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HomeMy WebLinkAboutSingle Audit of Federally Assisted Grant Program FYE 06-30-2005IVLC CITY OF PALM DESERT STAFF REPORT REQUEST: CITY OF PALM DESERT SINGLE AUDIT OF FEDERALLY ASSISTED GRANT PROGRAM FOR FISCAL YEAR ENDED JUNE 30, 2005 SUBMITTED BY: Paul S. Gibson, Director of Finance Jose Luis Espinoza, CPA Assistant Finance Director DATE: April 13, 2006 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, 2005. Background: 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, 2005. 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, 2005. The Single Audit Report was reviewed and accepted at the February 28, 2006 meeting by the Audit, Investment & Finance Committee. 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, 2005. Submitted By: Pa I S. Gibson, Director of Finance Approval: Carlos L. Ortega, Cif+ Manager H:1Acctg0544udd051SingIe Audd Stall Report 2005.doc CITY OF PALM DESERT, CALIFORNIA SINGLE AUDIT REPORT JUNE 30, 2005 e Fi..•::. 1 CITY OF PALM DESERT JUNE 30, 2005 TABLE OF CONTENTS 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 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 Page Number 1 3 Schedule 1 - Schedule of Expenditures of Federal Awards for the Year Ended June 30, 2005 5 Notes to the Schedule of Expenditures of Federal Awards 6 Schedule 2 - Schedule of Findings and Questioned Costs for the Fiscal Year Ended June 30, 2005 7 I 115Lmf:1,1 nce & nghard 1 LLP Certified Public Accountants 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 To the Honorable Mayor and Members of the City Council City of Palm 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. 192E-1999 We have audited the financial statements of the City of Palm Desert, California, as of and for the year ended June 30, 2005, and have issued our report thereon dated September 9, 2005. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Palm Desert's intemal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the intemal control over financial reporting would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the intemal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Palm Desert's financial statements are free of 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. 75 YEARS 1929 ►' ' 2004 1 06 ExGciteJlce 203 N. Brea Blvd., Suite 203 • Brea, CA 92821-4056 • (714) 672-0022 o Fax (714) 672-0331 • www.lslcpas.com To the Honorable Mayor and Members of the City Council The City of Palm Desert, California This report is intended solely for the information of the City Council, management, federal awarding agencies and pass -through entities and is not intended to be, and should not be, used by anyone other than these specified parties. 0‘,...hest-4444cee4 September 9, 2005 LI 1. . LSO��$cance Lunghard LLP 1 Certified Public Accountants J 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. 1921-1999 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Honorable Mayor and Members of the City Council The City of Palm Desert, California Compliance We have audited the compliance of the City of Palm Desert, Califomia, with the type of compliance requirements described in the United States Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2005. The City of Palm Desert's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Palm Desert's management. Our responsibility is to express an opinion on the City of Palm Desert's compliance based on our audit. 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 States, 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 of Palm Desert'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. Our audit does not provide a legal determination on the City of Palm Desert's compliance with those requirements. In our opinion, the City of Palm Desert complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2005. Internal Control Over Compliance The management of the City of Palm Desert is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Palm Desert's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on intemal control over compliance in accordance with OMB Circular A-133. 75 YEARS 1929' lir 2004 01 Excettexce 203 N. Brea Blvd., Suite 203 a Brea, CA 92821-4056 • (714) 672-0022 • Fax (714) 672-0331 • www.lslcpas.com Lance & Lunghard LLP CERTIFIED PUBLIC ACCOUNTANTS To the Honorable Mayor and Members of the City Council The City of Palm Desert, California Our consideration of the intemal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the intemal control components does not reduce to a relativity low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants caused by error or fraud that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the intemal 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, 2005, and have issued our report thereon dated September 9, 2005. Our audit was performed for the purpose 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 OMB 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, is 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 and pass -through entities and is not intended to be, and should not be, used by anyone other than these specified parties. Pew, Jet* Cx-044440e, 0?0‘1/464 February 6, 2006 CITY OF PALM DESERT Schedule 1 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2005 Federal Pass -Through/ CFDA Grantor's Federal Grantor/Pass-Through Grantor/Program Title Number Number Expenditures U.S. Department of Housing and Urban Development Direct Program: Community Development Block Grant* Total U.S. Department of Housing and Urban Development U.S. Department of Justice Direct Program: Local Law Enforcement Block Grant Total U.S. Department of Justice Total Federal Expenditures *Major Program 14.218 B-03-MC-0594 $ 294,230 B-04-MC-0594 294,297 588,527 16.592 2003-LB-BX-1673 22,724 2004-LB-BX-1505 11,289 34,013 $ 622,540 Note a: Refer to Note 1 to the financial statements for a description of significant accounting policies used in preparing this schedule. Note b: There are no federal awards expended in the form of noncash assistance, insurance in effect or loans or loan guarantees during the year. Note c: Total amount provided to subrecipients during the year from the Community Development Block Grant amounted to $572,177. 5 CITY OF PALM DESERT NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2005 Note 1: 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 that are 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, 2005 SECTION I - SUMMARY OF AUDITORS' RESULTS Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: • Material weakness(es) identified? yes X no • Reportable condition(s) identified that are not considered to be material weakness(es)? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal 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 Type 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? yes X no Identification of major programs: CFDA Number(s) 14.218 Dollar threshold used to distinguish between type A and type B program $300,000 Name of Federal Program or Cluster Community Development Block Grant Auditee qualified as low -risk auditee? yes X no 7 CITY OF PALM DESERT SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2005 SECTION 11- FINANCIAL STATEMENT FINDINGS No matters were reported. Schedule 2 (Continued) SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. 8