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HomeMy WebLinkAboutSingle Audit - Federally Assisted Grant Program FY 06/30/2003CITY OF PALM DESERT STAFF REPORT REQUEST: CITY OF PALM DESERT SINGLE AUDIT OF FEDERALLY ASSISTED GRANT PROGRAM FOR FISCAL YEAR ENDED JUNE 30, 2003 SUBMITTED BY: Paul. S. Gibson, Director of Finance Jose Luis Espinoza, CPA Assistant Finance Director DATE: March 25, 2004 CONTENTS: Staff Report and Single Audit Report Recommendation: Receive and file the City of Palm Desert Single. Audit of Federally Assisted Grant Programs for the year ended June 30, 2003. Background: The City was required to undergo an audit of federal funds it received because the City expended more than $300,000 in the year ended June 30, 2003. Lance, Soil & Lunghard, LLP was hired to perform and complete an audit on the Schedule of Federal Financial Assistance for the fiscal year ended June 30, 2003. The result of the audit disclosed no audit findings or questioned costs. Staff recommends to receive and file the City of Palm Desert Single Audit of Federally Assisted Grant Programs for the fiscal year ended June 30, 2003. Submitted By: Approval: Paul S. Gibson, Director of Finance Carlos L. Orte. 'City Manager H:1Acctg031AudftO3lS/NGLE AUDIT STAFF REPORT 2003.dot CITY OF PALM DESERT SINGLE AUDIT REPORT JUNE 30, 2003 CITY OF PALM DESERT JUNE 30, 2003 TABLE OF CONTENTS eport on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards eport on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 Dhedule 1 - Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2003 otes to Financial Statements thedule 2 - Schedule of Findings and Questioned Costs for the Fiscal Year Ended June 30, 2003 Page Number 1 3 5 6 Lance Soll & Lunghard LLP Brandon W. Burrows Donald L. Parker Michael K. Chu David E. Hale A Professional Corporation Donald G. Slater Richard K. Kikuchi ed Public Accountants REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS the Honorable Mayor and Members of the City Council -le City of Palm Desert, California Refired Robert C. Lance 1914-1994 Richard C. Soll Fred J. Lunghard, Jr. 1928.1999 le have audited the financial statements of the City of Palm Desert, California, as of and for the year ended me 30, 2003, and have issued our report thereon dated September 5, 2003. We conducted our audit in :cordance with auditing standards generally accepted in the United States of America and the standards )plicable to financial audits contained in Government Auditing Standards, issued by the Comptroller eneral of the United States. Compliance part of obtaining reasonable assurance about whether the City of Palm Desert's financial statements are of material misstatement, we performed tests of its compliance with certain provisions of laws, gulations, contracts and grants, noncompliance with which could have a direct and material effect on the :termination of financial statement amounts. However, providing an opinion on compliance with those ovisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results our tests disclosed no instances of noncompliance that are required to be reported under Government uditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting planning and performing our audit, we considered the City of Palm Desert's internal control over financial porting in order to determine our auditing procedures for the purpose of expressing our opinion on the uncial statements and not to provide assurance on the internal control over financial reporting. However, we ►ted certain matters involving the internal control structure and its operations that we consider to be portable conditions. Reportable conditions involve matters coming to our attention relating to significant :ficiencies in the design or operation of the internal control structure that, in our judgment, could adversely fect the City's ability to record, process, summarize and report financial data consistent with the assertions of anagement in the financial statements. We noted the following matter which we believe to be a reportable indition: Housing Authority Review wring our review of 100 randomly selected tenant files for the various apartment complexes of the Housing ithority, we noted two instances (both at the Las Seranas Apartment Complex) where tenants were being ercharged. Per discussions with management personnel at the apartment complex, these two tenants are to issued credits on their future bills. Years 2004 cellence 203 N. Brea Blvd. • Suite 203 ° Brea, CA 92821-4056 • (714) 672-0022 • Fax (714) 672-0331 • www.Islcpas.com Lance Lunghard LLP PRTIfIED PUBLIC ACCOUNTANTS 'o the Honorable Mayor and Members of the City Council 'he City of Palm Desert, California material weakness is a condition in which the design or operation of one or more of the internal control omponents does not reduce to a relatively low level the risk that misstatements in amounts that would be iaterial in relation to the financial statements being audited may occur and not be detected within a timely eriod by employees in the normal course of performing their assigned functions. Our consideration of the rternal control over financial reporting would not necessarily disclose all matters in the internal control that light be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that re also considered to be material weaknesses. However, we believe that the reportable condition noted bove is not a material weakness. City's Management Response 9anagement personnel have issued credits in the two instances noted. In order to minimize future errors, the ant for all new move -ins and re -certifications will be set based on the established rent schedule for the ffordable level and family size. Two signatures are required, one of which will be a manager. his report is intended solely for the information of the City Council, management, federal awarding agencies nd pass -through entities and is not intended to be, and should not be, used by anyone other than these pecified parties. „he se 444 ,w4°4 eptember 5, 2003 Lance Soil & Lunghard LLP led Public Accountants REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 "o the Honorable Mayor and Members of the City Council "he City of Paim Desert, California Brandon W. Burrows Donald L. Parker Michael K. Chu David E. Hale A Professional Corporation Donald G. Slater Richard K. Kikuchi Retired Robert C. Lance 1914.1994 Richard C. Soli Fred J. Lunghard, Jr. 1928.1999 Compliance Ve have audited the compliance of the City of Palm Desert, California, with the type of compliance squirements described in the United States Office of Management and Budget (OMB) Circular A-133 :ompliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 003. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its iajor federal programs is the responsibility of the City of Palm Desert's management. Our responsibility is to xpress an opinion on the City of Palm Desert's compliance based on our audit. Ve 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 states, Local Governments and Non -Profit Organizations. Those standards and OMB Circular A-133 require tat we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the roes of compliance requirements referred to above that could have a direct and material effect on a major :deral program occurred. An audit includes examining, on a test basis, evidence about the City of Palm esert's compliance with those requirements and performing such other procedures as we considered ecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our udit does not provide a legal determination on the City of Paim Desert's compliance with those requirements. 1 our opinion, the City of Paim Desert complied, in all material respects, with the requirements referred to bove that are applicable to each of its major federal programs for the year ended June 30, 2003. Internal Control Over Compliance he management of the City of Palm Desert is responsible for establishing and maintaining effective internal ontrol over compliance with requirements of laws, regulations, contracts and grants applicable to federal rograms. In planning and performing our audit, we considered the City of Palm Desert's internal control over DMpliance with requirements that could have a direct and material effect on a major federal program in order determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and ;port on internal control over compliance in accordance with OMB Circular A-133. Years 2004 ;cellence 203 N. Brea Blvd. • Suite 203 • Brea, CA 92821-4056 " (714) 672-0022 • Fax (714) 672-0331 • www.lslcpas.com Lance --r� Soli s Lunghard LLP 'ERTIFlEO PUBLIC ACCOUNTANTS ro the Honorable Mayor and Members of the City Council rhe City of Palm Desert, California Sur consideration of the internal control over compliance would not necessarily disclose all matters in the nternal control that might be material weaknesses. A material weakness is a condition in which the design or )peration of one or more of the internal control components does not reduce to a relativity low level the risk hat noncompliance with applicable requirements of laws, regulations, contracts and grants that would be naterial in relation to a major federal program being audited may occur and not be detected within a timely )eriod by employees in the normal course of performing their assigned functions. We noted no matters nvolving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards We have audited the basic financial statements of the City of Palm Desert as of and for the year ended June 30, 2003, and have issued our report thereon dated September 5, 2003. Our audit was performed for the >urpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by )MB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, s fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. this report is intended solely for the information of the City Council, management, federal awarding agencies Ind pass -through entities and is not intended to be, and should not be, used by anyone other than these specified parties. awe, _lee 5e-04424e, or-4z) =ebruary 12, 2004 CITY OF PALM DESERT Schedule 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2003 Federal Pass -Through CFDA Grantor's =ederal Grantor/Pass-Through Grantor/Program Title Number Number Expenditures J.S. Department of Housing and Urban Development Community Development Block Grant: Grant Entitlement Passed Through the County of Riverside J.S. Department of Transportation Highway Planning and Construction Program: Passed Through California Office of Transportation* Total U.S. Department of Transportation J.S. Department of Justice Direct Program: Local Law Enforcement Block Grant Total Federal Expenditures Major Program 14.218 B02-UC-06-0506 $ 164,620 20.205 RPSTPL-5414(007) 1,721,506 CML-6164(011) 10,929 CML-6164(009) 14,003 RS0312 1,971 1,748,409 16.592 2002-LB-BX-2973 32,986 $ 1,946,015 lote a: Refer to Note 1 to the financial statements for a description of significant accounting policies used in preparing this schedule. lote b: There are no federal awards expended in the form of noncash assistance, insurance in effect or loans or loan guarantees during the year. lote c: Total amount provided to subrecipients during the year from the Community Development Block Grant amounted to $101,466. 5 cote 1: CITY OF PALM DESERT NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2003 Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of Federal Awards a. Scope of Presentation The accompanying schedule presents only the expenditures incurred by the City of Palm Desert that are reimbursable under federal programs of federal financial assistance. For the purposes of this schedule, federal awards includes both federal financial assistance received directly from a federal agency, as well as federal funds received indirectly by the City from a non-federal agency or other organization. Only the portion of program expenditures reimbursable with such federal funds are reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying schedule. b. Basis of Accounting The expenditures included in the accompanying schedule were reported on the modified accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are incurred when the City becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures reported included any property or equipment acquisitions incurred under the federal program. 6 CITY OF PALM DESERT Schedule 2 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003 SECTION I - SUMMARY OF AUDITORS' RESULTS =inancial Statements type of auditors' report issued: Unqualified nternal control over financial reporting: Material weakness(es) identified? yes x no Reportable condition(s) identified that are not considered to be material weakness(es)? x yes none reported Joncompliance material to financial statements noted? yes x no =ederal Awards nternal control over major programs: Material weakness(es) identified? yes x no Reportable condition(s) identified that are not considered to be material weakness(es)? yes x none reported ype of auditors' report issued on compliance for major programs: Unqualified any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? ientification of major programs: CFDA Number(s) 20.205 )ollar threshold used to distinguish between type A and type B program +uditee qualified as low -risk auditee? yes x no Name of Federal Program or Cluster Highway Planning and Construction $300,000 x yes no CITY OF PALM DESERT SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2003 Schedule 2 (Continued) SECTION I1 - FINANCIAL STATEMENT FINDINGS Housing Authority Review uring our review of 100 randomly selected tenant files for the various apartment complexes of the Housing uthority, we noted two instances (both at the Las Seranas Apartment Complex) where tenants were being vercharged. Per discussions with management personnel at the apartment complex, these two tenants are to be sued credits on their future bills. City's Management Response lanagement personnel have issued credits in the two instances noted. In order to minimize future errors, the rent for 11 new move -ins and re -certifications will be set based on the established rent schedule for the affordable level and imily size. Two signatures are required, one of which will be a manager. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS o matters were reported. 8