City of Corona

We performed our audit to specifically determine whether:

• The project costs incurred and reimbursed were in compliance with the executed project agreements, state and federal regulations, and Caltrans/CTC program guidelines.
• The project deliverables and outcomes were consistent with the project scope, schedule, and benefits described in the executed project agreements or approved amendments.

The audit covered the period from February 1, 2007 through March 1, 2017.  Changes after these date were not tested, and accordingly, our conclusions do not pertain to changes arising after March 1, 2017.

Because of inherent limitations in any financial management system, misstatements due to error or fraud may occur and not be detected.  Also, projections of any evaluation of the financial management system to future periods are subject to the risk that the financial management system may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

The scope of the audit was limited to financial and compliance activities related to the above referenced projects.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The audit was less in scope than an audit performed for the purpose of expressing an opinion on the financial statements of the City. Therefore, we did not audit, and are not expressing an opinion, on the City's financial statements.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the data and the records selected. An audit also includes assessing the accounting principles used and significant estimates made by the City, as well as evaluating the overall presentation.

To achieve our audit objectives, we performed the following audit procedures:

• Reviewed the City's prior audits.
• Reviewed the City's policies and procedures relating to the financial management system and procurement.
• Interviewed employees, completed a review of the financial management system, and gained an understanding of the City's internal controls, job cost system, timekeeping, accounts payable, and billing processes related to projects funded by Prop 1B.

For the projects under review, we performed the following audit procedures:

• Reviewed and compared project agreements and quarterly progress reports to ensure that project deliverables and outcomes were met and that variances to the projects’ scopes, schedules, costs and benefits were properly approved and supported. The Final Delivery Report was not reviewed as it has not been submitted to Caltrans.
• Reviewed project billing invoices sent to the Caltrans accounting office to ensure that the City properly billed Caltrans for reimbursement of project expenditures.
• Reviewed supporting documentation from the project billing invoices to ensure that project expenditures were supported and in compliance with the project agreements, state and federal laws and regulations and Caltrans/CTC Guidelines.
• Review procurement records to ensure that the City procured billed contracts in accordance with applicable state and federal procurement requirements.
• Reviewed significant contract change orders to ensure that they were properly approved and supported.

As approved by the voters in the November 2006 general elections, Prop 1B enacted the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006 to authorize $19.925 billion of state general obligation bonds for specified purposes, including high-priority transportation corridor improvements, State Route 99 corridor enhancements, trade infrastructure and port security projects, school bus retrofit and replacement purposes, state transportation improvement program augmentation, transit and passenger rail improvements, state-local partnership transportation projects, transit security projects, local bridge seismic retrofit projects, highway-railroad grade separation and crossing improvement projects, state highway safety and rehabilitation projects, local street and road improvement, congestion relief, and traffic safety.

The projects were selected for audit based on an annual risk assessment performed by A&I.

Based on our audit, we determined that reimbursed project costs totaling $16,000,000 and $7,000,000 were in compliance with the executed project agreement, state and federal regulations, and CTC program guidelines. The project deliverables and outcomes were consistent with the project scope, schedule, and benefits described in the executed project agreement or approved amendments except for what is detailed in the Finding and Recommendation section of this report.

Our finding and recommendation take into consideration the City’s response dated November 21, 2017, to our October 9, 2017, draft report.

The Final Delivery Report (FDR) was not submitted within six months of the Auto Center Parkway (ACP) project being operable.  The City completed the ACP project in April 2016 but as of August 2017 it has not submitted the FDR as they have not final billed the project.  Therefore, the FDR is untimely.  TCIF Guidelines, which states in part, that “Within six months of the project becoming operable, the implementing agency will provide a final delivery report to the Commission on the scope of the completed project, its final costs as compared to the approved project budget, its duration as compared to the project schedule in the project baseline agreement, and performance outcomes derived from the project as compared to those described in the project baseline agreement.”

Recommendation: 

We recommend the City to submit the FDR for the ACP project as required.

City Response: 

The City submitted final billing to the District Local Assistance Engineer (DLAE) in the summer of 2017.  The invoice was returned for corrections, and since then resubmitted to the DLAE as of November 21, 2017.

Caltrans Analysis:

The City is actively working with Caltrans Local Assistance District staff to finalize the billing, however, the finding is not resolved until FDR for the ACP project is complete and accepted by Caltrans.  Our finding and recommendation remain unchanged.

The Public Works Department has been working with Caltrans Local Assistance District 8 staff to finalize the billing for the Auto Center Drive Grade Separation Project. The final billing submittal was delayed by the work that the Burlington Northern Santa Fe (BNSF) Railroad was conducting, after the project completion date, in order to retire the crossing. The City received the final billing and reconciled financials from BNSF in the summer of 2017, and immediately submitted final billing to the District Local Assistance Engineer (DLAE). The invoice was returned for corrections, and since then resubmitted to the DLAE.