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HomeMy WebLinkAboutFIN Annual Audit of Federal Grant Expenditures____________________________________________________________________________________ FOR CITY CLERK ONLY Council Meeting: 02/18/2020 Disposition: Accepted report Agenda Item No: 5.d Meeting Date: February 18, 2020 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: Finance Prepared by: Nadine Atieh Hade, Finance Director City Manager Approval: ______________ TOPIC: ANNUAL AUDIT OF FEDERAL GRANT EXPENDITURES SUBJECT: SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2019 RECOMMENDATION: ACCEPT REPORT BACKGROUND: Federal regulations provide that any local agency receiving or expending $750,000 or more in combined federal grant funds, either directly or indirectly in a fiscal year, is subject to a separate audit on those programs. This threshold was reached in fiscal year 2018-2019; therefore, a separate (Single Audit) report was required. The firm of Maze and Associates Accountancy Corporation, who also performed the City’s financial audit, conducted the Single Audit for fiscal year 2018-2019. ANALYSIS: The City incurred a total of $4,147,318 in federal expenditures during fiscal year 2018-2019 that fell under the parameters of the audit. The auditor identified one major program to be audited, Disaster Grants – Public Assistance (Presidentially Declared Disasters). Funds from this program supported emergency slide repairs at 70 Irwin, 80 Upper Toyon, 21 San Pablo, and 70 D Street as well as public safety support following the Mendocino Complex Fires. As required under the Single Audit Act, a number of separate reports are contained within this document. Most of these reports comment on either compliance with Federal assistance regulations or recommendations regarding the City’s accounting practices. The auditor issued the reports with an unmodified opinion and no reported deficiencies in internal control. FISCAL IMPACT: There is no fiscal impact resulting from the acceptance of this report. RECOMMENDED ACTION: Accept Report. ATTACHMENT: Single Audit Report for the Year Ended June 30, 2019 CITY OF SAN RAFAEL SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2019 This Page Left Intentionally Blank CITY OF SAN RAFAEL SINGLE AUDIT REPORT For The Year Ended June 30, 2019 TABLE OF CONTENTS Schedule of Findings and Questioned Costs .............................................................................. 1 Section I-Summary of Auditor's Results .......................................................................... 1 Section II -Financial Statement Findings ........................................................................... 2 Section III-Federal Award Findings and Questioned Costs ............................................. 2 Schedule of Expenditures of Federal Awards ............................................................................ 3 Notes to Schedule of Expenditures of Federal Awards ............................................................. 5 Independent Auditor's 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 ................. 7 Independent Auditor's Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ........ 9 This Page Left Intentionally Blank CITY OF SAN RAFAEL SCHEDULE OF FINDINGS AND QUESTIONED COSTS For The Year Ended June 30, 2019 SECTION I-SUMMARY OF AUDITOR'S RESULTS Financial Statements Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP Internal control over financial reporting: • Material weakness(es) identified? • Significant deficiency(ies) identified? Umnodified Yes Yes X X ------ Noncompliance material to financial statements noted? Federal Awards Internal control over major federal programs: • Material weakness(es) identified? • Significant deficiency(ies) identified? Type of auditor's report issued on compliance for major federal programs: Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Identification of major programs: Yes X ------ Yes X Yes X --- Unmodified Yes X Name of Federal Program or Cluster No None Reported No No None Reported No CFDA#(s) 97.036 Disaster Grants -Public Assistance (Presidentially Declared Disasters) Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? X Yes No 1 SECTION II -FINANCIAL STATEMENT FINDINGS _ Our audit did not disclose any significant deficiencies, or material weaknesses or instances of noncompliance material to the basic financial statements. We have also issued a separate Memorandum on Internal Control dated November 8, 2019 which is an integral part of our audits and should be read in conjunction with this report. SECTION ID -FEDERAL AW ARD FINDINGS AND QUESTIONED COSTS Our audit did not disclose any findings or questioned costs ·required to be reported in accordance with Uniform Guidance. 2 CITY OF SAN RAFAEL SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS For the Fiscal Year Ended June 30, 2019 Federal Grantor/ Pass-Through Gran tor/Program or Cluster Title U.S. Department of Housing and Urban Development, Direct Community Development Block Grants/ Entitlement Grants Pass-Through County of Marin, California Community Development Block Grants/ Entitlement Grants Childcare Total U.S. Department of Housing and Urban Development U.S. Department of Health and Human Services Pass-Through the California Health and Human Services Agency Medical Assistance Program Department of Health Care Services -Ground Emergency Medical Transportation Pass-Through County of Marin, California Special Programs for the Aging Title III, Part B -Grants for Supportive Services and Senior Centers Total U.S. Department of Health and Human Services U.S. Department of Transportation, Pass-Through Programs Pass-Through State of California Department of Transportation Highway Planning and Construction Southern Heights Bridge Replacement Third St at Hetherton Intersection Improvement Grand Avenue Pathway Connector Project Francisco Blvd. East Sidewalk Improvements Third Street Safety Improvement Study Subtotal for Highway Planning and Construction Pass-Through California Office ofTraftic Safety State and Community Highway Safety Selective Traffic Enforcement Program FY2018 Selective Traffic Enforcement Program FY2019 Subtotal for State and Community Highway Safety Total U.S. Department of Transportation U.S. Department of Justice, Direct Program Bulletproof Vest Partnership Program PD Vest Grant 2019 Total U.S. Department of Justice U.S. Department of Homeland Security, Pass-Through Programs Pass-Through State of California Governer's Office ofEmergency Services Disaster Grants -Public Assistance (Presidentially Declared Disasters) Disaster Grants -Public Assistance (Presidentially Declared Disasters) Program Subtotal Assistance to Firefighters Grant Program Total U.S. Department of Homeland Security Total Federal Expenditures Federal CFDA Number 14.218 14.218 93.778 93.044 20.205 20.205 20.205 20.205 20.205 20.600 20.600 16.607 97.036 97.036 97.044 Pass-Through Identifying Number 40CDBGI 9CD4527 SFY 2013-14 10-204 BRLO-5043(038) HSIPL-5043(040) CML-5043(039) A TPL-5043(042) HSIPL-5043 (043) PTl8131 PT!9132 FEMA-4301-DR-CA FEMA 4382 CDAA 2018 EMW-2017-FO-04380 See Accompanying Notes to Schedule offoqienditures of Federal Awards 3 Federal Expenditures $ 195,315 36,447 231,762 140,706 12,050 152,756 329,130 61,532 1,261,704 200,127 11,074 I 863,567 38,607 64,003 102,610 1,966,177 10.145 10,145 1,642,554 9,140 1,651,694 134,784 1,786,478 $ 4,147,318 This Page Left Intentionally Blank CITY OF SAN RAFAEL NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS For The Year Ended June 30, 2019 NOTE 1 -REPORTING ENTITY The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of San Rafael, California, and its component units as disclosed in the notes to the Basic Financial Statements, except for federal awards of the San Rafael Sanitation District (District). Federal awards expended by this entity, if any, are excluded from the Schedule and are subject to a separate Single Audit performed by other auditors. NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus applied. All governmental funds and agency funds are accounted for using the modified accrual basis of accounting. All proprietary funds are accounted for using the accrual basis of accounting. Expenditures of Federal Awards reported on the Schedule are recognized when incurred. NOTE 3 -INDIRECT COST ELECTION The City has elected not to use the 10% de minim is indirect cost rate allowed under the Uniform Guidance. 5 This Page Left Intentionally Blank INDEPENDENT AUDITOR'S 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 Members of the City Council City of San Rafael, 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 Gov ernment Auditing Standards issued by the Comptroller General of the United States, the financial statements of the govenm1ental activities , the business-type activities, the aggregate discretely presented component unit each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 3 0, 2019, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our repo1t thereon dated November 8, 2019 . Our report includes a reference to other auditors who audited the financial statements of San Rafael Sanitation District, as described in our repo1t on the City's financial statements. This report does not include the results of the other auditors' testing of internal control over financial reporting or compliance and other matters that are repo1ted on separately by those auditors. Our repo1t included an emphasis of a matter paragraph disclosing the implementation of a new accounting principle. Intemal 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 opinions 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 wealmess is a deficiency, or a combination of deficiencies , in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant d eficiency 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. Accountancy Corporation 3478 Bu skirk Ave nu e, Suite 215 Ple as an t Hill , CA 94 523 7 T 925 .930 .0902 F 925 .930 .0 135 e maze@ mazeassoci at es .co m w mazeassociates.com 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 and those of other auditors disclosed no instances of noncompliance or other matters that are required to be reported under Govermnent Auditing Standards. Pwpose 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. ~0.~e_ ~ ~/j4D ~ Pleasant Hill, California November 8, 2019 8 M\!'!1s~c~T~ INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE :FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Members of the City Council City of San Rafael, California Report 011 Complia11ce for Each Major Federal Program We have audited the City of San Rafael's (City) compliance with the types of compliance requirements described in the 0MB 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, 2019 . The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Ma11agement's Respo11sibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs . Auditor's 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 Gov ernment Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S . Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 a udit includes examini ng , 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 pro gram. However, our audit does not provide a legal determination of the City's compliance. Opinio11 011 Each Major Federal Program In our opinion, the City 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, 2019. Accountancy Corporation 3478 Buskirk Ave nu e, Su ite 2 15 Pl easant Hill , CA 94523 9 T 925 .930.0902 F 925 .930.0 135 E maze@ mazeassociat es.com w mazeassociates.com 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 proce_dures 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 the Uniform Guidance, 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 a 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 sign,i_ficant 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 and_ therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material wealmesses 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, the aggregate 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, 2019, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our rep01i thereon dated November 8, 2019, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion 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 the Uniform Guidance and is not a required part of the 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 financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 as a whole. IWll\lR-{ ~/J()O~ Pleasant Hill, California January 21, 2020 11 This Page Left Intentionally Blank