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HomeMy WebLinkAbout2026-04-09; Annual Comprehensive Financial Report and Financial Audit Results (Districts - All); Rocha, LauraAdministrative Services Branch Finance Department 1635 Faraday Avenue  Carlsbad, CA 92008  442-339-2127 t Council Memorandum April 9, 2026 To: Honorable Mayor Blackburn and Members of the City Council From: Laura Rocha, Deputy City Manager, Administrative Services Via: Sheila Cobian, Assistant City Manager Re: Annual Comprehensive Financial Report and Financial Audit Results (Districts – All) This memorandum provides information related to the Fiscal Year 2024-25 financial audit results. Background At the City Council meeting on February 24, 2026, the City Council received the Fiscal Year 2024-25 Annual Comprehensive Financial Report and annual financial audit results. As part of the financial audit, the city's external auditors, LSL, LLP, have provided several other reports and communication for distribution to the City Council. Discussion The following audit reports and communications are now available for distribution to the City Council: •Significant Audit Matters for the fiscal year ended June 30, 2025 •Communications Regarding Internal Control for the fiscal year ended June 30, 2025 •Single Audit Report on Expenditures of Federal Awards, Year Ended June 30, 2025 The Annual Comprehensive Financial Report (ACFR) and Single Audit Report on Expenditures of Federal Awards can also be found on the finance page of the city’s website at https://www.carlsbadca.gov/departments/finance/financial-reports. Please contact zach.korach@carlsbadca.gov or 442-339-2127 for any questions on the annual financial report audit communications. Next Steps The Fiscal Year 2025-26 Financial Audit will commence in the spring of 2026 and conclude in the fall of 2026 before final issuance by December 31, 2026. Attachments: A.Significant Audit Matters for the fiscal year ended June 30, 2025 B.Communications Regarding Internal Control for the fiscal year ended June 30, 2025 C.Single Audit Report on Expenditures of Federal Awards, Year Ended June 30, 2025 Memo ID# 2026016 To the members of the: CITY COUNCIL Date: ______ CA____ CC____ CM____ ACM____ DCM (3)____x x xxx4/9/2026 sc {city of Carlsbad Council Memo – Annual Comprehensive Financial Report and Financial Audit Results (Districts – All) April 9, 2026 Page 2 cc: Geoff Patnoe, City Manager Cindie McMahon, City Attorney Zach Korach, Finance Director Roxanne Muhlmeister, Assistant Finance Director Faviola Medina, Director of Constituent & Clerk Services LSLCPAS.COM December 23, 2025 To the Honorable Mayor and Members of the City Council City of Carlsbad, California We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Carlsbad, California (hereafter, the City) for the year ended June 30, 2025. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you date April 17, 2025. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Matters Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. As described in Note 1 to the financial statements, the City changed accounting policies related to compensated absences by adopting Statement of Governmental Accounting Standards (GASB Statement) No. 101, Compensated Absences, in fiscal year 2025. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the Statement of Activities. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. During fiscal year 2025, the following significant unusual transaction was reported: Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were: Management’s estimates of the net pension liability, net other post-employment benefits liability, and claims and judgments liability are based on actuarial valuations. We evaluated the methods, assumptions, and data used to develop the net pension liability, net other post-employment benefits liability, and claims and judgments liability in determining that they are reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Attachment ALs~ .... •••• •• fml,l[wn,J,-ni M,m,l"'r t1f ~ Pr1·meGlobal 1 11,eA,sociado,,o{Adwsory ~ and Acc:ow1cm,q l'mns To the Honorable Mayor and Members of the City Council City of Carlsbad, California Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. We are pleased to report that no misstatements were identified during the course of our audit. Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors’ report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated December 23, 2025. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to management’s discussion and analysis, the budgetary comparison schedule for the General Fund, and the required pension and other post-employment benefits schedules, which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual fund statements and schedules which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical sections of the Annual Comprehensive Financial Report, which accompany the financial statements but are not RSI. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Ls~ .... •••• •• To the Honorable Mayor and Members of the City Council City of Carlsbad, California Future GASB Pronouncements The following Government Accounting Standards Board (GASB) pronouncements will be effective for the following fiscal years’ audits and should be reviewed for proper implementation by management: Fiscal Year 2025-2026 GASB Statement No. 103, Financial Reporting Model Improvements. GASB Statement No. 104, Disclosure of Certain Capital Assets. Future Projects Comprehensive Project, Revenue and Expense Recognition. Major Project, Going Concern Uncertainties and Severe Financial Stress. Major Project, Infrastructure Assets. Practice Issue, Subsequent Events. Restriction on Use This information is intended solely for the information and use of the City Council and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, Irvine, California Ls~ .... •••• •• LSL_, LLP LSLCPAS.COM 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 To the Honorable Members of the City Council City of Carlsbad, 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 Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Carlsbad, California (hereafter, the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 23, 2025. Report on Internal 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) as a basis for designing 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 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 entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency 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 or significant deficiencies may exist that were not identified. Report on 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 financial statements. 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. Attachment BLs~ .... •••• •• fml,l[wn,J,-ni M,m,l"'r t1f ~ Pr1·meGlobal 1 11,eA,sociado,,o{Adwsory ~ and Acc:ow1cm,q l'mns To the Honorable Members of the City Council City of Carlsbad, California Purpose 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. Irvine, California December 23, 2025 Ls~ .... •••• •• LSLJ LLP CITY OF CARLSBAD, CALIFORNIA FOR THE YEAR ENDED JUNE 30, 2025 SINGLE AUDIT REPORT Attachment C Ls~ .... •••• •• Focused on YOU CITY OF CARLSBAD, CALIFORNIA Single Audit Report For the Year Ended June 30, 2025 CITY OF CARLSBAD, CALIFORNIA Single Audit Report For the Year Ended June 30, 2025 Table of Contents 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 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ............................................................................................................ 3 Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2025 ......................................................................................................................... 6 Notes to the Schedule of Expenditures of Federal Awards ........................................................................................ 7 Schedule of Findings and Questioned Costs For the Year Ended June 30, 2025 ......................................................................................................................... 8 Summary Schedule of Prior Year Findings and Questioned Costs For Year Ended June 30, 2024 ............................................................................................................................. 10 LSLCPAS.COM 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 To the Honorable Mayor and Members of the City Council City of Carlsbad, 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 Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Carlsbad, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 23, 2025. Report on Internal 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) as a basis for designing 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 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 entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency 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 or significant deficiencies may exist that were not identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether 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 financial statements. 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. Ls~ .... •••• •• ~ Jml,q':,Jn1t M,m,l,n t1f I 11u: Assoriado11 of Adwsory ~ Pr1meGlobal andAaowmsqNmis To the Honorable Mayor and Members of the City Council City of Carlsbad, California Purpose 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. Irvine, California December 23, 2025 2 Ls~ .... •••• •• LSL_, LLP LSLCPAS.COM INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY UNIFORM GUIDANCE To the Honorable Mayor and Members of the City Council City of Carlsbad, California Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the City of Carlsbad, California (the “City”)’s compliance with the types of compliance requirements identified as subject to audit in the OMB 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, 2025. 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. 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, 2025. Basis for Opinion on Each Major Federal Program 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 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”). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditors’ Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs. Auditors’ Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Ls~ .... •••• •• ~ Jml,q':,Jn1t M,m,l,n t1f I 11u: Assoriado11 of Adwsory ~ Pr1meGlobal andAaowmsqNmis To the Honorable Mayor and Members of the City Council City of Carlsbad, California Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we: •Exercise professional judgment and maintain professional skepticism throughout the audit. •Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. •Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances 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 the City’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on 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 significant 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 Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 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. 4 Ls~ .... •••• •• To the Honorable Mayor and Members of the City Council City of Carlsbad, California 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, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated December 23, 2025, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions 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 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 basic 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 basic financial statements as a whole. Irvine, California March 18, 2026 (Except for the Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance which is dated December 23, 2025) 5 Ls~ .... •••• •• LSL., LLP CITY OF CARLSBAD, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2025 Federal Pass-Through Assistance Unique Federal Subrecipient Listing Number Identifier Expenditures Pass-through U.S. Department of Housing and Urban Development: Direct Programs: CDBG - Entitlement/Special Purpose Grants Cluster Community Development Block Grants/Entitlement Grants 14.218 N/A 1,237,702$ 268,120$ Total CDBG - Entitlement/Special Purpose Grants Cluster 1,237,702 268,120 Continuum of Care Program *14.267 N/A 861,739 802,668 Housing Voucher Cluster * Section 8 Housing Choice Vouchers 14.871 N/A 13,848,307 - Mainstream Vouchers 14.879 N/A 1,056,946 - Total Housing Choice Voucher Cluster 14,905,253 - Total U.S. Department of Housing and Urban Development 17,004,694 1,070,788 U.S. Department of Justice: Direct Programs: Edward Byrne Memorial Justice Assistance Grant Program 16.738 N/A 15,777 - Total U.S. Department of Justice 15,777 - U.S. Department of Transportation: Direct Programs: Highway Research and Development Program 20.200 N/A 38,297 - Pass-through Programs: California Office of Traffic Safety State and Community Highway Safety 20.600 XCA4E3XL2KY7 45,124 - Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 XCA4E3XL2KY7 67,379 - Total U.S. Department of Transportation 150,800 - U.S. Department of Health and Human Services: Pass-through Programs: County of San Diego: Aging Cluster: Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.044 DHWCF2KK8GF3 27,326 - Special Programs for the Aging, Title III, Part C, Nutrition Services 93.045 DHWCF2KK8GF3 172,708 - Nutrition Services Incentive Program 93.053 DHWCF2KK8GF3 13,547 - Total Aging Cluster 213,581 - Total U.S. Department of Health and Human Services 213,581 - U.S. Department of Homeland Security: Pass-through Programs: County of San Diego: Homeland Security Grant Program 97.067 DHWCF2KK8GF3 77,848 - County of San Diego Office of Emergency Services: Homeland Security Grant Program 97.067 CZTNNM6XJVJ3 86,841 - Subtotal - ALN 97.067 164,689 - California Governor's Office of Emergency Services: Disaster Grants-Public Assistance (Presidentially Declared Disasters) *97.036 UTM3S7LKYQZ4 981,353 - Total U.S. Department of Homeland Security 1,146,042 - Total Expenditures of Federal Awards 18,530,894$ 1,070,788$ * Major Program There were no federal awards expended in the form of noncash assistance and insurance in effect during the year. Federal Grantor/Pass-Through Grantor/Program or Cluster Title The notes to the schedule of expenditures of federal awards are an integral part of this schedule. 6 CITY OF CARLSBAD, CALIFORNIA Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2025 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 Carlsbad, California (the City), that are reimbursable under federal programs of federal financial assistance. For the purposes of this schedule, federal awards include 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 is 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. The City has elected not to use the de minimis indirect cost rate allowed under the Uniform Guidance. C. Subrecipients Expenditures Amount Subrecipients Provided Community Development Block Grants/Entitlement Grants Interfaith Community Services 62,611$ The Community Resource Center 77,732 Casa de Amparo 100,000 Legal Aid Fair Housing 27,777 Continuum of Care Program Community Resource Center 802,668 Total 1,070,788$ 7 CITY OF CARLSBAD, CALIFORNIA Schedule of Findings and Questioned Costs For the Year Ended June 30, 2025 SECTION I - SUMMARY OF AUDITORS' RESULTS Financial Statements Type of auditors' report issued: Unmodified Opinion Internal control over financial reporting: • Material weaknesses identified? yes x no • Significant deficiencies identified? yes x none reported Noncompliance material to financial statements noted? yes x no Federal Awards Internal control over major programs: • Material weaknesses identified? yes x no • Significant deficiencies identified? yes x none reported Type of auditors' report issued on compliance for major programs: Unmodified Opinion Any audit findings disclosed that are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)? yes x no Identification of major programs: Assistance Listing Number(s) Name of Federal Program or Cluster 14.267 Continuum of Care Program 14.871/14.879 Housing Voucher Cluster 97.036 Disaster Grants-Public Assistance(Presidentially Declared Disasters) Dollar threshold used to distinguish between type A and type B program $750,000 Auditee qualified as low-risk auditee? x yes no 8 CITY OF CARLSBAD, CALIFORNIA Schedule of Findings and Questioned Costs For the Year Ended June 30, 2025 SECTION II - FINANCIAL STATEMENT FINDINGS No matters were reported. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported. 9 CITY OF CARLSBAD, CALIFORNIA Summary Schedule of Prior Year Findings and Questioned Costs For the Year Ended June 30, 2024 Administrative Services 1635 Faraday Avenue ° Carlsbad, CA 92008 ° 760-602-2430 t ° 760-602-8553 f No matters were reported. 10 {'cityof Carlsbad