HomeMy WebLinkAboutCC AG PKT 2008-10-13 #EAGENDA STAFF REPORT
DATE: October 13, 2008
TO: Honorable Mayor and City Council
THRU: David Carmany, City Manager
FROM: Robbeyn Bird, CPA
Director of Administrative Services/Treasurer
SUBJECT: SEAL BEACH TENNIS CENTER
SUMMARY OF REQUEST:
Staff requests that the City Council receive and file this report and the
Independent Accountant's Report on Agreed Upon Procedures Applied to the
Seal Beach Tennis Center
BACKGROUND:
At the August 11, 2008 City Council meeting, the City Council approved
Amendment No. 1 to the agreement for auditing services. This amendment
approved having the Certified Public Accounting firm of Mayer Hoffman McCann
complete a review of the Tennis Center for the years ended December 31, 2007
and 2006.
Due to the fact that the contract between the Tennis Center operator and the City
will expire in December, the City has been evaluating the- existing contract to
determine if the contract is beneficial to both parties.
Based on the results of that evaluation, the City received $31,200 in Tennis
Center property rental. However, the cost to the City was $157,312. These
costs consist of maintenance costs of $113,454, water and sewer fees waived by
the City of $38,858, and City staff time of $5,000. The maintenance costs consist
of janitorial fees, landscape costs, and spa maintenance.
The results of the review are in the attached auditor's report and noted various
discrepancies in the Tennis Center's records which resulted in minimal variances
in what was remitted to the City and what was owed to the City.
FISCAL IMPACT:
None
Agenda Item E
Page 2
RECOMMENDATION:
That the City Council receive and file this report and the Agreed-Upon
Procedures Report for the Seal Beach Tennis Center for the two years ended
December 31, 2007.
SUBMITTED BY:
NOTED AND APPROVED:
J~-+11.1.... '~r~ _ ~",~
Robbeyn Bird, CPA David Carmany, City Manager
Director of Administrative Services/Treasurer
Attachments:
A. Report of Independent Certified Public Accountants on Agreed-Upon Procedures Applied
to Seal Beach Tennis Center for the two years ended December 31, 2007
CITY OF SEAL BEACH, CALIFOR1vIA
Report of Independent Certified Public Accountants
on Agreed-Upon Procedures
Applied to Seal Beach Tennis Center
Yeazs ended December 31, 2007 and 2006
Mayer Hoffman McCann P.C.
An Independent CPA Firm
2301 Dupont Drive, Suite 200
Irvine, California 92612
949-474-2020 ph
949-263-5520 fx
www.mhm-pc.com
Honorable Mayor and City Council
City of Seal Beach
Seal Beach, California
INDEPENDENT ACCOUNTANTS' REPORT
ON AGREED-UPON PROCEDURES APPLIED TO SEAL BEACH TENNIS CENTER
We have performed the procedures enumerated below, which were agreed to by the City of Seal
Beach, solely to assist the City with respect to the Seal Beach Tennis Center in Seal Beach,
California for the years ended December 31, 2007 and 2006. This engagement to apply agreed-
upon procedures was performed ~in accordance with the attestation standards established by the
American Institute of Certified Public Accountants. The sufficiency of the procedures is solely
the responsibility of the specified users of the report. Consequently, we make no representations
regarding the sufficiency of the procedures described below either for the purpose for which this
report has been requested or for any other purpose. We were not engaged to, and did not, perform
an audit, the objective of which would be the expression of an opinion on the specified elements,
accounts, or items. Accordingly, we do not express such an opinion. Had we performed
additional procedures, other matters might have come to our attention that would have been
reported to you. Unless otherwise noted, all tests were performed for the years ended December
31, 2007 and 2006.
Our procedures and findings were as follows:
We obtained from the Seal Beach Tennis Center the monthly summary, by day, used to
track revenues. The total from this summary is used by the Tennis Center to calculate
the percentage of gross revenues, less the base amount, to be remitted to the City.
Using the monthly summary we recalculated the amount to be remitted to the City
based on the terms of the agreement between the City and the Seal Beach Tennis
Center and compared those results to the amounts received by the City.
Results: The Tennis Center underpaid the City in the month of December 2007 by $18.
However, through further inquiry it was noted that this balance was repaid to the City
in the following month.
2. We obtained the daily summary register tapes, Z reports, used to create the monthly
summaries for each month during the years ended December 2007 and 2006. We
agreed the daily total from the Z report to the daily total on the summary for each day
of each month for the years ended December 31, 2007 and 2006.
Results: We noted underreporting of total revenues of $796 and $1,086 for the years
2007 and 2006, respectively. The following is the (under)/over of revenues reported
for each month:
Honorable Mayor and City Council
City of Seal Beach
Page 2
2007 2006
Janua 722 50
Februa 1,481 309
March 20 20
Aril - 20
Ma 13 379
June 170 150
Jul 385 32
Au st 28 72
Se tember 25 70
October 20 70
November - 192
December 186 250
Total 1 0 6
3. Due to the variances noted above, we recalculated gross revenues for each month for
the years 2007 and 2006. Based on the recalculated gross revenues, we then calculated
what should have been remitted to the City.
Results: The recalculation resulted in the Tennis Center owing the City $44 and $19
for the yeazs 2007 and 2006, respectively.
4. We obtained the Register Reports from the Tennis Center accounting softwaze for the
years 2007 and 2006. For each yeaz, we compared the total income from the report to
the total of all monthly summaries.
Results: The Tennis Center has $5,188 and $8,066 more in bank deposits for 2007 and
2006, respectively, than in revenues recorded in their general ledger, and used to
calculate the payment to the City. We were not able to determine what the cause was
for an excess of revenues deposited into the bank over revenues recorded in the books.
This report is intended solely for the use of the management of the City of Seal Beach, and
should not be used by those who have not agreed to the procedures and taken responsibility for
the sufficiency of the procedures for their purposes. However, this limitation is not meant to
limit the distribution of this report, which is a matter of public record.
Irvine, California
September 2, 2008