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HomeMy WebLinkAbout20112012 Single Audit Report CITY OF PALM DESERT, CALIFORNIA SINGLE AUDIT OF FEDERALLY ASSISTED GRANT PROGRAMS JUNE 30, 2012 CITY OF PALM DESERT, CALIFORNIA TABLE OF CONTENTS June 30, 2012 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-133 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 - 10 Summary Schedule of Prior Audit Findings 11 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties - 1 - 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 (the City) as of and for the year ended June 30, 2012, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 19, 2012. 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 Management of the City is responsible for establishing and maintaining effective 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. - 2 - Internal Control Over Financial Reporting (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’s basic 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 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. December 19, 2012 Irvine, California 2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: 714.978.7893 Offices located in Orange and San Diego Counties - 3 - 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 The Honorable City Council City of Palm Desert Palm Desert, California Compliance We have audited the City of Palm Desert’s, California (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, 2012. 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 is 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 a major 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. 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, 2012. - 4 - 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 a major federal program 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, 2012, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 19, 2012, which contained an unqualified opinion on those statements. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements. The accompanying 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 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 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 financial statements taken as a whole. The purpose of this report is solely to describe the scope of our testing of compliance with the types of compliance requirements applicable to each of the City of Palm Desert’s major programs and our testing of internal control over compliance and the results of our testing, and to provide an opinion on the City’s compliance but not to provide an opinion on the effectiveness of the City’s internal control over compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s compliance with requirements applicable to each major program and its internal control over compliance. Accordingly, this report is not suitable for any other purpose. February 5, 2013, except to the date for the Schedule of Expenditures of Federal Awards to which the date is December 19, 2012 Irvine, California SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND SCHEDULE OF FINDINGS AND QUESTIONED COSTS Catalog of Federal Expenditures Domestic Program of Disbursements Assistance Identification Federal to Number Number Awards Subrecipients U.S. Department of Housing and Urban Development Direct Programs: Community Development Block Grants/ Entitlement Grants 14.218 B-09-MC-06-0594 43,162$ 43,012$ B-10-MC-06-0594 100,707 100,707 B-11-MC-06-0594 126,890 93,997 Total U.S. Department of Housing and Urban Development 270,759 237,716 U.S. Department of Justice Direct Programs: Edward Byrne Memorial Justice Assistance Grant Program (JAG)16.738 2010-DJ-BX-0688 5,575 - U.S. Department of Transportation Passed through the State of California Department of Transportation: Highway Planning and Construction 20.205 CML 5414 (008)3,158 - CML 5414 (009)255,149 - CML 5414 (010)470,333 - Total Highway Planning and Construction 728,640 - Passed through the University of California, Berkeley Traffic Safety Center: State and Community Highway Safety-20.600 SC11302 6,502 - Sobriety Checkpoint Program LLEA SC12302 38,945 - Total Passed through the University of California, Berkeley Traffic Safety Center 45,447 - Passed through the City of Riverside: State and Community Highway Safety-Avoid 30 20.600 AL0842 12,385 - Total State and Community Highway Safety 57,832 - Total U.S. Department of Transportation 786,472 - 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). CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended June 30, 2012 Pass - Through Grantor / Federal Grantor / - 5 - Program Title Catalog of Federal Expenditures Domestic Program of Disbursements Assistance Identification Federal to Number Number Awards Subrecipients U.S. Department of Energy Direct Program: ARRA - Energy Efficiency and Conservation Block Grant Program (EECBG)81.128 DE-SC002046 106,800$ -$ TOTAL DISBURSEMENTS TOTAL EXPENDITURES 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). CITY OF PALM DESERT, CALIFORNIA Federal Grantor / Pass - Through Grantor / Program Title - 6 - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended June 30, 2012 - 7 - CITY OF PALM DESERT, CALIFORNIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2012 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: Amounts 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). - 8 - CITY OF PALM DESERT, CALIFORNIA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (CONTINUED) June 30, 2012 5. SUBRECIPIENTS: During the fiscal year ended June 30, 2012, the City disbursed federal funds to the following subrecipients under the Community Development Block Grant Program (CFDA #14.218): Amount Disbursed CDBG Borrego Community Health Foundation $ 12,223 Casa for Riverside County, Inc. 7,587 Desert Aids Project 21,780 Desert ARC 43,012 Desert Cancer Foundation 7,223 Martha’s Village and Kitchen 24,476 Fair Housing Council of Riverside County 26,378 Ranch Recovery Center 95,037 Total Subrecipient Payments $ 237,716 6. DEFERRED LOANS RECEIVABLE: The CDBG balance of deferred loans receivable at June 30, 2012 was $12,255. 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 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). - 9 - CITY OF PALM DESERT, CALIFORNIA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended June 30, 2012 1. SUMMARY OF AUDITORS’ RESULTS: Financial Statements Type of auditor’s report issued:  Unqualified Internal control over financial reporting:  Material weakness identified? yes x no  Significant deficiency identified? 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  Significant deficiency(es) identified? yes x none reported Type of auditor’s 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 OMB Circular A-133? yes x no Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster 20.205 U.S. Department of Transportation; 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 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, 2012 2. FINDINGS - FINANCIAL STATEMENT AUDIT: There were no significant deficiencies, material weaknesses 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, 2012. 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). - 11 - CITY OF PALM DESERT, CALIFORNIA SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the year ended June 30, 2012 There were no findings reported for fiscal year 2010-11. 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).