AUDIT REPORT For the Fiscal Year Ended June 30, 2010 _part1 doc

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MEASUREEBONDBUILDINGFUNDOF
BEVERLYHILLSUNIFIED
SCHOOLDISTRICT
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AUDITREPORT
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FortheFiscalYearEnded
June30,2010
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MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
AUDITREPORT
FortheFiscalYearEndedJune30,2010
TableofContents
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 Page
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IntroductionandCitizens’OversightCommitteeMemberListing 1
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IndependentAuditor’sReport 2

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FINANCIALSECTION
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BalanceSheet 4
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StatementofRevenues,ExpendituresandChangesinFundBalance 5
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NotestoFinancialStatements 6
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OTHERINDEPENDENTAUDITOR’SREPORT
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ReportonInternalControloverFinancial
ReportingandonComplianceandOther
MattersBasedonanAuditofFinancialStatementsPerformedinAccordancewith
GovernmentAuditingStandards 15
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AUDITFINDINGSANDMANAGEMENT’SRESPONSESSECTION
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ScheduleofAuditFindingsandManagement’sResponses 17
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SummaryScheduleofPriorAuditFindings 19
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1

MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
IntroductionandCitizens’OversightCommitteeMemberListing
June30,2010
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TheBeverlyHillsUnifiedSchoolDistrictwasunifiedin1935underthelawsoftheStateofCaliforniaand
consistsofanareacomprisingapproximately5.7squaremiles.TheDistrictoperatesfourelementary
schools,onehighschool,andoneadultschool.
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InNovember2008,theDistrict’svotersapprovedbymore
thantherequired55%favorablevote,Measure
E,authorizingtheissuanceandsaleofgeneralobligationbonds,nottoexceed$334,000,000.Thepassage
ofProposition39inNovember2000amendedtheCaliforniaConstitutiontoincludeaccountability
provisions.Specifically,theDistrictmustconductanannualindependentperformanceaudittoensure
thatfunds
havebeenexpendedonlyonthespecificprojectslistedaswellasanannual,independent
financialauditoftheproceedsfromthesaleofthebondsuntilalloftheproceedshavebeenexpendedfor
facilitiesprojects.
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TheProposition39bondswereissuedbytheDistrict,throughtheCountyof
LosAngeles.OnJanuary6,
2009,Electionof2008,Series2009oftheMeasure Ebondauthorizationwasissued,whichconsistedof
currentinterestbondsandcapitalappreciationbondswithaninitialparamountof$72,044,664with
statedinterestratesof2.50%to5.0%andmaturingthroughAugust1,2033.As
ofJune30,2010,the
principalbalanceoutstandingontheElectionof2008,Series2009bondwas$72,044,664.
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UponpassageofProposition39,anaccompanyingpieceoflegislation,AB1908(Chapter44,Statutesof
2000),wasalsoenacted,whichamendedtheEducationCodetoestablishadditionalprocedureswhich

mustbe
followedifaDistrictseeksapprovalofabondmeasurepursuanttothe55%majorityauthorized
inMeasureEincludingformation,compositionandpurposeoftheCitizens’OversightCommittee,and
authorizationforinjunctivereliefagainsttheimproperexpenditureofbondrevenues.
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TheCitizens’OversightCommitteehadthefollowingmembersasof
June30,2010,allofwhomwere
appointedbytheDistrict’sBoardofEducationwithtwoyeartermsofoffice:
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Name Title Representation EducationCodeSection
LesBronte Chair ActiveinaSeniorCitizensʹOrganization 15282(a)(2)
RudyCole
ViceChair Community‐at‐Large 15282(a)
WoodrowClark Member ActiveinaBusinessOrganization 15282(a)(1)
AnaLaDou Member ParentofChildEnrolledinDistrict 15282(a)(4)
LindaLewis Member ParentofChildEnrolledinDistrictandActiveinaParent‐TeacherOrganization 15282(a)(5)
ShirleyZaragoza Member ParentofChildEnrolledinDistrict 15282(a)(4)
Open
Open Activeina
BonaFideTaxpayersʹOrganization 15282(a)(3)
SteveHendry Member Community‐at‐Large,FinanceBackgroundMember 15282(a)
ToddOkum Member Community‐at‐Large,ConstructionBackgroundMember 15282(a)
MartinPerlberger Member Community‐at‐Large 15282(a)
JoeSafier Member Community‐at‐Large,FinanceBackgroundMember 15282(a)
JulieSteinberg Member Community‐at‐Large 15282(a)
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GoverningBoardMembersand
MeasureECitizens’OversightCommittee
BeverlyHillsUnifiedSchoolDistrict
BeverlyHills,California
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
INDEPENDENTAUDITOR’SREPORT
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WehaveauditedtheaccompanyingbalancesheetoftheMeasureEBondBuildingFundofBeverlyHills
UnifiedSchoolDistrict(the“District”)asofJune30,2010,andtherelatedstatementofrevenues,
expend
ituresandchangesinfundbalanceforthefiscalyearendedJune30,2010.Thesefinancial
statementsaretheresponsibilityoftheDistrict’smanagement.Ourresponsibilityistoexpressanopinion
onthesefinancialstatementsbasedonouraudit.
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WeconductedourauditinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesof
AmericaandthestandardsapplicabletofinancialauditscontainedinGovernmentAuditingStandards,
issuedbytheComptrollerGeneraloftheUnitedStates.Thosestandardsrequirethatweplanand
performtheaudittoobtainreasonableassuranceaboutwhe
therthefinancialstatementsarefreeof
materialmisstatement.Anauditincludesexamining,onatestbasis,evid
encesupportingtheamounts

anddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciples
usedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallfinancialstatement
presentation.Webelievethatourauditprovidesareasonablebasisforouropinion.
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AsdiscussedinNote1A,the financialstatementspresentonlytheindividualMeasureEBondBuilding
Fund,consistingofthenetconstructionproceed
sofMeasureEgeneralobligationbondsasissuedbythe
District,throughtheCountyofLosAngeles, andarenotintendedtopresentfairlythefinancialposition
oftheDistr
ictinconformitywithgenerallyacceptedaccountingprinciples.
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Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,the
financialpositionoftheMeasureEBondBuildingFundofBeverlyHillsUnifiedSchoolDistrictasofJune
30,2010,andtheresultsofitsoperationsforthe fiscalyearend
edJune30,2010,inconformitywith
accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.
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InaccordancewithGovernmentAuditingStandards ,wehavealsoissuedourreportdatedDecember10,
2010onourconsiderationofBeverlyHillsUnifiedSchoolDistrict’sinternalcontroloverfinancial
reportingandourtestsofitscompliancewithcertainprovisionsoflaws,regulations,contracts,grants
agreementsandothermatters.Thepurpose
ofthatreportistodescribethescopeofourtestingof
internalcontrolsoverfinancialreportingandcomplianceandtheresultsofthattesting,andnotto
provideanopinionontheinternalcontroloverfinancialreportingoroncompliance.Thatreportisan
integralpartofanauditperformed
inaccordancewithGovernmentAuditingStandardsandshouldbe

consideredinassessingtheresultsofouraudit.
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InaccordancewiththerequirementsofProposition39,asincorporatedinCaliforniaConstitutionArticle
13A,wehavealsoissuedourperformanceauditreportdatedDecem ber10,2010onourconsiderationof
BeverlyHills
UnifiedSchoolDistrict’scompliancewiththerequirementsofProposition39.Thatreportis
anintegralpartofourauditoftheMeasureEBondBuildingFundforthefiscalyearendedJune30,2010
andshouldbeconsideredinassessingtheresultsofourfinancialaudit.
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SanDiego,California
December10,2010
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FinancialSection
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Theaccompanyingnotestofinancialstatementsareanintegralpartofthisstatement.
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MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
BalanceSheet
June30,2010


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ASSETS
Cashincountytreasury 63,474,622$
Accountsreceivable 214,516
Duefromotherfunds 2,000,000
TotalAssets 65,689,138$
LIABILITIESANDFUNDBALANCE
Liabilities
Accountspayable 169,755$
TotalLiabilities 169,755
FundBalance
Unreserved 65,519,383
TotalLiabilitiesandFundBalance 65,689,138$

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Theaccompanyingnotestofinancialstatementsareanintegralpartofthisstatement.
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MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
StatementofRevenues,ExpendituresandChangesinFundBalance
FortheFiscalYearEndedJune30,2010


REVENUES
Interestincome 934,446$
Otherlocalrevenue 65,878
TotalRevenues

1,000,324
EXPENDITURES
Facilitiesacquisitionandconstruction 3,828,334
TotalExpenditures
3,828,334
NetChangeinFundBalance
(2,828,010)
FundBalance,July1,2009
68,347,393
FundBalance,June30,2010
65,519,383$
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MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
NotestoFinancialStatements
June30,2010


NOTE1–SIGNIFICANTACCOUNTINGPOLICIES
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A. ReportingEntity

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TheBeverlyHillsUnifiedSchoolDistrict(the“District”)wasestablishedin1935.TheDistrict
servesapproximately10,126studentsinfourelementaryschools,onehighschool,andoneadult
school.

OnNovember4,2008theDistrictvotersauthorized$334millioningeneralobligationbonds
(MeasureE)toprovidesafeandmodernized
schoolfacilities,makenecessarystructuralseismic
safetyrepairs,upgrade,repair,andreconstructagingclassrooms,infrastructure,multiuse,gyms,
libraries,science,technology&labs;roofing,plumbing,heating,ventilationandelectrical
systemstobetterprotectstudentsandstafffromunauthorizedentry,securityrisksandnatural
disasters.

AnoversightcommitteetotheDistrict’sGoverning
BoardandSuperintendent,calledthe
Citizens’OversightCommittee(COC),wasestablishedpursuanttotherequirementsofStatelaw
andtheprovisionsoftheMeasureEbond.TheCOCisrequiredbystatelawtoactivelyreview
andreportontheproperexpenditureoftaxpayers’moneyforschoolconstruction.TheCOC
provides
oversightandadvisesthepublicwhethertheDistrictisspendingtheMeasureEBond
fundsforschoolcapitalimprovementswithinthescopeofprojectsoutlinedintheMeasureE
Bondprojectlist.Infulfillingitsduties,the COCreviews,amongotherthings,theDistrict’s
annualperformanceandfinancialauditsof
MeasureEactivity.

ThestatementspresentedarefortheindividualMeasureEBondBuildingFundoftheDistrict,
consistingofthenetconstructionproceedsofElectionof2008,Series2009generalobligation
bondsasissuedbytheDistrict,throughtheCountyofLosAngeles,andarenotintendedtobea

completepresentationoftheDistrict’sfinancialpositionorresultsofoperations.Thereareno
relatedpartiesorcomponentunitsincludedinthisfinancialstatementpresentation.


B. AccountingPolicies


TheDistrictaccountsforitsfinancialtransactionsinaccordancewiththepoliciesandprocedures
oftheCaliforniaDepartmentofEducationʹsCaliforniaSchoolAccountingManual.Theaccounting
policiesoftheDistrictconformtogenerallyacceptedaccountingprinciplesasprescribedbythe
GovernmentalAccountingStandardsBoard(GASB)andtheAmericanInstitute
ofCertified
PublicAccountants(AICPA).
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
7
MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
NotestoFinancialStatements
June30,2010


NOTE1–SIGNIFICANTACCOUNTINGPOLICIES(continued)


C. BasisofAccounting


Basisofaccountingreferstowhenrevenuesandexpendituresarerecognizedintheaccountsand
reportedinthefinancialstatements.Basisofaccountingrelatestothetimingofmeasurement
made,regardlessofthemeasurementfocusapplied.


Thefinancialstatementsarepresentedonthemodifiedaccrualbasisofaccounting.Underthe
modifiedaccrualbasisofaccounting,revenuesarerecordedwhensusceptibletoaccrual;i.e., both
measurableandavailable.“Available”meanscollectiblewithinthecurrentperiodorwithin60
daysafteryear‐end.Expendituresaregenerallyrecognizedunderthemodifiedaccrualbasisof
accountingwhentherelatedliabilityisincurred.

D. Encumbrances


Encumbranceaccountingisusedinallbudgetedfundstoreserveportionsofapplicable
appropriationsforwhichcommitmentshavebeenmade.Encumbrancesarerecordedfor
purchaseorders,contracts,andothercommitmentswhentheyarewritten.Encumbrancesare
liquidatedwhenthecommitmentsarepaid.

E. DepositsandInvestments


InaccordancewithEducationCodeSections15357and41001,theDistrictmaintainsaportionof
itscashintheLosAngelesCountyTreasury.Thecountypoolsthesefundswiththoseofother
districtsinthecountyandinveststhecash.Thesepooledfundsarecarriedatcost,which
approximatesmarket
value.Interestearnedisdepositedquarterlyintoparticipatingfunds.Any
investmentlossesareproportionatelysharedbyallfundsinthepool. 

F. UseofEstimates


Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccounting
principlesrequiresmanagementtomakeestimatesandassumptionsthataffectthereported

amountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateof
thefinancialstatementsandthereportedamountsofrevenuesandexpenditures
duringthe
reportingperiod.Actualresultscoulddifferfromthoseestimates. 
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
8
MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
NotestoFinancialStatements
June30,2010


NOTE1–SIGNIFICANTACCOUNTINGPOLICIES(continued)


G. BudgetsandBudgetaryAccounting


Annualbudgetsareadoptedonabasisconsistentwithgenerallyacceptedaccountingprinciples
forallgovernmentfunds.Bystatelaw,theDistrictʹsgoverningboardmustadoptabudgetno
laterthanJuly1.Apublichearingmustbeconductedtoreceivecommentspriortoadoption.
TheDistrictʹsgoverning
boardsatisfiedtheserequirements.

ThesebudgetsarerevisedbytheDistrictʹsgoverningboardduringtheyeartogiveconsideration
tounanticipatedincomeandexpenditures.Formalbudgetaryintegrationwasemployedasa
managementcontroldeviceduringtheyearforallbudgetedfunds.TheDistrictemploysbudget

controlbyminorobject
andbyindividualappropriationaccounts.Expenditurescannotlegally
exceedappropriationsbymajorobjectaccount.


NOTE2–CASHANDINVESTMENTS


SummaryofCashandInvestments

CashandinvestmentsasofJune30,2010areclassifiedintheaccompanyingfinancialstatementsascash
incountytreasuryfor$63,474,622.

PoliciesandPractices

TheDistrictisauthorizedunderCaliforniaGovernmentCodetomakedirectinvestmentsinlocalagency
bonds,notes,orwarrantswithintheState;U.S.Treasuryinstruments;registeredStatewarrantsor
treasurynotes;securitiesoftheU.S.Government,oritsagencies;bankersacceptances;commercialpaper;
certificatesofdepositplacedwithcommercialbanks
and/orsavingsandloancompanies;repurchaseor
reverserepurchaseagreements;mediumtermcorporatenotes; sharesofbeneficialinterestissuedby
diversifiedmanagementcompanies,certificatesofparticipation,obligationswithfirstprioritysecurity;
andcollateralizedmortgageobligations.Investmentsofdebtproceedsheldbytrusteesaregovernedby
theprovisionsofdebtagreementsrather
thanthegeneralprovisionsoftheCaliforniaGovernmentCode.
Theseprovisionsallowfortheacquisitionofinvestmentagreementswithmaturitiesupto30years.

CashinCountyTreasury–TheDistrictisconsideredtobean involuntaryparticipantinanexternal
investmentpoolastheDistrictisrequiredtodeposit
allreceiptsandcollectionsofmonieswiththeir

CountyTreasurer(EducationCodeSection41001).ThefairvalueoftheDistrict’sinvestmentinthepool
isreportedintheaccountingfinancialstatementsatamountsbasedupontheDistrict’spro‐ratashareof
thefairvalueprovidedbytheCountyTreasurer forthe
entireportfolio(inrelationtotheamortizedcost
ofthatportfolio).Thebalanceavailableforwithdrawalisbasedontheaccountingrecordsmaintainedby
theCountyTreasurer,whichisrecordedontheamortizedcostbasis.
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
9
MEASUREEBONDBUILDINGFUND
OFBEVERLYHILLSUNIFIEDSCHOOLDISTRICT
NotestoFinancialStatements
June30,2010


NOTE2–CASHANDINVESTMENTS(continued)


GeneralAuthorizations

Exceptforinvestmentsbytrusteesofdebtproceeds,theauthoritytoinvestDistrictfundsdepositedwith
thecountytreasuryisdelegatedtotheCountyTreasurerandTaxCollector.Thetablebelowidentifies
examplesoftheinvestmenttypespermittedintheinvestmentpolicy:


Authorized
InvestmentType
Maximum

Remaining
Maturity
Maximum
Percentage
ofPortfolio
 Maximum
Investment
inOneIssuer
LocalAgencyBonds,Notes,Warrants 5years None  None
RegisteredStateBonds,Notes,Warrants 5years None  None
U.S.TreasuryObligations 5years None  None
U.S.AgencySecurities 5years None  None
Banker’sAcceptance 180days 40%  30%
CommercialPaper 270days 25%  10%
NegotiableCertificatesofDeposit 5years 30%  None
RepurchaseAgreements 1year None  None
ReverseRepurchaseAgreements 92days 20%ofbase None
Medium‐Term
CorporateNotes 5years 30%  None
MutualFunds N
/
A 20%  10%
MoneyMarketMutualFunds N/A 20%  10%
MortgagePass‐ThroughSecurities 5years 20%  None
CountyPooledInvestmentFunds N/A None  None
LocalAgencyInvestmentFund(LAIF) N/A None  None
JointPowersAuthorityPools N/A None  None

Limitationsastheyrelatetointerestraterisk,creditrisk,andconcentrationofcreditriskare described


below:

InterestRateRisk

Interestrateriskistheriskthatchangesinmarketinterestrateswilladverselyaffectthefairvalueofan
investment.Generally,thelongerthematurityofaninvestment,thegreaterthesensitivityofitsfair
valuetochangesinmarketinterestrates.TheDistrictmanagesitsexposuretointerest
rateriskby
investingintheCountyTreasury.TheDistrictmaintainsaninvestmentwiththeLosAngelesCounty
InvestmentPoolwithafairvalueofapproximately$63,844,143andanamortizedbookvalueof
$63,474,622.TheweightedaveragematurityforthispoolasofJune30,2010was536days.

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