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Sample Service Contract and Acknowledgement Reciept - PDF

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  • pg 1
									       OFFICE OF THE
        CONTROLLER


CITY OF PHILADELPHIA
       PENNSYLVANIA


       PHILADELPHIA PARKING
            AUTHORITY

       ACCOUNTANT’S REPORT
       ON APPLYING AGREED-
         UPON PROCEDURES

          DECEMBER 2007




         Alan Butkovitz
         City Controller
                                  Independent Accountant’s Report
                                on Applying Agreed-Upon Procedures

Vincent J. Jannetti
Acting Director of Finance
City of Philadelphia
Room 1330, Municipal Services Building
1401 John F. Kennedy Boulevard
Philadelphia, PA 19102

We have performed the procedures enumerated below, which were agreed to by the Office of the
Director of Finance, solely to assist you in evaluating the accompanying schedules of revenues
and expenses reported in the audited income statement of the Philadelphia Parking Authority’s
(PPA’s) On-Street-Parking (OSP) division for fiscal 2006. The OSP income statement is the
responsibility of PPA. This agreed-upon procedures engagement was conducted in accordance
with attestation standards established by the American Institute of Certified Public Accountants.
The sufficiency of the procedures is solely the responsibility of the Office of the Director of
Finance. Consequently, we make no representation regarding the sufficiency of the procedures
described below either for the purpose for which this report has been requested or for any other
purpose.

The procedures and associated findings are as follows:

GENERAL

Procedures

  •   We reviewed the fiscal 2006 audit report of PPA’s independent auditor to determine
      whether PPA’s 2006 financial statements were deemed to have been fairly presented, in all
      material respects, in accordance with generally accepted accounting principles.
  •   We reconciled the balances per the audited financial statements to the general ledger.
  •   We reviewed the SAS 701 reports covering the internal controls of ACS State and Local

        1
         Statement on Auditing Standards No. 70, “Service Organizations,” Auditing Standards Board of the
American Institute of Certified Public Accountants.
                                                                                                            1
     Solutions, Inc. to determine if the report identified any internal control issues. (ACS
     collects OSP violation citations and collects fines and other costs related to those
     violations.)

Findings

 •   None.



REVENUES PER FISCAL 2006 AUDITED INCOME
STATEMENT (see Schedule A, attached)

Ticketing Revenue

Procedures

We selected two transactions nonstatistically from the general ledger. For the first transaction,
we traced from the general ledger to the journal entry, and from the journal entry to the ACS
Advice of Receipt, and from the Advice of Receipt to the related daily bank statement. For the
second transaction, we traced from the general ledger to the journal entry, and from the journal
entry to the PPA Revenue Allocation Schedule, and from the Revenue Allocation Schedule to
daily bank statement and the ACS Tentative Deposits Schedule.

Findings

 •   None.


Meter Revenue

Procedures

We selected one transaction nonstatistically from the general ledger. We traced the transaction to
the cash receipts journal (CRJ) and footed the journal. For each day of the sample month, we
traced the CRJ entries to the meter operations daily tally sheet (MODTS). We compared the
deposit amounts per the CRJ and MODTS to amounts per the bank statements.

Findings

 •   None.




                                                                                                2
Towing Revenue

Procedures

We selected two transactions from the general ledger: one OSP transaction and one Live Stop
transaction. For the OSP transaction, we traced the transaction amount to the related journal
entry, revenue allocation schedule, ACS Tentative Deposit Schedule, and bank statement. For the
Live Stop transaction, we obtained documents supporting the legal basis for deducting Live Stop
revenue from total towing revenue, traced the Live Stop transaction to a journal entry, and
obtained documentation supporting the basis for the allocation of towing revenue between OSP
and Live Stop.

Findings

 •   None.



EXPENSES PER FISCAL 2006 AUDITED
INCOME STATEMENT (see schedule B, attached)

Payment to the City – On-Street Parking

Procedures

We reconciled the accrual basis payments (as reported in audited financial statements) to the
cash basis payments (as remitted to city). We selected one transaction from the general ledger
and traced it to PPA’s IS-2 Schedule (payment calculation) and verified the schedule’s math
accuracy. We selected revenues and expenses per the IS-2 that were tested as part of our other
revenue and expense procedures. We traced those amounts to the general ledger. We determined
the nature of debt-service and capital outlays deducted from revenue, determined whether they
were proper charges to OSP, and requested support for any allocations. We obtained monthly
reports to the city for fiscal 2006 and compared payments to the IS-2 schedule and investigated
differences. We determined whether the fiscal 2006 payments were made on a monthly basis.

Findings

 •   PPA charged $820,000 to OSP for debt service on a parking lot at 15th and Arch Streets.
     These costs were part of a $4.7 million borrowing to finance the acquisition of the lot. The
     authorization for this charge was a December 1998 “acknowledgement” by the city’s
     finance director granting PPA the right to charge this debt service to OSP. The Controller’s
     Office has been unable to identify the legal basis for this action by the finance director. In
     addition, the $820,000 included $82,000 in charges related to a prior year. No justification
     could be identified for including this prior-year amount in fiscal 2006 expenses.
 •   PPA charged $183,000 to OSP for debt service on the authority’s headquarters at 3101
     Market Street. These costs were part of a $5.5 million borrowing for facility improvements.
     The $183,000 charge was 50 percent of 2006 debt service. No documentation was available
     to support the 50 percent allocation.

                                                                                                 3
 •   PPA charged $286,000 to OSP for vehicle purchases. Of this, $180,000 was for vehicles
     identified by account code as “support” rather than OSP.


Allocations: In Fleet, In Security, & In Support (Administration)

Procedures

We selected one transaction nonstatistically from the general ledger for each of the three
allocations. We obtained documentation for the allocation of expense to OSP. We reviewed the
allocation methodology to determine that it was systematic (applied consistently), rational
(applied logically and persuasively), and mathematically correct.

Findings

 •   Fleet. PPA could not document the total number of vehicles used in the allocation or the
     number of vehicles attributed to OSP.
 •   Security. PPA could not document the percentage used to allocate security cost to OSP.
 •   Administration. PPA allocated administration based on direct cost plus allocated fleet and
     security. To the extent the fleet and security allocations could not be substantiated, the
     administrative allocation was also affected. However, fleet and security were an immaterial
     portion the total expenses used to allocate administration, and their use in the allocation
     increased cost to OSP by a negligible amount ($41,000).


Regular Pay – Ticketwriting, Towing, Booting,
Enforcement, and Meter Collections

Procedures

We selected one transaction nonstatistically from the general ledger for each of the five payrolls.
We traced the general ledger entry to a related payroll register. We selected one employee from
the payroll register, verified that the employee was in pay status for the period tested, inspected
documentation indicating that the employee was working on OSP, and agreed the salary paid to
the authorize salary per the employee’s personnel file.

Findings

 •   Ticketwriting. Payroll register (listing of individuals and their pay for that period) was
     $7,000 (1 percent) less than the amount charged to the general ledger.
 •   Towing. None.
 •   Booting. None.
 •   Enforcement. Payroll register was $3,000 (9.3 percent) less than the amount charged to the
     general ledger.
 •   Meter collections. Employee was overpaid. For the period December 15, 2001 through the
     date of his retirement January 9, 2007, he was overpaid by $9,400, of which $1,852
     pertains to fiscal 2006.



                                                                                                 4
Ticket Processing – Enforcement

Procedures

We selected one transaction nonstatistically from the general ledger. We traced the transaction
from the general ledger to the journal entry and to the ACS invoice. We verified the math
accuracy of the invoice, compared the billing rates to the ACS contract, and noted the accounts
payable stamp evidencing payment. We reviewed ticket activity from calendar 2004 through
calendar 2006 to determine that the number of tickets processed by ACS for the test month was
consistent with the number of tickets processed each month during the three-year period.

Findings

 •   None.


Insurance – On Street

Procedures

We selected one transaction nonstatistically from the general ledger. We traced from the general
ledger to the journal entry. The transaction was a monthly estimate. We inquired as to the basis
for the estimate and the portion allocated to OSP. We compared the total estimated and actual
insurance expenses for fiscal 2006.

Findings

 •   PPA could not explain how the interim accrual ($597,000) or the allocation of expense to
     OSP ($395,000) were determined.


Contingency Payments (Fees for Delinquent Collections)

Procedures

We selected one transaction nonstatistically from the general ledger. We agreed the transaction
amount to the ACS invoice. We agreed the billing rates to the ACS contract. We verified the
math accuracy of the invoice and noted the accounts payable stamp evidencing payment. We
reviewed contingent payments from calendar 2004 through calendar 2006 to determine that the
contingent payments billed by ACS for calendar 2006 were consistent with billings for the last
two calendar years.

Findings

 •   None.




                                                                                              5
Welfare Fund – Ticket Issuing

Procedures

We selected a $172,000 transaction from the general ledger on a nonstatistical basis. We traced
the transaction amount to PPA’s Health and Welfare Payment Schedule to District Council 33.
We selected one employee from the payment schedule and determined that the employee was
active as a parking enforcement officer (OSP) for the test period by reviewing his personnel file.
We verified that the amount contributed on behalf of the employee was supported by PPA’s
agreement with the DC 33. We traced the payment schedule total ($300,000) to the general
ledger posting totals, and from posting totals to the cancelled check. We verified the math
accuracy of all documents examined.

Findings

 •   None.


Pension . . . On Street Enforcement - Ticketwriting

Procedures

We selected one transaction nonstatistically from the general ledger. We obtained the cost-
calculation methodology from management. We obtained documentation for the payroll amounts
and pension rates supporting charges to pension plans J and Y and recalculated those charges.
We selected one employee from each plan and reviewed personnel folders to determine that the
employees were active for the test period and working on OSP.

Findings

 •   A computer error resulted in a de minimis overcharge ($766) to OSP for the test period.


Postage – Lockheed Enforcement Ticket

Procedures

We selected one transaction nonstatistically from the general ledger. We traced the transaction to
the vendor invoice, verified the math accuracy of the invoice, determined the basis of the postal
charges by reference to the vendor contract, and noted the accounts payable stamp evidencing
payment. We also attempted to verify the postal rates in effect at the time.

Findings

 •   PPA could not provide documentation to substantiate the postal rates associated with the
     test transaction of $26,000.




                                                                                                6
We were not engaged to and did not conduct an examination the objective of which would be the
expression of an opinion on the PPA’s fiscal 2006 OSP financial statements. 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.

This report is intended solely for the information and use of the Office of the Director of
Finance, and is not intended to be used by anyone other than this specified party.




November 15, 2007                                 ALBERT F. SCAPEROTTO, CPA
                                                  Deputy City Controller




                                                  ALAN BUTKOWITZ
                                                  City Controller




                                                                                            7
                  FISCAL 2006 REVENUES AND EXPENSES TESTED

        Note: The Controller's Office performed an agreed-upon procedure on each category of
        revenue and expense assigned an item number.


                                   Schedule A
               REVENUES PER AUDITED FINANCIAL STATEMENTS
           Item        Account Title        Balance      %    Cum %
             1    Ticketing Revenue       $ 61,763,646  73.2%  73.2%
             2    Meter Revenue Meters      17,463,978  20.7%  93.8%
             3    Towing Revenue Towing      2,334,457   2.8%  96.6%
                  Other Revenue              2,869,832   3.4% 100.0%
                    Total Revenue         $ 84,431,914 100.0%

        Operating and nonoperating revenues




                                         Schedule B
                   EXPENSES PER AUDITED FINANCIAL STATEMENTS
Item                       Account                    Balance       %                          Cum %
   1   Payment To The City..On Street               $ 18,772,192  22.47%                         22.5%
   2   Allocation In Support On-Street Executive       9,742,566  11.66%                         34.1%
   3   Regular Pay - Ticketwriting                     8,231,187   9.85%                         44.0%
   4   Ticket Processing - Enforcement                 5,857,621   7.01%                         51.0%
   5   Insurance - On-Street                           5,201,652   6.23%                         57.2%
   6   Contingency Payments - Enforcement              4,454,364   5.33%                         62.6%
   7   Welfare Fund - Ticket Issuing                   2,210,771   2.65%                         65.2%
   8   Regular Pay - Towing                            2,145,830   2.57%                         67.8%
   9   Pension On Street Enforcement Ticketwriting     1,802,108   2.16%                         69.9%
  10   Allocation In Fleet On-Street Executive         1,668,895   2.00%                         71.9%
  11   Allocation In Security On-Street Executive      1,656,171   1.98%                         73.9%
  12   Postage - Lockheed Enforcement Ticket           1,413,082   1.69%                         75.6%
  13   Regular Pay - Booting                           1,056,394   1.26%                         76.9%
  14   Regular Pay - Enforcement                         945,079   1.13%                         78.0%
  15   Regular Pay - Meter Collections                   861,463   1.03%                         79.0%
       Other expenses                                 17,523,613  20.98%                        100.0%
          Total expenses                            $ 83,542,990 100.00%



                         NOTE: PPA’s financial statements were audited
                          by a public accounting firm retained by PPA.




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