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HomeMy WebLinkAboutSingle Audit Report - Federally Assisted Grant Progams Fiscal Year June 30, 2010m CITY 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, 2010 DATE: February 24, 2011 SUBMITTED BY: Paul S. Gibson, Finance Director CONTENTS: Single Audit Report for the Fiscal Year Ended June 30, 2010 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, 2010. Committee Recommendation The Audit, Investment and Finance Committee received the single audit report at their February 22 meeting, and it was recommended that the report for the fiscal year ended June 30, 2010 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, 2010. On Page 6 of the Single Audit of Federally Assisted Grant Programs, a detail of federal expenditures is given. The City's Community Development Block Grant represents the majority of expenditures totaling $296,716. In total, the City expended $524,029 for the year ended June 30, 2010. Diehl, Evans & Company, LLP, was hired to perform and complete an audit on the Schedule of Federal Financial Assistance for the fiscal year ended June 30, 2010. As stated in their opinion found on Page 3 of the report, "the City complied, in all material respects, with the compliance requirements ... of its major federal programs for the year ended June 30, 2010." Staff requests that the Council receive and file the single audit report for fiscal year ended June 30, 2010. GAFinance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR - Council single audit 2010.docx Staff Report Approval of Single Audit Report for Fiscal Year ended June 30, 2010 February 24, 2011 Page 2 of 2 Fiscal Impact There is no fiscal impact associated with this action. Submitted by: Approved by: Paul S. Gibson, Finance Director PSG:JLE:nmo M. Wohlmuth, City Manager CITY COUNCIL ACTION APPROVED _,�-,-�— DENIED RECEIVED_ ` .�1/�OTHER. MEETING DATE AYES: K rc c2vj e ;,a e NOES: ABSENT: N0i'('- _ ABSTAIN: N Ln +' VERIFIED BY:_L)KIrcf, Original on File with City Clerks Office G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR - Council single audit 2010.docx CITY OF PALM DESERT, CALIFORNIA SINGLE AUDIT OF FEDERALLY ASSISTED GRANT PROGRAMS JUNE 30, 2010 I CITY OF PALM DESERT, CALIFORNIA TABLE OF CONTENTS June 30, 2010 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 1-2 Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A- 13 3 and on the Schedule of Expenditures of Federal Awards 3-4 Schedule of Expenditures of Federal Awards and Schedule of Findings and Questioned Costs: Schedule of Expenditures of Federal Awards 5-6 Notes to Schedule of Expenditures of Federal Awards 7-8 Schedule of Findings and Questioned Costs 9 - 11 �11 DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS MICHAII. R. LUDIN, CPA CRAIA PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAW W. TEL, C R, CPA NITIN P. PATEL, CPA ROBERT J. CALLANAN, CPA 'PHILM H. HOLTRAMP, CPA 5 CORPORATE PARK, SUITE 100 •THOMAS M. PERLOWStq CPA IRVINE, CALIFORNIA 92606-5165 •HARVEY 1. SCHROEDER, CPA KENNE(949) 399-0600 • FAX (949) 399-0610 WILLIA x C. ENT7AMES, CPA WII.LIAM C. PJ3�iT'2ti CPA www diehlevazls com November 29, 2010 'APROFEMO AL CO" ORAnON 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 The Honorable City Council City of Palm Desert Palm Desert, California 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 of Palm Desert, California as of and for the year ended June 30, 2010, and have issued our report thereon dated November 29, 2010. 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's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. 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. -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330 CARLSBAD, CALIFORNIA 92008-2399 ESCONDIDO, CALIFORNIA 92025-2598 (760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAX (760) 741-9890 IInternal Control Over Financial Reuorting_(Continued) Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Palm Desert, California'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. This report is intended solely for the information and use of the City Council, management of the City of Palm Desert, California and others within the City, and is not intended to be and should not be used by anyone other than these specified parties. H HI i] L fl I DIEHL, EVANS & COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 5 CORPORATE PARK, SUITE 100 IRVINE, CALIFORNIA 92606-5165 (949) 399-0600 • FAX (949) 399-0610 www.dichloyans.com INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE INACCORDANCE WITH OMB CIRCULARA-133 AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS The Honorable City Council City of Palm Desert Palm Desert, California Compliance MICHAEL R. LUDIN, CPA CRAIG W. SPRAKER, CPA NITIN P. PAT19, CPA ROBERT J. CALLANAN, CPA 'PHII.1P H. HOLTKAMP, CPA •THOMAS M. PERLOWSn CPA •HARVEYJ.SCHROEDER,CPA KENNETH R AMES, CPA WULIAM C. PENTZ, CPA •A PROFES90NAL CORPORATION We have audited the City of Palm Desert's (the City) compliance with the types of compliance requirements described in the U. S. Office of Management and Budget (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, 2010. The City's major federal programs are identified in the summary of auditors' 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 are the responsibility of the City's management. Our responsibility is to express an opinion on the City'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 each of its major federal programs 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. Our audit does not provide a legal determination of the City's compliance with those requirements. In our opinion, the City complied, in all material respects, with the 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, 2010. -3- OTHER OFFICES AT: 2965 ROOSEVELT STREET CARLSBAD, CALIFORNIA 92008-2389 (760) 729-2343 • FAX (760) 729-2234 613 W. VALLEY PARKWAY, SUITE 330 ESCONDIDO, CALIFORNIA 92025-2598 (760) 741-3141 • FAX (760) 741-9890 -3 Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on each of its major federal programs in order to determine the auditing procedures for the purpose of expressing our opinion on compliance 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. 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 deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards 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 of Palm Desert as of and for the year ended June 30, 2010, and have issued our report thereon dated November 29, 2010, which contained unqualified opinions on those statements. Our audit was performed for the purpose of forming opinions on the financial statements as a whole. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States. Local Governments and Non -Profit Organizations, and is not a required part of the basic financial statements. 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic 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 of the City or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information 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 and use of management, the City Council, others within the City, 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. ZI LA , Ev., LL P February 2, 2011, except to the date for the Schedule of Expenditures of Federal Awards to which the date is November 29, 2010. -4- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND SCHEDULE OF FINDINGS AND QUESTIONED COSTS D N CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended June 30, 2010 Catalog of Federal Federal Grantor / Domestic Pass - Through Grantor / Assistance Program Title Number U.S. Department of Housing and Urban Development Direct Program: CDBG - Entitlement Grants Cluster Community Development Block Grants - Entitlement Grant ARRA - Community Development Block Grants - Entitlement Grant Total CDBG - Entitlement Grants Cluster U.S. Department of Justice Direct Program: Edward Byrne Memorial Justice Assistance Grant Program (JAG) ARRA - Edward Byrne Memorial Justice Assistance Grant Program (JAG) Total U.S. Department of Justice 14.218 14.253 16.738 Expenditures Program of Disbursements Identification Federal to Number Awards Subrecipients B-08-MC-06-0594 S 274,549 S 230,982 B-09-MC-06-0594 1,440 1,440 B-09-MY-06-0594 20,727 13,948 296,716 246,370 2009-DJ-BX-1348 15,647 16.804 2009-SB-B9-0954 6,959 _ 22,606 See Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 3 and 4) and Notes to Schedule of Expenditures of Federal Awards (pages 7 and 8). -5- CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended June 30, 2010 Federal Grantor / Pass - Through Grantor / Program Title U.S. Department of Transportation Direct Program: Passed through the State of California Department of Transportation: Highway Planning and Construction Passed through the State of California Office of Traffic Safety: State and Community Highway Safety Total Passed through the State of California Office of Traffic and Safety Passed through the University of California, Berkeley Traffic Safety Center. State and Community Highway Safety Programs Total Passed through the University of California, Berkeley Traffic Safety Center Passed through the City of Riverside: State and Community Highway Safety Programs Total State and Community Highway Safety Total U.S. Department of Transportation TOTAL DISBURSEMENTS TO SUBRECIPIENTS TOTAL EXPENDITURES OF FEDERAL AWARDS Catalog of Federal Expenditures Domestic Program of Disbursements Assistance Identification Federal to Number Number Awards Subrecipients 20.205 CML 5414 (008) $ 33,106 $ - 20.600 AL0971 32,956 - AL1094 118,110 - 151,066 - 20.600 CT09302 5,125 - SC09302 8,383 - SC 10302 5,287 - 18,795 - 20.600 AL0842 1,740 - 171,601 - 204,707 - $ 524,029 $ 246,370 See Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 3 and 4) and Notes to Schedule of Expenditures of Federal Awards (pages 7 and 8). -6- CITY OF PALM DESERT, CALIFORNIA 9 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2010 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 COMPREHENSIVE 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 (CAFR). 4. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS: eAmounts reported in the accompanying Schedule of Expenditures of Federal Awards agree with amounts reported in federal financial reports. See Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 3 and 4) and Schedule of Expenditures of Federal Awards (pages 5 and 6). 3 CITY OF PALM DESERT, CALIFORNIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) June 30, 2010 5. SUBRECIPIENTS: During the fiscal year ended June 30, 2010, the City disbursed federal funds to the following subrecipients under the Community Development Block Grant and ARRA - Community Development Block Grant Programs (CFDA #14.218): Amount Amount Disbursed Disbursed CDBG CDBG - R ra Desert AIDs $ 5,275 $ 4,650 Desert ARC 157,105 Family YMCA of the Desert 918 - Fish of the Lower Coachella Valley 10,281 4,650 Smile Factory Foundation 10,281 - Martha's Village and Kitchen Jewish Family Services - Desert SOS 10,281 10,281 4,648 - Fair Housing Council of Riverside County 28.000 - Total Subrecipient Payments $ 232,422 $ 13.948 6. DEFERRED LOANS RECEIVABLE: The CDBG balance of deferred loans receivable at June 30, 2010 was $15,092. 7. CONTINGENCIES: Under the terms of federal and state grants, additional audits may be requested by the grantor Q agencies and certain costs may be questioned as not being appropriate expenditures under the terms of the grant. Such audits could lead to a request for reimbursement to the grantor agencies. See Independent Auditors' Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 3 and 4) and Schedule of Expenditures of Federal Awards (pages 5 and 6). -8- rA CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended June 30, 2010 I. SUMMARY OF AUDITORS' RESULTS: a. The auditors' report expresses an unqualified opinion on the financial statements of the City of Palm Desert. b. No significant deficiencies relating to the audit of the financial statements are reported. c. No instances of noncompliance material to financial statements of the City of Palm Desert, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. d. No significant deficiencies relating to the audit of the major federal award programs are reported. e. The auditors' report on compliance for the major federal award programs for the City of Palm Desert expresses an unqualified opinion on all major federal programs. f. No audit findings that are required to be reported in accordance with Section 510(a) of OMB CircularA-133 are reported in this Schedule. eg. The threshold used for distinguishing between type A and type B programs was $300,000. h. The programs tested as a major programs were: Community Development Block Grant CFDA # 14.218 ARRA - Community Development Block Grant CFDA # 14.253 i. The City of Palm Desert did not qualify as low -risk auditee. 2. FINDINGS -FINANCIAL STATEMENT AUDIT: There were no significant deficiencies or noncompliance material to the financial statements which were disclosed by the audit of the financial statements of the City of Palm Desert for the year ended June 30, 2010. 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 with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 1 through 4). -9- 1 CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) For the year ended June 30, 2010 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 with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 1 through 4). -10- CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) For the year ended June 30, 2010 SUMMARY OF PRIOR AUDIT FINDINGS: There were no findings reported for fiscal year 2008-09ri a See Independent Auditors' Report on p p 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 with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 1 through 4). -11-