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HomeMy WebLinkAbout; ; 2005-06 City of Carlsbad Audit Report; 2006-06-30City of Carlsbad Compliance Reports and Other Financial Information June 30,2006 McGladrey&Pullen Certified Public Accountants McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. Contents 3 a a a a a Schedule of Expenditures of Federal and State Awards 1 and 2 Notes to Schedule of Expenditures of Federal and State Awards 3_ 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 4 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 5 and 6 Schedule of Findings and Questioned Costs 7-9 Summary Schedule of Prior Year Audit Findings W_ Independent Accountant's Report on Applying Agreed-upon Procedures 11 and 12 Appropriations Limit Calculation 13 City of Carlsbad -•am Schedule of Expenditures of Federal and State Awards Year Ended June 30,2006 Grantor/Pass-through Grantor Program Title Catalog of Federal Domestic Assistance Number Grant Number/ Pass-through Entity Identifying Number Expenditures a a a a 7CA01000 $ 9,832 B03MC060563 B04MC060563 B05MC060563 14.871 * 14.239 CA077VO 39673 5,732,312 295,407 7,217,277 Federal U.S. Department of Agriculture: Pass-through the Office of Emergency Services: Forest Service - Cooperative Forestry Assistance 10.664 U.S. Department of Housing and Urban Development: Direct Programs: Community Development Block Grant 14.218 Community Development Block Grant 14.218 Community Development Block Grant 14.218 Section 8 Housing Choice Voucher Program HOME Investment Partnership Program U.S. Department of the Interior: Direct Programs: Bureau of Reclamation Cooperative Agreement Recycled Phase II Project 15.504 U.S. Department of Justice: Direct Programs: Local Law Enforcement Block Grant 16.592 Bulletproof Vest Partnership Program 16.607 Community Oriented Policing Services (Tech Grant) 16.710 Community Oriented Policing Services (Overtime Grant) 16.710 Narcotics Forfeitures & Seizures 16.999 * Denotes major program N/A = Not available The notes to the Schedule of Expenditures of Federal and State Awards are an integral part of this statement. 02-FC-35-0005 2004-LBBX-1157 N/A 2004-CKWX-0056 2003-OMWX-0217 N/A 142,599 677,343 369,616 1,189,558 948,589 4,356 7,190 27,879 24,374 81,952 145,751 3 3 3 City of Carlsbad Schedule of Expenditures of Federal and State Awards, Continued Year Ended June 30,2006 a 3 3 Grantor/Pass-through Grantor Program Title Federal, Continued U.S. Department of Transportation: Pass-through State Department of Transportation: Intermodal Surface Transportation Efficiency Act: Coastal Rail Trail Project Rancho Santa Fe Road National Foundation on the Arts and Humanities: Direct Programs: Museum for America Grant National Leadership Grant Pass-through the California State Library: LSTA Library Grant Award - Public Staff Education U.S. Department of Health and Human Services: Pass-through the County of San Diego: Aging Cluster: Special Programs for the Aging-Title III, Part B Special Programs for the Aging-Title III, Part C U.S. Department of Homeland Security: Pass-through the County of San Diego: State Domestic Preparedness Equipment Support Program Urban Areas Security Initiative Total expenditures of federal awards State Office of Criminal Justice Planning: California Law Enforcement Equipment Program High Technology Grant Total expenditures of federal and state awards Catalog of Federal Domestic Assistance Number 20.205 20.205 45.301 45.312 45.310 93.044 93.045 97.004 97.008 N/A Grant Number/ Pass-through Entity Identifying Number CML 5308(005) HP21STPL-5308(014) MA-02-04-0790-04 LG-02-04-0050-04 40-6252 45811 45811 N/A N/A 00001 29M Expenditures $ 1,300,358 2,293,010 3,593,368 2,900 128,423 131,323 1,661 132,984 14,405 111,555 125,960 42,801 264,870 307,671 12,481,432 2,060 $ 12,483,492 * Denotes major program N/A = Not available The notes to the Schedule of Expenditures of Federal and State Awards are an integral part of this statement. City of Carlsbad Notes to Schedule of Expenditures of Federal and State Awards "2 a a a a Note 1. Basis of Presentation The accompanying Schedule of Expenditures of Federal and State Awards (the Schedule) presents the activity of all federal award programs and a state award of the City of Carlsbad, California, (the City). The Schedule includes federal awards received directly from federal agencies, as well as federal awards passed through other agencies. The City's reporting entity is defined in Note 1 to the City's basic financial statements. Because the Schedule presents only a selected portion of the operations of the City, it is not intended to, and does not, present the financial position of the City. The accompanying Schedule 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 (CDBG) 14.218 $850,885 HOME Investment Partnership Program 14.239 288,356 LSTA Library Grant Award - Public Staff Education 45.310 1,661 Note 3. Office of Criminal Justice Planning Disclosures The expenditures incurred under the California Law Enforcement Equipment Program High Technology Grant, Grant No. 0000129M, for the year ended June 30,2006 were for police equipment upgrades in the amount of $2,060. McGladrey&Pulien Certified Public Accountants g Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements m Performed in Accordance with Government Auditing Standards •m To the Honorable Mayor and Members of the City Council 3 City of Carlsbad, California 3 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, (the City) as of and for the year 3 ended June 30,2006, which collectively comprise the City's basic financial statements, and have issued our report thereon dated October 5,2006. We conducted our audit in accordance with auditing standards generally accepted in 3 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. M _., Internal Control over Financial Reporting «•* ^ In planning and performing our audit, we considered the City's internal control over financial reporting in order to «"" determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to _ provide assurance on the internal control over financial reporting. Our consideration of the internal control over "•" financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might — be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or **" more of the internal control components does not reduce to a relatively low level the risk that misstatements caused ** by error or fraud 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. *• We noted no matters involving the internal control over financial reporting and its operation that we consider to be *"* material weaknesses. *"" Compliance and Other Matters •n*m« »***As part of obtaining reasonable assurance about whether the City's financial statements are free of material H 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 M 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 •3 noncompliance or other matters that are required to be reported under Government Auditing Standards. a _ This report is intended solely for the information and use of the City's management, the Mayor, the City Council, and * federal and state awarding agencies and pass-through entities, and is not intended to be, and should not be, used by . anyone other than these specified parties. a Riverside, California October 5,2006 McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. McGladrey&Pullen Certified Public Accountants Independent Auditor's Report on 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 To the Honorable Mayor and Members of the City Council City of Carlsbad, California Compliance We have audited the compliance of the City of Carlsbad, California, (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133, Compliance Supplement, that are applicable to each of its major federal programs for the year ended June 30, 2006. The City's major federal programs are 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 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 occurred that could have a direct and material effect on a major federal program. 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 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 each of its major federal programs for the year ended June 30,2006. However, the results of our auditing procedures disclosed an instance of noncompliance with those requirements that are required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying schedule of findings and questioned costs as item CF #2006-01. 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 that 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 report on internal control over compliance in accordance with OMB Circular A-133. McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. a a a a a 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 reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants caused by error or fraud 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 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, 2006, which collectively comprise the City's basic financial statements, and have issued our report thereon dated October 5, 2006. Our audit was performed for the purpose of forming opinions 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. OMB Circular A-1 33, 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, the Mayor, the City Council, and federal and state awarding agencies and pass-through entities, and is not intended to be, and should not be, used by anyone other than these specified parties. Riverside, California October 5, 2006 a City of Carlsbad a m 3 a Schedule of Findings and Questioned Costs Year Ended June 30, 2006 I. Summary of Independent Auditor's Results Financial Statements Type of auditor's report issued: Unqualified Internal control over financial reporting: • Material weakness(es) identified? • Reportable condition(s) identified that are not considered to be material weaknesses? Noncompliance material to financial statements noted? Federal Awards Internal control over major program: • Material weakness(es) identified? • Reportable condition(s) identified that are not considered to be material weaknesses? Yes X Yes Yes Yes Type of auditor's report issued on compliance for major programs: Unqualified X Yes Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133? Identification of major program: CFDA Number Name of Federal Program 14.871 15.504 X No None Reported No No Yes X None Reported No Section 8 Housing Choice Voucher Program Bureau of Reclamation Cooperative Agreement Recycled Phase II Project Dollar threshold used to distinguish between type A and type B programs: $ 374,443 Auditee qualified as low-risk auditee? X Yes No 2 City of Carlsbad 3 Schedule of Findings and Questioned Costs Year Ended June 30,2006 II. Financial Statement Findings •* A. Reportable Conditions * None reported. a B. Compliance Findings a None reported. a III. Findings and Questioned Costs for Federal Awards 3 A. Reportable Conditions•«•» (MM None reported.•*n.«• B. Compliance Findings «•* w CF #2006-01 - Section 8 Housing Choice Voucher Program MM ,w Condition & Cause: -* The City has improperly calculated the housing assistance payment for one participant for the months of ^ July and August 2005 due to using the wrong payment standard. The payment standard is initially '— determined based upon the Fair Market Rent (FMR), which is determined by HUD for each agency's specific m region. It is the City's policy to use 110% of FMR to determine its payment standard. The FMR for the period1** of July 1, 2005 through August 31, 2005 was $938 for a one-bedroom unit, resulting in the City's payment — standard of $1,032. According to the family report (HUD form 50058) for recertification filed on March 1, '** 2006, the City used a monthly payment standard of $1,105. ""* Criteria: ~ According to the Administrative Plan for Section 8, Chapter 11, Section 6, the City has failed to determine """" the appropriate payment standard. Per the Section 8 Compliance Supplement manual, it is the responsibility ~ of the Public Housing Agency (PHA) to determine income eligibility and calculate the tenant's rent payment using the documentation from third-party verification in accordance with 24 CFR part 5 subpart F (24 CFR 3 section 5.601 et seq.) (24 CFR sections 982.201,982.515, and 982.516). *S Effect: The housing assistance payment made by the City was $1,105 per month for the period of July 1, 2005 3 through August 31, 2005. If the City used the correct payment standard, the housing assistance payment would have been $1,032 per month. As such, for the two-month period, the City overcharged the Section 8 31 Program $73 per month for a total overpayment of $146. 3 City of Carlsbad 3 Schedule of Findings and Questioned Costs Year Ended June 30,2006 J3 3 Recommendation: The City should implement a checklist for all necessary requirements at the time of each reapplication. The * checklist should be signed by the program manager to ensure that the appropriate payment standards were — reviewed. For example, the checklist should include line items noting the proper payment standard, review ™ of income for the year and documentation of the most current lease or rent increase. Management Response: m Management concurs with this finding and has made the necessary corrections to the housing assistance payment process. a a a City of Carlsbad 3 Summary Schedule of Prior Year Audit Findings Year Ended June 30,2006a a There were no audit findings reported for the year ended June 30,2005. a :a a a a 10 a McGladrey&Pullen « Certified Public Accountants 3 3 «• Independent Accountant's Report on ** Applying Agreed-upon Procedures To the Honorable Mayor and 2J Members of the City Council City of Carlsbad, California «MI We have performed the procedures enumerated below to the accompanying Appropriations Limit Calculation of the 3 City of Carlsbad, California, (the City) for the year ended June 30,2006. 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 2 to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution), were performed solely to _tm assist the City in meeting the requirements of Section 1.5 of Article XIII-B 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 «M 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: *» 1. We obtained the completed internal calculations and compared the limit and annual adjustment factors *"i 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. on*Finding: No exceptions were noted as a result of our procedures. yu» 2. For the accompanying Appropriations Limit Calculation, we added line A, last year's limit as revised, to line E, !3 total adjustments, and compared the resulting amount to line F, this year's limit. 1Z Finding: No exceptions were noted as a result of our procedures. 3 3. We compared the current year information presented in the accompanying Appropriations Limit Calculation to the supporting calculations described in item 1 above.m ^ Finding: No exceptions were noted as a result of our procedures. tit — 4. We compared the revised prior year Appropriations Limit presented in the accompanying Appropriations Limit *** Calculation to the revised prior year Appropriations Limit adopted by the City Council during the current year. «•» *"* Finding: No exceptions were noted as a result of our procedures. McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. 11 3 a We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion 3 on the accompanying Appropriations Limit Calculation of the City. 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 3 reported to you. No procedures have been performed with respect to the determination of the appropriations limit for the base year, as defined by Article XIII-B of the California Constitution. 9 3 This report is intended solely for the information and use of the City Council, the Mayor and management of the City 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. Riverside, California October 5,2006 a m a 12 City of Carlsbad Appropriations Limit Calculation Year Ended June 30,2006 Amount Source A. Last Year's Limit (as revised) B. Adjustment Factors: 1. Population change 2. Per capita income change Total adjustment 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 Year's Limit $ 142,508,838 1.0262 1.0526 11,429,209 State Finance State Finance 0.0802 [(B.1.xB.2.)-1.0] 11,429,209 (BxA) $ 153,938,047 (C + D) (A + E) 13