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HomeMy WebLinkAbout; ; 2001-02 City of Carlsbad Audit; 2002-09-30CITY OF CARLSBAD Compliance Reports and Other Financial Information June 30, 2002 CONTENTS SCZ-IEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS 1— 2 Notes to Schedule of Expenditures of Federal and State Awards 3 INDEPENDENT AUDITOR' S REPORT ON: Compliance and on Intemal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 4— 5 Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal and State Awards 6— 7 SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS 8-9 10 INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES 11 — 12 Appropriations limit calculation 13 CITY OF CARLSBAD, CALIFORNIA Schedule of Expenditures of Federal and State Awards Year Ended June 30, 2002 Catalog of Federal Domestic Assistance Pass-through Entity Program Grantor/Pass-Through Grantor Program Title Number ldentifying Number Expenditures FEDERAL U.S. Department of Agriculture: Pass-through the County of San Diego: Child and Adult Caze Food Program 10.558 36832 $ 21,200 Pass-through the Department of Forestry and Fire Protection: Cooperative Forestry Assistance 10.664 7CA01000 44,426 65,626 U.S. Department of Housing and Urban Development: Direct Programs: Community Development Block Grant Community Development Block Grant Section 8 Housing Choice Voucher Program U.S. Department of the Interior: Direct Programs: Bureau of Reclamation Cooperative Agreement ,_ Recycled Phase II Project U.S. Department of Justice: Direct Programs: Local Law Enforcement Block Grant Police Asset Forfeiture U.S. Department of Transportation: Pass-through State Department of Transportation: Intermodal Surface Transportation Efficiency Act - Carlsbad Blvd. Bridge Retrofit Project Intermodal Surface Transportation Efficiency Act - Coastal Rail Trail Project i 14.218 BOOMC060563 (1) 14.218 BOlMC060563 (1) 14.871 CA077V0 (]) 15.504 16.592 16.000 20205 20.205 126,435 350,728 477,163 3,867,573 4,344,736 02-FC-35-0005 (1) 1,130,819 2001-LB-BX-3111 (1) CA0370100 (1) STPLZ 5308(008) CML 5308(005) 103,879 13,215 117,094 24,260 342,828 367,088 CITY OF CARLSBAD, CALIFORNIA Schedule of Expenditures of Federal and State Awards (Continued) Year Ended June 30, 2002 Pass-through Entity Program Grantor/Pass-Through Grantor Program Title Identifying Number Expenditures FEDERAL (Continued) Environmental Protection Agency: Direct Programs: Water Desalination - Recycled Phase II Project 66.606 XP-98998001-0 (1) 385,703 Federal Emergency Management Agency: Pass-through the Office of Emergency Services: Hazard Mitigation Program U.S. Depadment of Health and Human Services: Pass-through the County of San Diego: Special Programs for the Aging - Title III, Part B Special Programs for the Aging - Title III, Part C 83.548 93.044 93.045 FEMA-979-DR-CA 11,312 36832 36832 Total expenditures of federal awards STATE Office of Criminal Justice Planning: California Law Enforcement Equipment Program High Technology Grant Total federal and state awards (1) Grantee number 0000129M (1) See accompanying Notes to Schedule of Expenditures of Federal and State Awards. 8,901 8Q877 89,778 $ 6,512,156 $ 55,734 $ 6,567,890 2 CITY OF CARLSBAD, CALIFORNIA Notes to Schedule of Exoenditures of Federal and State Awards Note 1. Basis of Presentarion The accompanying schedule of expenditures of federal and state awards includes the federal and state grant activity of the City of Cazlsbad (the City), California, and is presented on the modified-accrual basis — of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, _, the basic financial statements. Note 2. Subrecipients Of the federal expenditures presented in the schedule, the City provided federal awards to subrecipients as follows: Program Title Provided Federal CFDA Number Amount Community Development Block Grant Note 3. Section 108 Loans 14.218 $168,497 The City has Section 108 loans outstanding in the amount of $329,950 at June 30, 2002. Periodic payments on these Section 108 loans are made from Community Development Block Grant (CDBG) funds and are included in the federal expenditures for the Community Development Block Grant on the Schedule of Expenditures of Federal and State Awards. Principal and interest payments made from CDBG funds totaled $184,236 for the year ended June 30, 2002. Note 4. Office of Criminal Justice Planning Disclosures The expenditures incurred under the Califomia Law Enforcement Equipment Program High Technology Grant, Grant No. 0000129M, for the year ended June 30, 2002 were for police equipment upgrades in the - amount of $55,734. The amount awarded to the City under this program for the year ended June 30, 2002 was also $55,734. 3 � M�GLADREY&PULLEN. LLr Certified Public Accountants INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE �. AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDTT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of City Council -" City of Carlsbad Carlsbad, Califomia We have audited the basic financial statements of the City of Carlsbad (City), California as of and for the year ended June 30, 2002, and have issued our report thereon dated September 30, 2002. 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. Compliance As paR 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 grants, 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, acwrdingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. However, we noted certain immaterial instances of noncompliance that we have reported to management of the City in a separate letter dated September 30, 2002. Internal Control Over Fina�cial Reporting In planning and performing our audit, we considered City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financia( statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a repoRable condition. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect the City's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. The repoRable condition is described in the accompanying schedule of findings and questioned costs as item RC 02-01. — A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low Ievel the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a _ timely period by employees in the normal course of performing their assigned functions. Our consideration of the intemal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily discbse _ all repor[able conditions that are also considered to be material weaknesses. However, we be►ieve that the reportable condition described above is not a material weakness. We also noted other matters involving the internal control over financial reporting that we have reported to management of the City in a separate letter dated September 30, 2002. This report is intended for the information of the City's management and 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. /(�/ /' r / �r'�2 ����rJ� S 12� � � San Diego, C ifomia September 30, 2002 � M�GLADREY&PULLEN, LLr Certified Public Accountants INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIItEMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS _; To the Honorable Mayor and Members of City Council City of Cazlsbad Carlsbad, California Compliance We have audited the compliance of the City of Cadsbad (City) with the types of compliance requirements described in the U.S O�ce ofManagement and Budget (OMB) Circular 1-133 Compliance Supplement that are applicable to its major federal program for the yeaz ended June 30, 2002. The City's major federal program is identified in the summary of independent auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program 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 standazds applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circulaz A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standazds and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance — with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and perfoaning such othe� procedures as we considered - necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the yeaz ended June 3Q 2002. Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements thaf could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and repod on - internal control over compliance in accordance with OMB Circular A-133. — Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or opera.tion of one or more of the internal control components does not reduce to a relatively tow __ level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We _ noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal and State Awards We have audited the basic financial statements of the City as of and for the year ended June 30, 2002, and have issued our repoR thereon dated September 30, 2002. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying Schedule of Expenditures of Federal and State 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 has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a ,... whole. This report is intended for the information of the City's management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than ffiese specified parties. ��� � ��.o�, � San Diego, Ca � ornia September 30, 2002 CITY OF CARLSBAD ' Schedule of Findings and Questioned Costs " Year Ended June 30, 2002 _ I. Summary of Independent Auditor's Results Financial Statements Type of auditor's repod issued: Unqualified Intemal control over financial reporting: • Material weakness(es) identified? Yes X No — • Reportable condition(s) identified that are not considered to be material weaknesses? X Yes None Repoded — Noncompliance material to financial statements noted? Yes X No Federal Awards Intemal control over major program: .__ • Material weakness(es) identified? Yes X No • Reportable condition(s) identi5ed that are not ,_ considered to be material weakness(es)? 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 program: - CFDA Number Name of Federal Program Amount Expended 14.871 Section 8 Housing Choice Voucher Program $3,867,573 Dollar threshold used to distinguish between type A and type B programs: $300,000 __ Auditee qualified as low-risk auditee? X Yes No 8 CITY OF CARLSBAD Schedule of Findings and Questioned Costs (Continued) - Year Ended June 30, 2002 II. Findings relating to the fnancial statement audit as required to be reported in accordance with generally accepted Government Auditing Standards A. Reportable Condition RC 02-01 Condition: There is a lack of segregation of duties in that utility billing rate tables, within the Harris system, are accessible by several people in various departments including at least two people in the finance department. The same two individuals in the finance department also have access to the utility billing stock and control processing and mailing of the billing information. Recommendation: The segregation of duties related to utility billings could be strengthened by adding access controls to the utility billing rate tables in the Harris system. Access should be limited to appropriate accounting supervisors in the finance deparhnent who do not have access to or perform utility billing. B. Compliance Findings None reported. III. Findings and questioned costs for federal awards A. Reportable Conditions None reported. B. Compliance Findings None reported. .� CTTY OF CARLSBAD Summary Schedule of Prior Year Audit Findings Year Ended June 30, 2002 There were no prior year audit findings reported. ]0 � M�GLADREY&PULLEN, LLr Certified Public Accountants INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES To the Honorable Mayor and Members of City Council City of Carlsbad Carlsbad, California We have performed the procedures enumerated below to the accompanying Appropriations Limit Calculation of the City of Carlsbad, Califomia (the City), for the year ended June 30, 2002. These procedures, which were agreed to by the City and the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution), were performed solely to assist the City in meeting the requirements of Section 1.5 of ARicle XIIIB of the California Constitution. The City's management is responsible for the Appropriations Limit Calculation. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: We obtained the completed internal calculations and compared the limit and annual adjustment factors included in those calculations to the limit and annual adjustment factors that were adopted by a resolution of the City Council. We also compared the population and inflation options included in the aforementioned calculations to those that were selected by a recorded vote of the City Council. Finding: No exceptions were noted as a result of our procedures. 2. For the accompanying Appropriations Limit Calculation, we added line A, last year's limit, to line E, total adjustments, and compared the resulting amount to line F, this year's limit. Finding: No exceptions were noted as a result of our procedures. 3. We compazed the current year information presented in the accompanying Appropriations Limit Calculation to the supporting calculations described in item 1 above. Finding: No exceptions were noted as a result of our procedures. 11 4. We compared the prior year Appropriations Limit presented in the accompanying Appropriations '- Limit Calculation to the prior year Appropriations Limit adopted by the City Council during the prior year. Finding: No exceptions were noted as a result of our procedures. We were not engaged to and did not conduct an examination, the objective of which would be the — expression of an opinion on the accompanying Appropriations Limit Calculation of the City of Carlsbad, California. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures _ have been performed with respect to the determination of the appropriation limit for the base year, as defined by AKicle XIIIB of the California Constitution. This report is intended solely for the information and use of the City Council and management of the City of Carlsbad, Califomia, and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. x �(/ �l�'�� g �iiLGtf� � t.[_I� v San Diego, lifomia September 30, 2002 12 CITY OF CARLSBAD, CALIFORNIA Appropriations Limit Calculation Year Ended June 30, 2002 A. Last Year's Limit B. Adjustment Factors: 1. Population change 2. Non-residential new construction change Total Adjustment [(B.1. x B.2.) -1.0] C. Annual Adjustment D. Other Adjustments: 1. Lost responsibility (-) 2. Transfer to private (-) 3. Transfer to fees (-) 4. Assumed responsibility (+) Subtotal E. Total Adjustments F. This Yeaz's Limit 13 Amount $ 225,815,416 Source 1.01754236255 State Finance 1.12053757994 San Diego County 014019445642 $ 31,658,070 (B x A) 31,658,070 $ 257,473,486 (r �- D) (A + E)