HomeMy WebLinkAboutAudit - FYE 06/30/2014 Federally Assisted Grant ProgramsCITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: RECEIVE AND FILE THE SINGLE AUDIT OF FEDERALLY
ASSISTED GRANT PROGRAMS FOR THE FISCAL YEAR ENDED
JUNE 30, 2014
DATE: February 26, 2015
SUBMITTED BY: Paul S. Gibson, Finance Director
CONTENTS: Single Audit Report for the Fiscal Year Ended June 30, 2014
Recommendation
By Minute Motion, that the City Council receive and file the single audit
report of Federally Assisted Grant Programs for fiscal year ended June 30,
2014.
Committee Recommendation
The Audit, Investment and Finance Committee received the single audit report at their
February 24, 2015 meeting, and it was recommended that the report for the fiscal year
ended June 30, 2014 be received and filed by the City Council.
Background
The Single Audit Act and Office of Management and Budget (OMB) Circular A-133, Audits
of States, Local Governments, and Non -Profit Organizations, requires non-federal entities
that expend equal to or in excess of $500,000 in a fiscal year in federal awards to have
an audit performed in accordance with the Single Audit Act.
The City was required to undergo an audit of federal funds it received because the City
expended more than $500,000 in the year ended June 30, 2014. On Page 6 of the Single
Audit of Federally Assisted Grant Programs, a detail of federal expenditures is given. In
total, the City expended $1,347,526 for the year ended June 30, 2014.
There were no findings in the report. Staff requests that the Council receive and file the
single audit report for fiscal year ended June 30, 2014.
G TinanceW iamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2014\SR - Council single audit 2014.docx
Staff Report
Approval of Single Audit Report for Fiscal Year ended June 30, 2014
February 26, 2015
Page 2 of 2
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by;
to e
Paul S. tfiib�(on, Finance Director
PSG:JLE:nmo
Approved by:
hn M. Wohlmuth, City Manager
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2014\SR - Council single audit 2014.docx
CITY OF PALM DESERT, CALIFORNIA
SINGLE AUDIT OF FEDERALLY
ASSISTED GRANT PROGRAMS
JUNE 30, 2014
CITY OF PALM DESERT, CALIFORNIA
TABLE OF CONTENTS
June 30, 2014
Page
Number
Independent Auditors' 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 l - 2
Independent Auditors' Report on Compliance for Each Major
Program and on Internal Control Over Compliance in Accordance
with OMB CircularA-133 and on the Schedule of Expenditures
of Federal Awards 3-5
Schedule of Expenditures of Federal Awards and Schedule of
Findings and Questioned Costs:
Schedule of Expenditures of Federal Awards 6
Notes to Schedule of Expenditures of Federal Awards 7-8
Schedule of Findings and Questioned Costs 9 - 10
Summary Schedule of Prior Audit Findings 11 - 12
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
I-INANCIAL REPORTING AND ON COMPLIANCE AND OTI IER MATTERS
BASED ON AN AUDIT OF FINANCIAI, STNI'EMENTS PERFORMED IN
ACCORDANCE WITII GO VERNMENTA UDITING STANDARDS
City Council
City of Palm Desert
Palm Desert, California
We have audited, in accordance with the 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, the financial statements of the governmental
activities, the business -type activities, the discretely presented component unit, each major fund, and
the aggregate remaining fund information of the City of Palm Desert, California, (the City), as of and
for the year ended June 30, 2014, and the related notes to the financial statements, which collectively
comprise the City's basic financial statements, and have issued our report thereon dated
November 17, 2014.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinion on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,
we do not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control 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 and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the City's financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in
internal control that is less severe than a material weakness, yet important enough to merit attention by
those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify
any deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit and, accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of' this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
City's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Irvine, California
November 17, 2014
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INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR
EACI I MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 AND ON TI IE
SCIIEDULE OF EXPENDITURES OF FEDERAL AWARDS
City Council
City of Palm Desert
Palm Desert, California
Report on Compliance for Each Major Federal Program
We have audited the City of Palm Desert's (the City) compliance with the types of compliance
requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct
and material effect on each of the City's major federal programs for the year ended June 30, 2014. The
City's major federal programs are identified in the summary of auditors' results section of the
accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and
grants applicable to its federal programs.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance for each of the City's major federal
programs based on our audit of the types of compliance requirements referred to above. We conducted
our audit of compliance in accordance with auditing standards generally accepted in the United States
of America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of Slates,
Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 require
that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with
the types of compliance requirements referred to above that could have a direct and material effect on a
major federal program occurred. An audit includes examining, on a test basis, evidence about the
City's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major
federal program. However, our audit does not provide a legal determination of the City's compliance.
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Opinion on Each Major Federal Program
In our opinion, the City of Palm Desert complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major federal
programs for the year ended June 30, 2014.
Report on Internal Control over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing
our audit of compliance, we considered the City's internal control over compliance with the types of
requirements that could have a direct and material effect on each major federal program to determine
the auditing procedures that are appropriate in the circumstances for the purpose of expressing an
opinion on compliance for each major federal program and to test and report on internal control over
compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion
on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of the City's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A
significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance, yet important
enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. I lowever,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
We have audited the financial statements of the governmental activities, the business -type activities,
the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the City, as of and for the year ended June 30, 2014, and the related notes to the
financial statements, which collectively comprise the City's basic financial statements. We issued our
report thereon dated November 17, 2014, which contained unmodified opinions on those financial
statements. Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the basic financial statements. The accompanying schedule of expenditures
of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133
and is not a required part of the basic financial statements.
ME
Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
(Continued)
Such information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements
or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the schedule of
expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
Irvine, California
February 9, 2015, except to the date for the Schedule of Expenditures of Federal Awards to which the
date is November 17, 2014
- 5 -
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
CITY OF PALM DESERT, CALIFORNIA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2014
Federal Grantor /
Pass - Through Grantor /
Program 'title
U.S Department of Housing and Urban Development
Direct Programs
Community Development Block Entitlement
Grant:
Community Development Block
Entitlement Grant
Catalog of'
Federal
Domestic Program
Assistance Identification
Number Number
14.218
Total U S. Department of I lousing and Urban Development
U.S. Department of Transportation
Passed through the State of'California
Department of Transportation
Highway Planning and Construction
20,205
Total I lighway Planning and Construction
Passed through the University of California, Berkeley
Traffic Safety Center:
State and Community I lighway Safety -
Sobriety Checkpoint Program LLFA
20 600
Passed through the City of Riverside:
State and Community I lighway Safety -Avoid 30
20.600
Passed through the California Office of'TrafIc Safety
State and Commumty Highway Safety
20.600
Total State and Community Highway Safety
Total U S Department of'I'ransportation
11 S Department off lomeland Security
Passed through County of Riverside Fire Department.
I Iomeland Security Grant Program
97.067
Total U.S. Department of Homeland Security
TOTAL DISBURSEMENTS TO SUBRECIPIENTS
TOTAL. E•XPENDI URFS OF FF.DFRAI. AWARDS
Expenditures
of
Federal
Awards
B-12-MC-06-0594 S 200,603 S
13-13-MC-06-0594 158,742
359,345
C ML. 5414 (008)
[IP21CM1. 5414 (013)
SC 13302
Al-0842
PT13114
75,480
855,458
930,938
28,680
1,431
18,841
48,952
979,890
Disbursements
to
Subrecipicnts
171595
153.742
327,337
2011-SS-0077 6,640
2012-SS-00123 1,651
8,291 -
S 327,337
S 1,347,526
See Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over
Compliance Required by OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards
(pages 3 through 5) and Notes to Schedule of Expenditures of Federal Awards (pages 7 and 8).
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CITY OF PALM DESERT, CALIFORNIA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
June 30, 2014
1. GENERAL:
The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal
financial assistance programs of the City of Palm Desert (the City). The City's reporting entity is
defined in Note 1 of the notes to the City's financial statements. All financial assistance received
directly from federal agencies as well as federal financial assistance passed through other
government agencies to the City is included in the accompanying schedule.
2. BASIS OF ACCOUNTING:
The accompanying Schedule of Expenditures of Federal Awards is presented using the modified
accrual basis of accounting for governmental funds and the accrual basis for proprietary funds,
which is described in the Note 1 of the notes to the City's financial statements.
3. RELATIONSHIP TO COMPREI IENSIVE ANNUAL FINANCIAL, REPORT:
Amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree to
amounts reported within the City's Comprehensive Annual Financial Report.
4. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS:
Amounts reported in the accompanying Schedule of Lxpenditures of Federal Awards agree with
amounts reported in federal financial reports.
See Independent Auditors' Report on Compliance for Each Major Program and on Internal Control
Over Compliance Required by OMB Circular A-133 and on the Schedule of Expenditures of Federal
Awards (pages 3 through 5) and Schedule of Expenditures of Federal Awards (page 6).
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CITY OF PALM DESERT, CALIFORNIA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
(CONTINUED)
June 30, 2014
5. SUBRECIPIENTS:
During the fiscal year ended June 30, 2014, the City disbursed federal funds to the following
subrecipients under the Community Development Block Entitlement Grant Program
(CFDA #14.218):
Amount
Disbursed
CDBG
Fair Housing Council of Riverside County $ 31,036
Desert Aids Project 30,916
Incight 5,211
Borrego Community Health Foundation 13,199
Desert Best Friends Closet 4,830
Joslyn Center 97,954
Independent Living Partnership 5,121
Jean Benson Childcare Facility - Family YMCA of the Desert 27,982
Martha's Village and Kitchen 14,688
Ranch Recovery Center 96,400
Total Subrecipient Payments $ 327,337
6. DEFERRED LOANS RECEIVABLE:
The CDBG balance of deferred loans receivable at June 30, 2014 was $0.
7. CONTINGENCIES:
Under the terms of federal and state grants, additional audits may be requested by the grantor
agencies and certain costs may be questioned as not being appropriate expenditures under the terms
of the grants. Such audits could lead to a request for reimbursement to the grantor agencies.
See Independent Auditors' Report on Compliance for Each Major Program and on Internal Control
Over Compliance Required by OMB Circular A-133 and on the Schedule of Expenditures of Federal
Awards (pages 3 through 5) and Schedule of Expenditures of Federal Awards (page 6).
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CITY OF PALM DESERT, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2014
1. SUMMARY OF AUDITORS'RESULTS:
TS:
Financial Statements
Type of auditors' report issued:
• Unmodified
Internal control over financial reporting:
• Material weakness identified?
• Significant deficiency identified?
yes x no
yes x none reported
Noncompliance material to financial statements noted: yes
Federal Avvards:
Internal control over major programs:
• Material weakness identified?
• Significant deficiency identified?
x no
yes x no
yes x none reported
Type of auditors' report issued on compliance for major programs:
• Unmodified
Any audit findings disclosed that are required to be
reported in accordance with Section 510(a) of OMB
Circular A-133? yes x no
Identification of major programs:
CFDA Number(s) Name of Federal Program or Cluster
20.205 Passed through the State of California Department of
Transportation, Highway Planning and Construction
Dollar threshold used to distinguish
between type A and type B programs: $ 300,000
Auditee qualified as low -risk auditee? x yes _ no
See Independent Auditors' 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 and Independent Auditors' Report on Compliance for Each Major
Program and on Internal Control Over Compliance Required by OMB Circular A-133 and on the
Schedule of Expenditures of Federal Awards (pages 1 through 5).
CITY OF PALM DESERT, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(CONTINUED)
For the year ended June 30, 2014
2. FINDINGS - FINANCIAL STATEMENT AUDIT:
None.
3. FINDINGS AND QUESTIONED COSTS -MAJOR FEDERAL AWARD PROGRAM AUDIT:
None.
See Independent Auditors' 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 and Independent Auditors' Report on Compliance for Each Major
Program and on Internal Control Over Compliance Required by OMB Circular A-133 and on the
Schedule of Expenditures of Federal Awards (pages 1 through 5).
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CITY OF PALM DESERT, CALIFORNIA
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the year ended June 30, 2014
Finding Number 2013-01
Noncompliance - Reporting
Major Program
United States Department of Housing and Urban Development; Direct Assistance; Community
Development Block Entitlement Grant; (CFDA # 14.218); Grant Identification
Numbers: B-11-MC-06-0594 and B- 12-MC-06-0594
Criteria
As of October 1, 2010, the Federal Funding Accountability and Transparency Act (FFATA) requires a
prime recipient of non -recovery act grants to report sub -awards of $25,000 or more on the FFATA
Subaward Reporting System (FSRS - www.fsrs.gov). The prime awardee is required to file a FFATA
sub -award report by the end of the month following the month in which the prime recipient awards any
sub -grant greater than or equal to $25,000.
Condition
The City, a prime recipient, made three sub -awards in the amounts of $29,690, $29,083, and $50,000
subsequent to October 1, 2010 and did not report the required information on the FFATA Subaward
Reporting System.
Context
The City had three sub -awards over $25,000 for the year ended June 30, 2013 and was unaware of the
FFATA filing requirement sub -award report.
See Independent Auditors' 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 Standardv and Independent Auditors' Report on Compliance for Each Major
Program and on Internal Control Over Compliance Required by OMB Circular A-133 and on the
Schedule of Expenditures of Federal Awards (pages 1 through 5).
CITY OF PALM DESERT, CALIFORNIA
SUMMARY SCIiEDULE OF PRIOR AUDIT FINDINGS
(CONTINUED)
For the year ended June 30, 2014
Finding Number 2013-01 (Continued)
Noncompliance - Reporting (Continued)
uestioned Costs
None.
Cnncf-
The City staff was not aware of the FFATA requirement.
Effect
The City did not comply with the FFATA filing requirement.
Recommendation
We recommend that the City establish procedures that will ensure the reporting of required information
for sub -awards greater than or equal to $25,000 on the FFATA Subaward Reporting System.
Management Response
The City was not aware of the reporting requirements for the Federal Funding Accountability and
Transparency Act (FFATA). Upon receiving notification from our auditors regarding the report
requirement, City staff filed all sub -awards greater than or equal to $25,000 on the FFATA sub -award
Reporting System. City staff is now aware of the requirement and going forward will file the required
FFATA sub -award report by the end of the month following the month in which the City of Palm
Desert as prime recipient awards any sub -grant greater than or equal to $25,000.
Current Status
This finding has been resolved.
See Independent Auditors' 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 and Independent Auditors' Report on Compliance for Each Major
Program and on Internal Control Over Compliance Required by OMB Circular A-133 and on the
Schedule of Expenditures of Federal Awards (pages 1 through 5).
SIPM