IA SR 20150203 06 FY 2013-14 IA Audited Financial ReportCITY OF
MEMORANDUM
lLiRANCHO PALOS VERDES
TO: HONORABLE CHAIR &COMMISSION MEMBERS /,A
FROM: KATHRYN DOWNS, ACTING DIRECTOR OF FINANCE �V1J
DATE: FEBRUARY 3, 2015
SUBJECT: FY13-14 IMPROVEMENT AUTHORITY AUDITED
FINANCIAL REPORT
REVIEWED: CAROLYNN PETRO, ACTING EXECUTIVE DIRECTORS
RECOMMENDATION
Receive and file the FY13-14 audited financial report of the Rancho Palos Verdes Joint
Powers Improvement Authority.
DISCUSSION
The terms of the Reimbursement and Settlement Agreement (Horan Agreement) require
an annual independent audit of the Improvement Authority. The Authority's auditors,
Vavrinek, Trine, Day & Co., LLP, have completed their audit for FY13-14. The financial
report (see attachment A) includes an unqualified (clean) opinion issued by the auditors.
The auditors have also prepared a letter to the Commission noting there were no
difficulties or disagreements with management during the audit (see Attachment B).
A copy of the report is available for public review at the front counter located in the
reception area of City Hall. Additionally, the City Clerk's office has a copy of the report on
file for permanent retention.
Attachments
A - Rancho Palos Verdes Joint Powers Improvement Authority Annual Financial Report,
Year Ended June 30, 2014
B - Vavrinek, Trine, Day & Co., LLP letter to the Commission dated January 27, 2015
IA 6-1
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
(A Component Unit of the City of Rancho Palos Verdes)
ANNUAL FINANCIAL REPORT
Year ended June 30, 2014
IA 6-2
Rancho Palos Verdes
Joint Powers Improvement Authority
(A Component Unit Of The City Of Rancho Palos Verdes)
Annual Financial Report
Year Ended June 30, 2014
TABLE OF CONTENTS
IndependentAuditors' Report ........................................................................................................................1
Basic Financial Statements:
Government -wide:
Statementof Net Position...................................................................................................3
Statementof Activities........................................................................................................4
Fund Financial Statements:
Governmental Funds:
BalanceSheet.........................................................................................................5
Statement of Revenues, Expenditures and Changes
inFund Balance...................................................................................................6
Notes to the Basic Financial Statements..........................................................................................7
Required Supplementary Information:
Budgetary Comparison Schedule
Portuguese Bend — Special Revenue Fund........................................................12
Note to the Required Supplementary Information.........................................................................13
Supplementary Information:
Budgetary Comparison Schedule
Abalone Cove — Budget and Actual..................................................................14
Independent Auditors' Report on Internal Control over Financial Reporting and on
Compliance and Other Matters and on Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards............................................................15
IA 6-3
Vavrinek, Trine, Day & Co., LLP
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
The Commission of the
Rancho Palos Verdes Joint Powers
Improvement Authority
Rancho Palos Verdes, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and each major fund of the
Rancho Palos Verdes Joint Powers Improvement Authority (Authority), a component unit of the City of Rancho
Palos Verdes, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which
collectively comprise the Authority's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements 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 financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express opinions 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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the
risks of material misstatement of the financial statements, 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
financial statements 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 financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the Authority as of June 30, 2014, and the
respective changes in financial position thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 www.vtdcpa.com I A 6-4
FRESNO • LAGUNA HILLS • PALO ALTO • PLEASANTON • RANCHO CUCAMONGA • RIVERSIDE • SACRAMENTO
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Portuguese Bend
Special Revenue Fund budgetary comparison information on page 12 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management about
the methods of preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Management has omitted the management's discussion and analysis that accounting principles generally accepted
in the United States of America require to be presented to supplement the basic financial statements. Such
missing information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic
financial statements is not affected by this missing information.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Authority's basic financial statements. The Abalone Cove budgetary comparison schedule on
page 14 is presented for purposes of additional analysis and is not a required part of the financial statements. The
Abalone Cove Budgetary Comparison Schedule is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing standards generally accepted
in the United States of America. In our opinion, the Abalone Cove Budgetary Comparison Schedule is fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 27, 2015, on
our consideration of the Authority's 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 Authority's internal control over financial reporting and compliance.
volu;je-1
I
I/vM' j t 4 Vfi: %0 1
Rancho Cucamonga, California
January 27, 2015
2
IA 6-5
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
STATEMENT OF NET POSITION
JUNE 30, 2014
ASSETS:
Cash and investments
Interest receivable
TOTAL ASSETS
LIABILITIES:
Accounts payable and accrued liabilities
TOTAL LIABILITIES
NET POSITION
Restricted for infrastructure maintenance:
Nonexpendable
Expendable
TOTAL NET POSITION
See accompanying notes to financial statements.
3
Governmental
Activities
$ 1,459,515
1
1,459,516
15,512
15,512
1,000,000
444,004
$ 1,444,004
� • •
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2014
Functions/Programs Expenses
Governmental Activites:
Public works $ 120,554
Total Governmental Activities
See accompanying notes to financial statements.
Program Revenues
Operating
Grants and
Contributions
$ 120,554 $
Net (Expense)
Revenue and
Changes in
Net Position
Governmental
Activities
90,000 $ (30,554)
90,000 (30,554)
General revenues:
Investment income 4
Change in net position (30,550)
Net Position, Beginning of Year 1,474,554
Net Position, Ending $ 1,444,004
4
IA 6-7
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
BALANCESHEET
GOVERNMENT FUNDS
JUNE 30, 2014
ASSETS
ASSETS:
Cash and investments
Interest receivable
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable and accrued liabilities
FUND BALANCES:
Nonspendable:
Reimbursement settlement agreement
Restricted for:
Infrastructure maintenance
TOTAL FUND BALANCES
TOTAL LIABILITIES
AND FUND BALANCES
See accompanying notes to financial statements.
Special
Revenue
Permanent
Fund
Fund
Portuguese
Abalone
Bend
Cove
Total
Government
Funds
$ 372,615 $ 1,086,900 $ 1,459,515
- 1 1
$ 372,615 $ 1,086,901 $ 1,459,516
$ 10,159 $
362,456
5,353 $ 15,512
1,000,000
81,548
362,456 1,081,548
1,000,000
444,004
1,444,004
$ 372,615 $ 1,086,901 $ 1,459,516
E
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
GOVERNMENT FUNDS
YEAR ENDED JUNE 30, 2014
REVENUE
Investment income
Contributions from the City of Rancho Palos Verdes
Total Revenues
EXPENDITURES
Current:
Public works
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
See accompanying notes to financial statements.
Special
Revenue
Permanent
Fund
Fund
Total
Portuguese
Abalone
Government
Bend
Cove
Funds
$ -
$ 4
$ 4
70,000
20,000
90,000
70,000
20,004
90,004
73,555
46,999
120,554
(3,555)
(26,995)
(30,550)
366,011
1,108,543
1,474,554
0
$ 362,456 $ 1,081,548 $ 1,444,004
� * •
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2014
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Rancho Palos Verdes Joint Powers Improvement Authority (Authority) conform to
accounting principles generally accepted in the United States of America as applicable to governments. The
Governmental Accounting Standards Board (GASB) is the accepted standard setting body for governmental
accounting and financial reporting principles. The following is a summary of the Authority's significant
accounting policies.
Reporting Entity:
The Authority is a separate legal governmental entity created on September 4, 1990, in accordance with the
provisions of the Reimbursement and Settlement Agreement, dated October 27, 1987, entered into by the City of
Rancho Palos Verdes (City), the Rancho Palos Verdes Redevelopment Agency (Agency) and the County of Los
Angeles in connection with the Horan lawsuit. The Authority is considered a component unit of the City of
Rancho Palos Verdes for purpose of the City's annual financial report. The Agreement requires funds to be set
aside and expended by the Authority to maintain landslide abatement improvements installed and constructed by
the Agency.
On February 1, 2012, the Agency was dissolved as a result of legislation enacted by the State of California. The
City of Rancho Palos Verdes has accepted the fiduciary role of Successor Agency to the Rancho Palos Verdes
Redevelopment Agency and is responsible for winding down the affairs of the Agency.
The members of the City Council are also members of the Commission of the Authority. Similarly, the officers of
the City serve as officers of the Authority. Facilities and equipment, administrative, financial and legal services
are provided to the Authority by the City.
The Portuguese Bend Special Revenue Fund is financed through annual contributions from the general fund of the
City. The exclusive source of revenue for the Abalone Cove portion of the Authority comes from investment
income on the $1,000,000 principal held in the Permanent Fund.
The basic financial statements of the Authority are composed of the following:
• Government -wide financial statements
• Fund financial statements
• Notes to financial statements
Government -wide Financial Statements:
The government -wide financial statements (i.e., the statement of net position and the statement of activities)
report information on all of the activities of the Authority. The effect of interfund activity has been removed from
these statements.
The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by
program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program
revenues include 1) charges to customers who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function. Other items not properly included among program
revenues are reported, instead, as general revenues.
7 IA 6-10
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2014
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fund Financial Statements:
Fund financial statements for the Authority's governmental funds are presented after the government -wide
financial statements. The emphasis of fund financial statements is on major governmental funds. These
statements display information about major funds individually.
The accounting system of the Authority is organized and operated on the basis of separate funds, each of which is
considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self -
balancing accounts that constitute its assets, liabilities, fund equity, revenues, and expenditures.
The Authority reports the following major governmental funds:
The Portuguese Bend Special Revenue Fund is used to account for maintenance and repairs of landslide
abatement improvements in the Portuguese Bend Project Area.
The Abalone Cove Permanent Fund is used to account for monies received as part of a July 1991 Reimbursement
and Settlement Agreement with the County of Los Angeles. As a part of this Agreement, the Authority received a
$1,000,000 deposit of nonexpendable principal. The interest income on this principal is used to pay for
maintenance and repairs of Abalone Cove landslide abatement improvements.
Measurement Focus, Basis of Accounting and Financial Statement Presentation
Measurement focus is a term used to describe which transactions are recorded within the various financial
statements.
In the government -wide statement of net position and the statement of activities, activities are presented using the
economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of
accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or
economic asset used, regardless of the timing of related cash flows. Revenues, expenses, gains, losses, assets, and
liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place.
Governmental Funds:
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Under this method, revenues are recognized when they become
measurable and available. Measurable means that the amounts can be estimated or otherwise determined.
Available means that the amounts were collected during the reporting period or soon enough thereafter to be
available to finance the expenditures accrued for the reporting period. Revenue recognition is subject to the
measurable and available criteria for the governmental funds in the fund financial statements. The Authority
considers investment earnings to be available if they are collected within 60 days of the end of the current fiscal
period.
8 IA 6-11
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2014
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued):
Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or
services are provided). Locally -imposed derived tax revenues are recognized as revenues in the period in which
the underlying exchange transaction upon which they are based takes place. Imposed nonexchange transactions
are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they
are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received,
whichever occurs first. Government -mandated and voluntary nonexchange transactions are recognized as
revenues when all applicable eligibility requirements have been met.
For the current fiscal year, the Authority did not have any items that needed to be reconciled between the fund
financial statements and government -wide financial statements as a result of difference in measurement focus or
basis of accounting.
Investments:
Investments are stated at fair value (quoted market price or the best available estimate thereof).
Governmental Fund Balance Classifications:
The following classifications describe the relative strength of constraints placed on the purpose for which
resources can be used:
Nonspendable Fund Balance - This classification includes amounts that cannot be spent because they are either (a)
not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted Fund Balance - This classification includes amounts that can be spent only for specific purposes
stipulated by constitution, external resource providers or through enabling legislation.
Committed Fund Balance - This classification includes amounts constrained to specific purposes by the
Commission via a Commission resolution. The Commission must adopt another resolution to remove or change
the constraint.
Assigned Fund Balance - This classification includes amounts the Commission intends to use for a specific
purpose, which is expressed by the Commission via minute order.
Unassigned Fund Balance - The unassigned classification is used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted, committed or assigned.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund balances are
available, the Authority's policy is to apply restricted fund balance first.
When an expenditure is incurred for purposes for which committed, assigned or unassigned fund balances are
available, the Authority's policy is to apply committed fund balance first, then assigned fund balance, and finally
unassigned fund balance.
9 IA 6-12
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2014
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates:
The preparation of basic financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial
statements and the reported amounts of revenues and expenditures during the reporting period. Actual results
could differ from those estimates.
New Pronouncements:
Effective in This Fiscal Year:
GASB Statement No. 65 — Items Previously Reported as Assets and Liabilities. In March 2012, the GASB
established accounting and financial reporting standards that reclassify, as deferred outflows of resources or
deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes,
as outflows of resources or inflows of resources, certain items that were previously reported as assets and
liabilities. The statement has been implemented with the June 30, 2014 financial statements.
Effective in Future Fiscal Years:
GASB Statement No. 68 — Accounting and Financial Reporting for Pension — an amendment of GASB Statement
No. 27. In June 2012, the GASB improved accounting and financial reporting by state and local governments for
pension. It also improves information provided by state and local governmental employers about financial
support for pensions that is provided by other entities. This Statement results from a comprehensive review of the
effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing
decision -useful information, supporting assessments of accountability and interperiod equity, and creating
additional transparency. This statement is not effective until June 30, 2015. The Authority has not determined its
effect on the financial statements.
GASB Statement No. 69 — Government Combinations and Disposals of Government Operations. In January
2013, the GASB established accounting and financial reporting standards related to government combinations and
disposals of government operations; including a variety of transactions referred to as mergers, acquisitions, and
transfers of operations. This statement is not effective until June 30, 2015. The Authority has not determined its
effect on the financial statements.
GASB Statement No. 71 — Pension Transition for Contributions Made Subsequent to the Measurement Date — An
Amendment of GASB Statement No. 68. In November 2013, the GASB addressed an issue relating to amounts
associated with contributions made by a government employer to a defined benefit pension plan after the
measurement date of the government's beginning net pension liability. This statement is not effective until
June 30, 2015. The Authority has not determined its effect on the financial statements.
10 IA 6-13
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
NOTES TO THE BASIC FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2014
NOTE 2 — CASHAND INVESTMENTS
Cash and Investments:
Cash and investments at June 30, 2014, consisted of the following:
Cash and investments pooled with
the City of Rancho Palos Verdes $ 1,459,515
Detailed information concerning the City's pooled cash and investments can be found in the City's
Comprehensive Annual Financial Report for the year ended June 30, 2014.
11 IA 6-14
REQUIRED SUPPLEMENTARY INFORMATION
IA 6-15
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
BUDGETARY COMPARISON SCHEDULE
PORTUGUESE BEND SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE 30, 2014
Revenues
Investment income
Contributions from the
City of Rancho Palos Verdes
Total Revenues
Expenditures
Current:
Public works
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
Budgeted Amounts
Original Final
$ 820 $ 820 $
Variance with
Actual Final Budget
- $ (820)
70,000 70,000 70,000 -
70,820 70,820 70,000 (820)
119,100
119,100
73,555
45,545
119,100
119,100
73,555
45,545
(48,280)
(48,280)
(3,555)
44,725
366,011
366,011
366,011
-
$ 317,731
$ 317,731
$ 362,456
44,725
See accompanying note to required supplementary information.
12 IA 6-16
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
NOTE TO REQUIRED SUPPLEMENTARY INFORMATION
JUNE 30, 2014
The Authority adopts an annual budget using the modified -accrual basis of accounting for the special revenue and
permanent funds. Budgetary controls are established at the department level. At year-end, unexpended
appropriations lapse.
The Authority's Chief Administrative Officer may transfer budget appropriations between major categories
within a fund in conformance with the policies set by the Authority's Commission. Any interfund changes or
amendments must be approved by the Authority's Commission. Adopted budget and budget amendments made
during the year are reflected in the Budgetary Comparison Schedule.
13 IA 6-17
SUPPLEMENTARY INFORMATION
� • i
RANCHO PALOS VERDES
JOINT POWERS IMPROVEMENT AUTHORITY
BUDGETARY COMPARISON SCHEDULE
ABALONE COVE PERMANENT FUND
FOR THE YEAR ENDED JUNE 30, 2014
14 IA 6-19
Budgeted Amounts
Variance with
Original
Final
Actual
Final Budget
Revenues
Investment income
$ 3,300
$ 3,300
$ 4
$ (3,296)
Contributions from the
City of Rancho Palos Verdes
20,000
20,000
20,000
-
Total Revenues
23,300
23,300
20,004
(3,296)
Expenditures
Current:
Public works
53,300
71,935
46,999
24,936
Total Expenditures
53,300
71,935
46,999
24,936
Net Change in Fund Balance
(30,000)
(48,635)
(26,995)
(21,640)
Fund Balance, Beginning of Year
1,108,543
1,108,543
1,108,543
-
Fund Balance, End of Year
$ 1,078,543
$ 1,059,908
$ 1,081,548
21,640
14 IA 6-19
Vavrinek, Trine, Day & Co., LLP
Certified Public Accountants
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
The Commission of the
Rancho Palos Verdes Joint Powers
Improvement Authority
Rancho Palos Verdes, 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 financial statements of the governmental activities and each major
fund of the Rancho Palos Verdes Joint Powers Improvement Authority (Authority), a component unit of the City
of Rancho Palos Verdes (City), as of and for the year ended June 30, 2014, and the related notes to the financial
statements and have issued our report thereon dated January 27, 2015. Our report included an explanatory
paragraph stating that the financial statements do not include management's discussion and analysis.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Authority's 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 financial statements, but not for the purpose of
expressing an opinion on the effectiveness of the Authority's internal control. Accordingly, we do not express an
opinion on the effectiveness of the Authority's 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 combination of deficiencies, in internal
control such that there is a reasonable possibility that a material misstatement of the entity's financial statements
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.
15
8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 www.vtdcpa.com IA 6-20
FRESNO • LAGUNA HILLS • PALO ALTO • PLEASANTON • RANCHO CUCAMONGA • RIVERSIDE • SACRAMENTO
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements 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.
Purpose of 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 Authority's internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the Authority's internal control and compliance. Accordingly, this communication is
not suitable for any other purpose.
Rancho Cucamonga, California
January 27, 2015
16 IA 6-21
Vavrinek, Trine, Day & Co., LLP
Certified Public Accountants
The Commission of the
Rancho Palos Verdes Joint Powers
Improvement Authority
Rancho Palos Verdes, California
We have audited the financial statements of the governmental activities and each major fund of the Rancho Palos
Verdes Joint Powers Improvement Authority (Authority) for the year ended June 30, 2014 and have issue our
report thereon dated January 27, 2015. Professional standards require that we provide you with information about
our responsibilities under generally accepted auditing standards, as well as certain information related to the
planned scope and timing of our audit. Professional standards also require that we communicate to you the
following information related to our audit.
Our Responsibility under U.S. Generally Accepted Auditing Standards
Our responsibility, as described by professional standards, is to express an opinion about whether the financial
statements prepared by management with your oversight are fairly presented, in all material respects, in
conformity with U.S. generally accepted accounting principles. Our responsibility is to plan and perform the
audit to obtain reasonable, but not absolute, assurance that the financial statements are free of material
misstatement. Our audit of the financial statements does not relieve you or management of your responsibilities.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Authority are described in Note 1 to the financial statements. We noted no
transactions entered into by the governmental unit 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.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management's knowledge and experience about past and current events and assumptions about future events.
Certain accounting estimates are particularly sensitive because of their significance to the financial statements and
because of the possibility that future events affecting them may differ significantly from those expected. The
most sensitive estimates affecting the Authority's financial statements was management's estimate for the value of
investments. We evaluated the key factors and assumptions used to develop the estimate in determining that it
appeared reasonable in relation to the financial statements taken as whole.
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.
8270 Aspen Street Rancho Cucamonga, CA 91730 Tel: 909.466.4410 Fax: 909.466.4431 www.vtdcpa.com IA 6-22
FRESNO • LAGUNA HILLS • PALO ALTO • PLEASANTON • RANCHO CUCAMONGA • RIVERSIDE • SACRAMENTO
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 January 27, 2015.
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 Authority's financial statements 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 Authority's 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 limited procedures to budgetary comparison schedule of the Portuguese Bend Special Revenue
Fund, which is required supplementary information (RSI) that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding the methods of preparing the information and
comparing the information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit
the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the budgetary comparison schedule of the Abalone Cove Permanent Fund, which
accompanies the financial statements but is not RSI. With respect to this supplementary information, we made
certain inquiries of management and evaluated the form, content, and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the United States of
America, the method of preparing it has not changed from the prior period, and the information is appropriate and
complete in relation to our audit of the financial statements. We compared and reconciled the supplementary
information to the underlying accounting records used to prepare the financial statements or to the financial
statements themselves.
Restriction on Use
This information is intended solely for the use of the Commission and management of the Authority and is not
intended to be, and should not be, used by anyone other than these specified parties.
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Rancho Cucamonga, California
January 27, 2015
2 IA 6-23