net assets of SACOG, the changes in them, and measure the financial health or financial position of SACOG. Increases or decreases in SACOGs net assets are one indicator of whether its financial health is improving or deteriorating. However, in addition to the results of operating activities, one needs to consider other non-financial factors such as prevailing economic conditions, growth or decline in population, and new or changed governmental legislation as contributing to the net change in assets.
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Sacramento Area Council of Governments MANAGEMENTS DISCUSSION AND ANALYSIS June 30, 2003 and 2002 NET ASSETS A summary of SACOGs Statement of Net Assets is presented in Table A-1. Table A-1 Condensed Statement of Net Assets (In Millions) Total Percent  Current Year Last Year Dollar Change Change Current Assets $19.6 $15.4 $4.2 27% Capital Assets (net) 6.0 2.4 3.6 150% TotalAssets$25.6$17.8$7.844%Current Liabilities $14.3 $10.7 $3.6 34% Long Term Debt 4.0 0.6 3.4 567% TotalLiabilities$18.3$11.3$7.062%Invested in Capital Assets, Net of Related Debt $2.7 $2.4 .3 13% Unrestricted$4.6$4.1$0.512%TotalNetAssets$7.3$6.5$0.812%Current Assets - increased by $4.2 million (27%) over last year due to: SECAT cash (Designated Reserve) increased $3.4 million over last year due to the receipt of $14.8 million of phase II funding and $0.3 million in interest, offset by program cash outlays of $11.7 million. Street) generated $0.6 million in cash proceeds (shown as CashThe sale of the SACOG building (at 3000 S Held in Escrow), and is reported separately from Operating cash since it had not yet been disbursed from the title agency. Capital Assets - increased to $6.0 million as a result of: The sale of SACOGs building at 3000 S Street, and  SACOGs portion ofSACOGs acquisition of a 13.33% ownership interest in the Meridian Plaza building. the Meridian Plaza office building, Construction in Progress and land costs was $5.6 million at June 30. The remaining $0.4 million is equipment, net of depreciation. Current Liabilities - increased $3.6 (34%) to $14.3 million. This was mainly attributed to SECAT program activity. SECATs deferred revenue was $13.6 million at June 30, 2003 compared to $9.9 million last fiscal year. Any SECAT monies not expended are shown as Deferred Revenue. Long Term Debt - increased $3.4 million (567%) over last year to $4.0 million, primarily due to SACOGs acquisition of a 13.33% ownership interest in the Meridian Plaza project. SACOGs portion of the liability for the construction loan was $3.2 million at June 30. 8
Sacramento Area Council of Governments MANAGEMENTS DISCUSSION AND ANALYSIS June 30, 2003 and 2002 Unrestricted Net Assets - the part of net assets that can be used to finance day-to-day operations without constraints (debt covenants or other legal requirements), increased by $0.5 million to $4.6 million primarily due to the gain on the sale of the SACOGs 3000 S Street building. SACOG has designated portions of this balance for specific future uses. Total Net Assets - (total assets-total liabilities-invested in capital assets) increased by $0.8 million (12%) to $7.3 million due primarily to the $0.9 million gain on sale of the 3000 S Street Building. Table A-2 Condensed Statement of Revenues, Expenses, and Changes in Net Assets (In Millions) Total Percent  Current Year Last Year Dollar Change Change Operating revenues:  TDA $1.9 $2.0 ($0.1) (5%)  Other State & Local Funds 1.9 2.0 ($0.1) (5%)  Total Operating Revenue $3.8 $4.0 ($0.2) (5%) Operating Expenses:  Salaries/Benefits $3.2 $2.7 $0.5 19%  Indirect Services 1.8 1.3 0.5 38%  Consultants 1.6 2.7 (1.1) (41%)  Other Operating Expenses 1.5 1.3 .2 15% TotalOperatingExpenses$8.1$8.0$0.11%OperatingLoss($4.3)($4.0)($0.3)8%Non-operating Revenue/Exp: Federal Grants $3.1 $2.6 $.5 19%  State and Local Grants, Miscellaneous 2.0 1.7 0.3 18% TotalNon-operatingRevenue$5.1$4.3$0.819%ChangeinNetAssets$0.8$0.3$.5167%Operating Revenues - were down $.2 million from last year (5%). One component is TDA funding which is dependent on sales tax revenues and can change from year to year depending on economic factors in the county and state. Other State and Local Funds declined slightly because of fewer project reimbursement requests for work not yet completed. 9