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SUBJECT:

Request For Asset Forfeiture Funding To Compensate The Independent Auditor’s Annual Asset Forfeiture Audit And Budget Modification No. 20 (RTC#02-096)

REPORT IN BRIEF

Staff recommends approval of Alternative 1 and Budget Modification No. 20 to facilitate ongoing payment of annual Asset Forfeiture Program audits.

BACKGROUND

The federal Departments of Justice and Treasury require annual financial audits of local agency shared asset forfeiture proceeds valued at more than $100,000 in a single fiscal year, or if the local agency’s federal forfeiture fund carries a balance of more than $100,000. Shared proceeds are usually cash and/or property. In all likelihood the Sunnyvale Asset Forfeiture Program will continue to be audited yearly because it usually meets one or both of the federal requirements. Federal regulations permit the use of asset forfeiture funds to pay for such audits.

DISCUSSION

The City of Sunnyvale contracts with an independent financial auditor (see RTC #01-163) to independently verify the accuracy and validity of reported fiscal results. Financial audits, including the Asset Forfeiture Program, are conducted at the close of each fiscal year. The Department of Finance customarily paid for the asset forfeiture audit as an operational "cost of doing business," but recently discovered that payment for the audit was a permissible use under federal asset forfeiture guidelines. With the advice and consent of the Department of Public Safety, the Department of Finance proposes that current year and ongoing costs for the audit be paid with asset forfeiture funds through a Special Project.

FISCAL IMPACT

The cost for the audit at the close of FY 2001/2002 is $3,000. Yearly costs thereafter will be budgeted at $3,000 plus inflation. Unused funds will either be carried over for future audits or returned to the Asset Forfeiture Fund Balance.

Current

Increase (Decrease)

Revised

Asset Forfeiture Fund

Expenditures:

New Asset Forfeiture Audit Project

$ 0

$ 3,000

$ 3,000

Reserves:

Federal Reserves

$ 1,678,869

$ (3,000)

$ 1,675,869

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the library and the City Clerk’s office.

ALTERNATIVES

1. Approve Budget Modification Number 20 as detailed in the Fiscal Impact section of this report.
2. Do not approve Budget Modification Number 20 as detailed in the Fiscal Impact section of this report.

RECOMMENDATION

Staff recommends approval of Alternative 1.

Prepared by:
Nasi Raissian
Finance Manager

Irwin I. Bakin
Director of Public Safety

Approved by:
Robert S. LaSala
City Manager

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