Maricopa county highway user revenue fund monies: compliance attestation report

              Compliance Attestation Report
A REPORT
TO THE
ARIZONA LEGISLATURE
Maricopa County
Highway User Revenue
Fund Monies
Year Ended June 30, 2006
Financial Audit Division
Debra K. Davenport
Auditor General
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Maricopa County
Report Compliance Attestation Highway User Revenue Fund Monies
Year Ended June 30, 2006
Table of Contents Page
Independent Accountants’ Report 1
Report on Internal Control over Compliance with Requirements
Applicable to Highway User Revenue Fund Monies and
Other Dedicated State Transportation Revenues Received by the County
2
County Response
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Accountants’ Report
Members of the Arizona State Legislature
The Board of Supervisors of
Maricopa County, Arizona
We have examined Maricopa County’s compliance as to whether expenditures made during the year
ended June 30, 2006, from highway user revenue fund monies received by the County pursuant to Arizona
Revised Statutes Title 28, Chapter 18, Article 2, and any other dedicated state transportation revenues
received by the County, were solely for authorized transportation purposes prescribed in Article IX, §14, of
the Arizona Constitution. Management is responsible for compliance with those requirements. Our
responsibility is to express an opinion on the County’s compliance based on our examination.
Our examination was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence
about the County’s compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances. We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination on the County’s compliance with
specified requirements.
In our opinion, Maricopa County complied, in all material respects, with the aforementioned requirements
for the year ended June 30, 2006.
This report is intended solely for the information and use of the members of the Arizona State Legislature
and the Board of Supervisors, and is not intended to be and should not be used by anyone other than
these specified parties. However, this report is a matter of public record, and its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
January 23, 2008
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Accountants’ Report on Internal Control over
Compliance with Requirements Applicable to Highway User Revenue Fund Monies
and Other Dedicated State Transportation Revenues Received by the County
Members of the Arizona State Legislature
The Board of Supervisors of
Maricopa County, Arizona
In planning and performing our examination of Maricopa County’s compliance as to whether highway user
revenue fund monies and any other dedicated state transportation revenues received by the County were
used solely for the authorized transportation purposes specified in Article IX, §14, of the Arizona
Constitution, Arizona Revised Statutes (A.R.S.) §28-5801(B)(1)(c) and (2)(c), and A.R.S. §28-5808(A)(2)(b)
and (B)(2)(b) during the year ended June 30, 2006, in accordance with the attestation standards
established by the American Institute of Certified Public Accountants, we considered the County’s internal
control over compliance with those requirements as a basis for designing our examination procedures for
the purpose of expressing our opinion on compliance with those requirements, but not for the purpose of
expressing an opinion on the effectiveness of the County’s internal control with those requirements, and
accordingly, we do not express such an opinion.
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and would not necessarily identify all deficiencies in internal control that might be significant deficiencies
or material weaknesses. However, as discussed below, we identified a deficiency in internal control that
we consider to be a significant deficiency.
A control deficiency in the County’s internal control over compliance 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 noncompliance with the compliance requirements for highway user revenue
fund monies and any other dedicated state transportation revenues on a timely basis. A significant
deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the
County’s ability to administer these monies such that there is more than a remote likelihood that
noncompliance with the compliance requirements for these monies that is more than inconsequential will
not be prevented or detected by the County’s internal control. We consider the following deficiency to be a
significant deficiency in internal control:
The County should spend highway user and vehicle
license tax monies in accordance with state laws
Each year, the State distributes Highway User Revenue Fund (HURF) monies and a portion
of the vehicle license tax (VLT) monies to the County and has mandated that the County
use these monies solely for highway and street purposes, as specified in Article IX, §14, of
2
3
the Arizona Constitution, A.R.S. §28-5801(B)(1)(c) and (2)(c), and A.R.S. §28-5808(A)(2)(b)
and (B)(2)(b). The County received $97 million in HURF and VLT monies in fiscal year 2006.
The County’s Transportation Department operates primarily from these monies. Based on
the Constitution, laws, and Attorney General Opinion No. I05-003, auditors noted the
following expenditures that appeared to be unallowable charges:
Description Amount
General and automobile liability premiums $580,108
Conferences and banquets 11,365
Catered food for staff retreats 1,840
Liability premiums represent 98 percent of the questionable expenditures. The Attorney
General Opinion specifically states that HURF monies may not be used to pay premiums
related to liability for personal injury judgments. County officials have indicated that they do
not agree with this opinion. However, our determination in this matter is based on the
Attorney General opinion.
The County should strengthen its policies and procedures to help ensure that HURF and
restricted VLT monies are spent in accordance with the Arizona Constitution and A.R.S.,
and ensure that its transportation department follows these policies and procedures.
Written policies should clearly identify the types of expenditures that are allowable and
unallowable. In addition, management should review and approve expenditures to help
ensure that all expenditures charged to HURF and restricted VLT monies are only for
allowable charges. Finally, the County should allocate local revenues to replenish the
monies it spent inappropriately during fiscal year 2006.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in
more than a remote likelihood that material noncompliance with the compliance requirements for these
monies will not be prevented or detected by the County's internal control. We do not believe that the
significant deficiency described above is a material weakness.
The County’s response to the finding identified in our examination is presented on page 4. We did not
audit the County’s response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the members of the Arizona State Legislature
and the Board of Supervisors, and is not intended to be and should not be used by anyone other than
these specified parties. However, this report is a matter of public record, and its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
January 23, 2008