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6.1 B <br /> City of Redwood City AT �,��ie�� <br /> Single Audit Reports <br /> Schedule of Findings and Questioned Costs <br /> For the Year Ended June 30, 2010 , <br /> B. FINDINGS - FINANCIAL STATEMENTS AUDIT <br /> FS-2010-01 Prior Period Adjustment <br /> Criteria: All explicit and measurable equity interest in a joint venture should be <br /> reported as an asset by participating governments of the joint venture. <br /> Condition: The City recorded a prior period adjustrnent in the amount of $9.2 million to <br /> its investment in sewer authority to correct the City's equity interest of the <br /> South Bayside System Authority. <br /> Cause: The City was selectively reporting certain equity interest, not all equity <br /> interest, on its financial statements in previous years. <br /> Effect: The previous years' financial statements have been materially misstated. <br /> Recommendation: The City needs to record all equity interest of other entities in accordance with <br /> accounting principles generally accepted in the United States of America. <br /> Management Response: During fiscal year 2009-10, the City recorded a prior period adjustment to <br /> increase the City's investment in the South Bayside System Authority (SBSA) <br /> as it changed its methodology in calculating the amount of its investment. <br /> In prior fiscal years, the City only reflected its contributions to SBSA's Plant, <br /> Pump Station and Stage 2 Construction Fund, due to the pre-GASB 34 <br /> accounting which segregated contributed capital in the fund equity section. <br /> After the implementation of GASB 34 by SBSA, the concept of contributed <br /> capital was eliminated. However, the City coniinued to reflect its equity <br /> interest in SBSA on the same limited basis that existed prior to GASB 34. <br /> During fiscal year 2009-10, the City's auditors, Caporicci & Larson, <br /> recommended that the City expand the recording of its equity interest in <br /> SBSA based on its share of all of the funds maintained by SBSA. The City has <br /> recorded the prior period adjustment in the amount of $9,200,926 to record its <br /> equity interest in all of the additional funds not previously included in this <br /> calculation. <br /> 10 <br />