Chevron El Segundo Tax Revenue Investigation

Recommendations 56

• R1

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  Most cities expended more than they received in revenues during FY 2011-12.
• R2

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  Most cities’ total net assets and general fund balances declined during FY 2011-12, and several cities’ ratios of total net assets to total liabilities are lower than desirable.
• R3

  Page 139
  All cities should not use one-time revenues to fund recurring or on-going expenditures.
• R4

  Page 139
  All cities should adopt a method and practice of saving into a reserve or “rainy day” fund to supplement operating revenue in years of short fall. See Exhibit 12 CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 131 GOVERNANCE AND FINANCIAL MANAGEMENT BEST PRACTICES The current fiscal health of cities is largely due to the economic downturn that began in 2008 and continues. However, the overall governance and management practices of each city contributed to how well each city was prepared for this downturn, and how effectively each has responded. The following sections of this report present information on best practices for local governments in the areas of governance and financial management. Current practices by the cities are compared to these best practices and recommendations made for improvements. These best practices and recommendations should be useful to the cities in addressing their current financial challenges, and preparing for the future. The Grand Jury identified best practices for local governments in the areas of governance and financial management to be used as a basis for comparison with the practice of cities. A questionnaire was developed and administered to identify the current practice of cities in each of these areas. As part of this questionnaire cities were requested to provide specific documentation in each of these areas and to provide comments or explanations regarding their responses and policies. In the following sections, the Grand Jury provides information on the best practices identified, and compares the current practices of cities with these best practices. A copy of the questionnaire is provided in
• R5

  Page 139
  Annual Exec. Evaluation
• R6

  Page 139
  Conflict of Interest Policy
• R7

  Page 149
  Most cities published their financial reports or CAFR to their website.
• R8

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  All cities maintained an adequate accounting system. Most issued timely financial statements and a CAFR in compliance with standards, and most made the CAFR readily accessible to the general public on their website. RECOMMENDATIONS – FINANCIAL MANAGEMENT 3
• R9

  Page 171
  Please provide any comments or explanations regarding your responses on governance: CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT
• R10

  Page 139
  Formal Audit Committee
• R11

  Page 172
  Is the audit committee directly responsible for the appointment, compensation, retention, and oversight of the work of independent accountants engaged to perform independent audit, review, or attestation services? o Yes o No
• R12

  Page 106
  More information on each of these fiscal health criteria, and the results of the comparison, is contained within the sections following this exhibit. CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 99 Exhibit 3: Results and Rankings of Cities on Fiscal Health Criteria City All Funds General Fund Net Revenue Percent Ratio of Assets to Liabilities Change in Net Assets General Fund Net Revenue Change in General Fund Balance Unassigned General Fund Balance FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 Rank Percent Rank Percent Rank Ratio Rank Ratio Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Agoura Hills 79 (41.5%) 24 (.3%) 29 3.82 24 7.54 45 0.8% 70 (2.6%) 36 3.5% 16 8.1% 1 285.1% 74 (78.3%) 14 80.3% 9 85.5% Alhambra 12 3.9% 5 6.0% 52 2.48 52 3.77 6 8.1% 34 14.6% 44 1.5% 51 (2.3%) 13 24.3% 47 (5.2%) 67 4.7% 64 0.7% Arcadia 63 (15.3%) 37 (4.2%) 23 4.31 28 6.92 70 (3.5%) 74 (5.7%) 52 0.0% 58 (5.0%) 34 6.1% 42 (3.5%) 50 19.0% 45 20.3% Artesia 52 (8.4%) 70 (17.1%) 67 1.77 39 5.05 44 0.8% 37 8.8% 20 8.3% 54 (3.5%) 11 25.3% 51 (7.1%) 31 44.9% 32 35.0% Azusa 68 (19.8%) NA 0.0% 71 1.69 NA 0.00 73 (4.8%) NA 0.0% 30 4.7% NA 0.0% 3 68.8% NA 0.0% 83 (15.3%) 67 0.0% Baldwin Park 16 2.2% 33 (2.8%) 56 2.28 48 4.48 28 2.4% 15 39.9% 23 7.1% 35 3.8% 64 (9.7%) 49 (5.8%) 56 15.3% 56 8.1% Bell Gardens 33 (2.4%) 46 (7.3%) 41 2.93 25 7.25 72 (4.5%) 10 63.6% 15 10.0% 40 1.7% 36 5.0% 36 (1.9%) 18 73.2% 67 0.0% Bellflower 25 (.8%) 12 4.1% 36 3.29 46 4.64 5 8.2% 31 15.6% 29 4.7% 44 1.0% 41 2.3% 30 1.5% 20 70.0% 15 63.0% Beverly Hills 6 5.7% 3 8.5% 51 2.55 63 2.83 8 6.6% 38 8.2% 11 11.8% 9 11.1% 44 0.4% 11 9.4% 33 43.7% 24 45.5% Bradbury 82 (108.2%) NA 0.0% 2 49.28 NA 0.00 80 (10.1%) NA 0.0% 83 (59.2%) NA 0.0% 76 (23.9%) NA 0.0% 6 187.6% 67 0.0% Burbank 54 (1.5%) 69 (16.6%) 32 3.52 40 4.98 56 (.6%) 40 7.9% 74 (15.0%) 68 (13.0%) 61 (7.0%) 58 (14.2%) 43 31.1% 67 0.0% Calabasas 39 (4.0%) 22 0.2% 35 3.48 57 3.52 15 5.2% 59 (.0%) 33 4.3% 34 3.9% 52 (3.6%) 20 4.5% 13 86.8% 7 94.1% Carson 58 (11.7%) 74 (24.5%) 48 2.65 74 1.96 78 (9.5%) 73 (4.4%) 24 7.1% 18 7.6% 10 29.3% 4 26.0% 51 18.4% 38 26.4% Cerritos 55 (10.1%) 35 (3.2%) 45 2.83 6 39.19 61 (1.0%) 12 51.7% 72 (14.1%) 76 (44.0%) 53 (4.2%) 61 (16.1%) 9 103.1% 11 77.9% Claremont 5 8.5% 9 4.9% 22 4.45 41 4.93 21 3.1% 60 (.2%) 21 8.0% 14 8.7% 17 15.1% 10 14.4% 44 30.9% 34 31.7% Commerce 61 (12.1%) 31 (2.0%) 72 1.69 76 1.61 74 (5.0%) 42 6.6% 45 1.5% 20 6.6% 47 0.1% 19 5.3% 19 71.8% 12 77.1% Covina 66 (17.8%) 63 (13.7%) 49 2.61 53 3.69 76 (5.8%) 76 (8.2%) 42 1.9% 59 (5.0%) 23 9.4% 56 (9.2%) 39 36.3% 35 31.1% Cudahy 84 (170.3%) 58 (12.0%) 82 1.29 14 15.61 84 (72.8%) 1 260.9% 69 (9.8%) 67 (11.9%) 73 (15.6%) 55 (9.2%) 10 103.0% 8 88.5% Culver City 17 2.1% 68 (15.5%) 69 1.73 38 5.08 34 2.0% 7 80.9% 6 16.4% 53 (3.3%) 9 29.4% 39 (2.6%) 24 61.4% 17 58.4% Diamond Bar 76 (32.0%) 76 (65.8%) 4 24.92 8 25.49 63 (1.3%) 64 (1.3%) 82 (55.5%) 71 (24.1%) 78 (31.1%) 66 (19.4%) 25 60.2% 18 56.7% Downey 65 (17.8%) 62 (13.5%) 30 3.76 44 4.74 75 (5.1%) 44 5.7% 70 (10.9%) 62 (8.5%) 66 (9.9%) 60 (14.4%) 57 14.8% 55 8.8% Duarte 31 (1.6%) 19 1.0% 21 4.46 7 34.15 16 5.1% 22 27.0% 1 42.6% 19 6.7% 4 58.3% 21 3.8% 11 97.4% 6 109.0% El Monte 56 (10.4%) 28 (1.3%) 19 4.77 33 5.44 43 1.0% 49 4.1% 56 (1.9%) 56 (4.9%) 33 6.2% 32 0.8% 55 16.9% 48 16.3% El Segundo 35 (3.1%) 61 (13.5%) 16 5.47 47 4.49 65 (1.5%) 72 (3.4%) 60 (4.1%) 60 (7.0%) 51 (3.1%) 67 (19.5%) 62 9.8% 52 14.6% Gardena 8 4.8% 13 4.1% 42 2.89 62 2.91 55 (.4%) 66 (1.9%) 19 8.5% 31 5.2% 29 7.1% 16 7.5% 70 0.7% 66 0.5% Glendale 53 (9.1%) 56 (11.2%) 27 3.90 42 4.89 50 0.1% 62 (1.0%) 73 (14.8%) 70 (16.7%) 19 11.3% 70 (55.6%) 36 38.7% 40 23.3% Glendora 44 (5.6%) 36 (3.9%) 33 3.50 37 5.08 48 0.3% 47 4.7% 28 5.9% 52 (2.6%) 37 4.2% 57 (9.6%) 72 0.0% 67 0.0% Hawaiian Gardens 32 (2.3%) NA 0.0% 75 1.52 NA 0.00 52 0.0% NA 0.0% 59 (3.5%) NA 0.0% 54 (4.5%) NA 0.0% 7 120.3% 67 0.0% Hawthorne 20 1.4% 16 3.4% 79 1.38 67 2.51 13 5.7% 5 118.4% 10 14.0% 7 11.3% 15 19.4% 71 (59.0%) 41 33.1% 37 28.8% Hermosa Beach 13 3.7% 2 10.7% 12 7.44 31 5.89 39 1.5% 69 (2.4%) 14 10.6% 5 13.6% 18 11.7% 22 3.5% 49 23.2% 41 23.3% Hidden Hills 70 (23.3%) 8 5.6% 10 10.54 16 12.22 40 1.5% 57 0.2% 79 (32.0%) 21 6.5% 65 (9.8%) 25 2.3% 3 207.2% 2 291.9% Huntington Park 40 (4.5%) NA 0.0% 84 0.62 NA 0.00 83 (13.0%) NA 0.0% 39 2.4% NA 0.0% 38 3.5% NA 0.0% 45 30.7% 67 0.0% Industry 60 (12.0%) 51 (9.6%) 66 1.85 72 2.12 14 5.7% 75 (6.2%) 2 30.0% 41 1.4% 30 6.9% 48 (5.3%) 1 607.2% 1 454.7% Inglewood 9 4.7% NA 0.0% 74 1.60 NA 0.00 67 (2.8%) NA 0.0% 57 (2.7%) NA 0.0% 68 (12.5%) NA 0.0% 52 18.3% 67 0.0% Irwindale 7 5.3% 52 (9.8%) 58 2.25 5 40.08 3 8.5% 14 40.3% 37 3.1% 63 (9.1%) 2 143.7% 63 (17.0%) 72 0.0% 67 0.0% La Canada Flintridge 3 11.6% 26 (.8%) 50 2.60 65 2.66 10 6.0% 51 1.9% 5 16.6% 11 10.4% 28 7.3% 38 (2.1%) 8 119.3% 5 116.3% La Habra Heights 1 25.4% NA 0.0% 8 11.75 NA 0.00 60 (1.0%) NA 0.0% 49 0.6% NA 0.0% 48 (.6%) NA 0.0% 5 195.2% 67 0.0% La Mirada 27 (1.0%) 29 (1.3%) 65 1.85 17 11.38 2 11.8% 4 128.7% 16 9.6% 2 23.3% 42 2.0% 15 7.6% 17 73.2% 10 85.1% La Puente 50 (7.7%) 45 (7.0%) 59 2.23 64 2.82 38 1.5% 35 10.4% 63 (5.6%) 6 11.4% 50 (2.8%) 72 (59.6%) 28 54.8% 22 50.6% La Verne 11 4.3% 25 (.6%) 15 5.48 27 6.94 27 2.4% 54 1.3% 67 (7.7%) 50 (2.3%) 35 6.0% 6 19.3% 72 0.0% 67 0.0% CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 100 Exhibit 3: Results and Rankings of Cities on Fiscal Health Criteria City All Funds General Fund Net Revenue Percent Ratio of Assets to Liabilities Change in Net Assets General Fund Net Revenue Change in General Fund Balance Unassigned General Fund Balance FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 Rank Percent Rank Percent Rank Ratio Rank Ratio Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Lakewood 15 2.4% 21 0.7% 11 8.85 11 17.97 24 2.8% 24 24.5% 27 6.2% 29 5.7% 26 7.6% 17 6.7% 68 3.2% 59 6.5% Lancaster 69 (21.8%) 49 (9.2%) 28 3.88 10 18.04 64 (1.4%) 23 25.2% 76 (23.3%) 47 (.9%) 74 (17.0%) 69 (38.6%) 46 30.2% 43 21.5% Lawndale 77 (39.1%) NA 0.0% 44 2.85 NA 0.00 46 0.5% NA 0.0% 81 (36.5%) NA 0.0% 57 (5.6%) NA 0.0% 16 74.9% 67 0.0% Lomita 42 (5.1%) 48 (7.8%) 17 4.99 34 5.33 66 (1.7%) 65 (1.5%) 40 2.1% 33 4.0% 69 (13.0%) 24 2.5% 64 8.5% 60 5.1% Long Beach 26 (.9%) 75 (25.2%) 57 2.25 69 2.39 11 5.9% 53 1.5% 53 (.2%) 38 2.3% 82 (59.1%) 9 15.1% 71 0.2% 62 1.3% Los Angeles 43 (5.3%) 44 (6.6%) 68 1.74 75 1.77 26 2.7% 48 4.5% 25 6.4% 26 6.1% 16 19.1% 12 9.2% 66 6.5% 58 6.7% Lynwood 57 (11.5%) 40 (4.9%) 53 2.47 58 3.42 35 1.8% 63 (1.2%) 64 (5.7%) 48 (1.0%) 75 (21.2%) 59 (14.3%) 53 18.2% 47 18.5% Malibu 73 (29.2%) 55 (11.1%) 38 3.01 61 2.95 49 0.2% 71 (3.3%) 61 (4.2%) 57 (4.9%) 77 (23.9%) 54 (8.7%) 42 31.2% 28 36.2% Manhattan Beach 10 4.3% 17 3.2% 24 4.12 50 4.07 29 2.4% 45 5.3% 32 4.3% 28 5.7% 24 9.1% 33 (.2%) 37 36.7% 29 35.6% Monrovia 78 (40.3%) 53 (10.0%) 80 1.30 66 2.65 81 (10.8%) 3 163.7% 78 (31.8%) 72 (27.2%) 71 (14.0%) 76 (374.5%) 84 (27.1%) 76 (27.7%) Montebello 34 (2.5%) 27 (.9%) 77 1.51 68 2.43 9 6.3% 18 37.5% 77 (25.4%) 74 (31.8%) 83 (174.5%) 2 43.8% 61 10.5% 49 15.9% Monterey Park 36 (3.2%) 50 (9.4%) 70 1.72 60 3.01 25 2.7% 16 39.6% 58 (3.1%) 45 0.6% 55 (4.5%) 7 18.1% 65 8.3% 57 7.8% Norwalk 47 (6.9%) 10 4.6% 60 2.20 32 5.70 53 (.1%) 19 33.6% 4 17.6% 17 7.8% 8 36.0% 65 (19.0%) 48 25.4% 36 29.9% Palmdale 19 1.4% 41 (5.6%) 31 3.73 26 7.13 51 0.1% 32 15.3% 9 14.4% 39 1.8% 12 24.7% 52 (7.1%) 38 36.5% 33 34.6% Palos Verdes Estates 28 (1.0%) 39 (4.8%) 1 50.47 3 44.98 62 (1.1%) 68 (2.4%) 41 2.1% 32 4.9% 22 9.4% 44 (4.7%) 60 10.7% 50 15.7% Paramount 62 (12.5%) 38 (4.7%) 61 2.13 22 9.94 77 (6.3%) 17 39.5% 51 0.2% 42 1.4% 5 42.6% 29 1.6% 30 49.9% 23 49.6% Pasadena 51 (8.3%) 72 (18.0%) 63 2.01 73 2.04 23 3.0% 26 20.7% 22 7.3% 8 11.2% 67 (12.4%) 14 7.7% 78 (.8%) 75 (23.1%) Pico Rivera 64 (17.1%) 59 (12.4%) 54 2.32 54 3.67 20 3.2% 8 80.9% 68 (8.6%) 49 (1.7%) 60 (6.8%) 31 1.2% 59 11.5% 67 0.0% Pomona 48 (7.0%) 57 (11.2%) 78 1.48 71 2.22 57 (.7%) 13 41.0% 48 0.9% 24 6.2% 70 (13.0%) 73 (62.2%) 72 0.0% 67 0.0% Rancho Palos Verdes 4 10.4% 1 11.8% 7 12.25 4 41.90 22 3.0% 29 16.4% 3 25.5% 1 26.2% 49 (2.4%) 18 5.6% 22 66.7% 14 71.4% Redondo Beach 23 (.0%) 34 (3.0%) 20 4.57 36 5.13 32 2.2% 36 10.0% 34 4.1% 37 2.4% 6 38.0% 37 (1.9%) 72 0.0% 65 0.6% Rolling Hills 80 (45.6%) 66 (14.3%) 3 36.59 2 45.56 82 (12.9%) 52 1.5% 38 2.6% 69 (16.0%) 39 3.1% 50 (6.4%) 4 206.8% 3 177.0% Rolling Hills Estates 30 (1.6%) 11 4.5% 9 10.57 19 10.72 31 2.4% 39 8.1% 65 (7.3%) 22 6.3% 72 (15.1%) 8 17.0% 47 28.5% 30 35.2% Rosemead 71 (26.4%) 71 (17.3%) 64 1.98 15 15.41 4 8.4% 11 56.2% 66 (7.6%) 46 0.4% 63 (9.6%) 41 (3.3%) 26 57.6% 20 56.0% San Dimas 75 (30.5%) 6 5.9% 25 4.11 20 10.30 33 2.1% 20 33.2% 46 1.3% 36 2.5% 43 1.6% 35 (.9%) 27 55.2% 19 56.1% San Fernando 49 (7.5%) 30 (1.6%) 39 2.98 43 4.81 58 (.7%) 50 3.0% 80 (32.0%) 73 (30.0%) 84 (704.9%) 75 (99.7%) 81 (4.4%) 74 (10.0%) San Gabriel 45 (5.8%) 47 (7.7%) 18 4.81 45 4.70 69 (3.4%) 67 (2.2%) 75 (22.2%) 75 (33.4%) 46 0.2% 68 (25.9%) 79 (2.1%) 61 3.5% San Marino 72 (27.2%) 67 (15.0%) 5 15.44 9 21.50 47 0.4% 58 0.2% 18 9.1% 15 8.7% 62 (8.9%) 64 (18.1%) 15 79.8% 13 72.6% Santa Clarita 67 (19.7%) 32 (2.4%) 14 6.22 21 10.14 36 1.7% 43 6.1% 7 15.5% 61 (8.0%) 25 7.6% 62 (16.4%) 21 69.7% 16 58.4% Santa Fe Springs 24 (.7%) 73 (19.0%) 73 1.66 29 6.27 19 3.7% 9 72.8% 71 (11.4%) 65 (11.4%) 31 6.7% 5 25.4% 40 35.4% 25 43.1% Santa Monica 46 (6.7%) 42 (5.9%) 26 3.98 35 5.28 30 2.4% 30 16.3% 55 (1.7%) 3 23.2% 7 37.0% 3 41.0% 34 40.0% 31 35.1% Sierra Madre 37 (3.3%) 64 (13.7%) 6 12.97 12 16.57 59 (.8%) 61 (.4%) 12 11.3% 10 10.5% 27 7.5% 53 (7.4%) 23 65.2% 54 12.2% Signal Hill 81 (64.0%) 65 (14.2%) 76 1.52 18 11.31 41 1.3% 6 101.5% 31 4.5% 25 6.1% 20 9.8% 23 2.5% 35 39.1% 27 41.7% South El Monte 21 0.2% 15 3.5% 83 1.13 23 9.38 1 100.0% 2 237.1% 50 0.4% 12 9.6% 80 (51.7%) 1 59.7% 69 2.0% 53 13.2% South Gate 14 2.4% 14 3.6% 47 2.68 56 3.56 7 6.8% 33 14.6% 54 (1.0%) 43 1.2% 32 6.5% 26 2.0% 58 13.2% 46 19.5% South Pasadena 38 (3.9%) 4 7.7% 55 2.31 70 2.32 17 4.0% 55 0.9% 13 11.2% 30 5.5% 14 20.8% 13 9.0% 29 53.9% 21 55.6% Temple City 2 12.0% 18 2.2% 13 7.19 13 16.34 12 5.7% 41 7.7% 26 6.3% 27 5.8% 40 2.5% 45 (5.0%) 2 236.1% 42 22.5% Torrance 18 2.0% 7 5.8% 43 2.88 55 3.66 42 1.2% 27 18.6% 43 1.9% 23 6.2% 58 (6.0%) 27 1.9% 63 9.7% 44 21.4% Vernon 83 (110.4%) 77 (83.9%) 81 1.29 77 1.14 79 (9.7%) 77 (51.4%) 84 (100.3%) 77 (108.1%) 81 (58.5%) 77 (455.0%) 82 (8.2%) 77 (47.4%) Walnut 74 (29.3%) 23 (.0%) 34 3.49 1 48.92 54 (.2%) 21 31.7% 35 3.5% 64 (10.3%) 79 (31.7%) 46 (5.2%) 72 0.0% 63 0.7% West Covina 29 (1.2%) 43 (6.3%) 62 2.07 51 4.00 71 (3.9%) 25 21.8% 62 (5.5%) 66 (11.7%) 59 (6.2%) 40 (2.9%) 54 17.0% 39 24.4% CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 101 Exhibit 3: Results and Rankings of Cities on Fiscal Health Criteria City All Funds General Fund Net Revenue Percent Ratio of Assets to Liabilities Change in Net Assets General Fund Net Revenue Change in General Fund Balance Unassigned General Fund Balance FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 FY 2010-11 FY 2011-12 Rank Percent Rank Percent Rank Ratio Rank Ratio Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent Rank Percent West Hollywood 59 (11.8%) 20 1.0% 46 2.78 49 4.23 18 3.9% 46 5.0% 8 14.7% 4 17.4% 21 9.6% 28 1.7% 80 (2.2%) 51 15.6% Westlake Village 41 (4.6%) 54 (10.9%) 37 3.13 59 3.16 68 (3.3%) 56 0.3% 47 1.2% 13 9.4% 56 (5.4%) 34 (.9%) 12 92.7% 4 139.3% Whittier 22 (.0%) 60 (12.6%) 40 2.94 30 6.23 37 1.5% 28 18.2% 17 9.3% 55 (4.3%) 45 0.2% 43 (4.4%) 32 43.7% 26 42.0% Average - All Cities (12.5%) (6.2%) 5.45 8.92 0.8% 24.0% (1.7%) (1.5%) (3.8%) (14.5%) 51.4% 38.3% Source: Comprehensive Annual Financial Report (CAFR) or Basic Financial Statements obtained from each City. Financial information for FY 2010-11 or FY 2011-12 was not available from the cities of Avalon, Bell, Compton, and Maywood as of April 25, 2013. Financial information for FY 2011-12 was not available from the cities of Azusa, Bradbury, Hawaiian Gardens, Huntington Park, Inglewood, La Habra Heights, and Lawndale as of April 25, 2013. CITIES OF LOS ANGELES COUNTY 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 102 CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 103 Net Revenue Percent – All Funds Net Revenue Percent is the percent of all revenues remaining after all city expenditures. Revenues are the amount received by a city from taxes, fees, permits, licenses, interest, intergovernmental sources, and other sources during the fiscal year. Expenditures are the actual spending of governmental funds by each city. If a city spends less than received the net revenues and percentage would be positive. If a city spends more than received in revenues the net revenues and percentage would be negative. The net revenue percent is calculated by dividing net revenues by total revenues. All Funds include each city’s general fund as well as any other funds for proprietary or business- type activities which could include operating public utilities (power, water, parking, refuse collection, etc.) or other non-governmental type activities. As the following Exhibit shows, only 21 of the 84 cities spent less on all activities (governmental and business) during Fiscal 2010-11 than revenue received. The remaining 61 cities spent more than they received in revenue. Both the cities of Vernon and Bradbury spent more than twice what was received in revenues. On average, cities expended 12.5% more than they received in revenue during FY 2010-11. The exhibit also shows that only 22 of the 77 cities spent less on all activities (governmental and business) during Fiscal 2011-12 than revenue received. The remaining 55 cities spent more than they received in revenue. The City of Vernon spent nearly 84% more than it received in revenue. On average, cities expended 6.2% more than they received in revenue during FY 2011-
• R13

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  Please provide a copy of the action formally establishing the audit committee.
• R14

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  Please provide any comments or explanations regarding your responses on audit committees:
• R15

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  Independence Standard
• R16

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  In selecting independent auditors does your city undertake a full-scale competitive process at the end of the term of each audit contract? o Yes o No
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  Years with Current Auditor
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  Audit Contract Term Agoura Hills 3 3 + 2 one year renewals Alhambra 7 5 Arcadia 2 4 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 145 Exhibit 11: Responses to Questions on Independent Auditor Contract Term City
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  Does your city have a formal policy requiring that the independent auditor be replaced at the end of the audit contract? o Yes o No CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT
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  Does your city allow the independent auditor to provide nonaudit services to the city? o Yes o No
• R21

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  If yes, does the Audit Committee review and approve these services? o Yes o No
• R22

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  Please provide a copy of the formal policies related to audit procurement.
• R23

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  Please provide any comments or explanations regarding your responses on audit procurement:
• R24

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  Are accounting policies and procedures formally documented in an accounting policies and procedures manual? o Yes o No
• R25

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  Are accounting policies and procedures reviewed annually and updated at least once every three years on a predetermined schedule? o Yes o No
• R26

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  Do the accounting policies and procedures specifically define the authority and responsibility of all employees, including the authority to authorize transactions and the responsibility for safekeeping of assets and records? o Yes o No
• R27

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  Please provide a copy of the accounting policies and procedures manual.
• R28

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  Please provide any comments or explanations regarding accounting policies and procedures: CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT
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  Policies / Procedures
• R30

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  Does your city have a formally adopted and widely distributed and publicized ethics policy? o Yes o No
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  Conf/Anon. Reporting
• R32

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  Are concerns received regarding fraud, abuse, or questionable practices reviewed by internal auditors, with documentation reviewed by the Audit Committee. o Yes o No
• R33

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  Please provide a copy of the ethics policy and information on mechanisms for reporting concerns of fraud, abuse, or questionable practices.
• R34

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  Please provide any comments or explanations regarding reporting of fraud, abuse, and questionable practices:
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  Are internal control procedures over financial management formally documented? o Yes o No
• R36

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  Do internal control procedures include practical means for lower level employees to report instances of management override of controls? o Yes o No
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  Are internal control procedures evaluated to determine if those controls are adequately designed to achieve their intended purpose, have actually been implemented, and continue to function as designed? o Yes o No CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT
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  Weaknesses Documented
• R39

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  Is there a process in place to identify changes in what is being controlled or controls themselves, and corrective action plans are developed with an appropriate timeline? o Yes o No
• R40

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  Please provide a copy of the internal control procedures over financial management.
• R41

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  Please provide any comments or explanations regarding your responses on internal controls:
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  Does your city have an internal audit function formally established by enabling resolution or other legal means? o Yes o No
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  Is the work of the internal audit function conducted in accordance with the U.S. General Accounting Office’s Government Auditing Standards? o Yes o No
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  Are all reports of the Internal Audit function provided to or available to the Audit Committee? o Yes o No
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  Please provide a copy of the formal action establishing the internal audit function.
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  Please provide any comments or explanations regarding your responses on internal audit: CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT
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  Does your city have a formal policy on the level of unrestricted fund balance to be maintained in the General Fund? o Yes o No
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  Does this policy require an unrestricted fund balance of no less than two months of regular general fund operating revenues or regular general fund operating expenditures? o Yes o No
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  Please provide a copy of the formal policy on the level of unrestricted fund balance to be maintained in the General Fund.
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  Please provide any comments or explanations regarding your responses on general fund unrestricted fund balance:
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  Adequate Acctg. System
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  Timely Fin. Statements
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  Independently Audited
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  CAFR on City Website
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  Participate in GFOA Number Positive Responses Percent Positive Responses Rank Among Cities Agoura Hills N N Y Y Y Y Y Y Y Y N N Y N Y Y N Y N Y Y Y Y Y N Y Y Y Y Y Y Y 25 78% 31 Alhambra Y Y Y N Y Y N Y Y N N Y N Y N Y N N Y N Y Y Y N Y N Y Y Y Y Y 21 66% 56 Arcadia N N Y Y Y Y Y N Y Y N Y Y N Y N Y N Y Y Y Y N Y N NA Y Y Y Y Y 20 63% 65 Artesia Y Y Y Y Y Y Y Y N N Y Y Y Y N NA Y Y Y Y Y 18 56% 78 Avalon N N Y N Y Y Y Y Y Y N Y Y N N N N N N Y Y Y Y Y Y N NA Y N Y Y Y 18 56% 78 Azusa N N Y Y Y Y Y N Y Y N N Y N Y N Y N NA N N Y Y Y N N NA Y Y Y Y Y 19 59% 74 Baldwin Park *1 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y 29 91% 7 Bell Y N Y Y Y Y Y N Y Y N N Y Y N Y Y N N N N N Y Y N N NA Y N Y Y Y 19 59% 74 Bell Gardens N N Y Y Y Y Y N Y Y N N Y N Y N N N N Y Y Y Y N N Y N Y Y Y Y Y 20 63% 65 Bellflower Y Y Y Y Y Y Y N Y N Y Y N Y N Y N NA Y N Y N Y N Y Y Y Y Y Y Y 21 66% 56 Beverly Hills Y Y Y Y Y Y Y Y Y Y N Y N Y Y Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y 27 84% 20 Bradbury Y N Y Y Y Y Y N Y Y N N N N Y N Y N Y Y Y Y Y N N Y Y Y N Y Y Y 22 69% 50 Burbank Y Y Y Y Y Y Y Y Y Y N N N N N N N N Y Y Y Y Y Y Y Y Y Y Y Y Y Y 25 78% 31 Calabassas N N Y Y Y Y Y N Y Y N N Y Y Y Y Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y 27 84% 20 Carson N N Y Y Y Y Y N Y Y N Y N N Y Y Y Y N N N Y N N N Y N Y Y Y Y Y 18 56% 78 Cerritos Y Y Y Y Y Y Y N Y Y N N Y Y Y Y Y Y Y Y Y Y Y Y Y N NA Y Y Y Y Y 28 88% 14 Claremont Y Y Y Y Y Y Y N Y Y N Y Y Y Y Y N N N Y Y Y Y Y N N NA Y Y Y Y Y 23 72% 42 Commerce Y N Y Y Y Y Y Y Y Y N Y N N N Y Y Y N Y Y Y Y N N Y Y Y Y Y Y Y 23 72% 42 Compton N N Y N N Y Y N Y Y N N Y Y Y Y Y N N Y Y Y Y Y N Y N Y Y Y Y 21 66% 56 Covina Y Y Y Y Y Y Y Y Y Y N N Y Y Y N N N N Y Y Y Y Y N Y Y Y Y Y Y Y 26 81% 25 Cudahy N N Y N N Y Y N Y Y N N N N N N N N N N N N N N N N NA Y N Y N Y 9 28% 87 Culver City Y Y Y Y Y Y Y Y Y Y N N Y Y Y Y Y Y Y Y Y Y Y Y N Y Y Y Y Y Y Y 30 94% 3 Diamond Bar Y N Y N Y N Y N Y Y N Y Y N Y Y N N N Y Y Y Y N N Y Y Y Y Y Y Y 20 63% 65 Downey Y Y Y Y Y Y Y Y Y Y N N Y Y Y Y Y Y Y Y Y Y Y Y Y N NA Y Y Y Y Y 29 91% 7 Duarte Y Y Y Y Y Y Y N Y Y N N Y Y Y Y Y Y Y Y Y Y Y Y Y N NA Y Y Y Y Y 28 88% 14 CITIES FISCAL HEALTH, GOVERNANCE AND MANAGEMENT 2012-2013 LOS ANGELES COUNTY CIVIL GRAND JURY REPORT 134 Exhibit 10: Overview of Governance and Financial Management Best Practices Questionnaire Reponses
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  Please provide any comments or explanations regarding your responses on financial and public reporting practices: