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2007 Single Audit on Federal Awards■ Li I L, I L L' U L L' 11, I L' I I L' CITY OF ROSEMEAD Rosemead, California Single Audit Report on Federal Awards Year ended June 30, 2007 Conrad Government Services Division Mayer Hoffman McCann P.C. An Independent CPA Firm 1 1 1 1 1 CITY OF ROSEMEAD Single Audit Report on Federal Awards Year ended June 30, 2007 TABLE OF CONTENTS Report on Compliance and Other Matters and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable to Each Major Program, Internal Control over Compliance and on the Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A-133 Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings Pape 1 3 5 6 7 8 Mayer Hoffman McCann P.C. An Independent CPA Firm 2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx w .mhm-pc.com 1 Honorable Mayor and City Council City of Rosemead Rosemead, California ' REPORT ON COMPLIANCE AND OTHER MATTERS AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS ' PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of the governmental activities and each major fund and the aggregate remaining fund information of the City of Rosemead, California, (the City) as of and for the year ended June 30, 2007, which collectively comprise the City's basic financial statements and have issued our report thereon dated February 22, 2008. 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 and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are ' free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, ' providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no material instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but nor for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. I prevented or detected by the City's internal control. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be Honorable Mayor and City Council City of Rosemead Page Two ' A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily disclose all ' deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. We noted certain matters we reported to the management of the City in a separate letter dated February 22, 2008. ' This report is intended solely for the information and use of the City Council, management and federal awarding agencies and pass-through entities, and is not intended to be, and should not be, used by anyone other than those specified parties. Aa"-07 ,o 9. ' Irvine, California February 22, 2008 1 F1 II I I I I Mayer Hoffman McCann P.C. An Independent CPA Firm 2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com Honorable Mayor and Members of the City Council City of Rosemead Rosemead. California 1 1 1 1 I REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM, INTERNAL CONTROL OVER COMPLIANCE AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS IN ACCORDANCE WITH OMB CIRCULAR A-133 Compliance We have audited the compliance of the City of Rosemead, 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 its major federal programs for the year ended June 30, 2007. The City's major federal programs are identified in the summary of auditors' results section- of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal programs are the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination 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 programs for the year ended June 30, 2007. 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 LJ Honorable Mayor and Members of the City Council ' City of Rosemead Page Two 1 expressing our opinion on compliance, 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 control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to administer a federal program such that there is more than a remote likelihood that ' noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the City's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the City's internal control. 1 1 I Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the City's internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Federal Awards We have audited the basic financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the City as of and for the year ended June 30, 2007, which collectively comprise the City's basic financial statements, and have issued our report thereon dated February 22, 2008. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis in accordance with the requirements of OMB Circular A-133 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 solely for the information of the City Council, management, 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. Irvine, California February 22, 2008 1 1 1 1 CITY OF ROSEMEAD Schedule of Expenditures of Federal Awards Year ended June 30, 2007 Federal Federal Grantor/Pass-through CFDA Federal Grantor/Program Title Number Expenditures U.S. Department of Housing and Urban Development Direct Programs: Community Development Block Grants 14.218 $ 2,112,082 U.S. Department of Justice Direct Programs: Narcotics Forfeiture and Seizure 16.999 68,005 U.S. Department of Transportation Pass-through State Department of Transportation: Highway Planning and Construction 20.205 3,285,201 Total Federal Awards Expended $ 5,465,288 . Denotes a Major Program CFDA = Catalog of Federal Domestic Assistance See accompanying notes to the schedule of expenditures of federal awards 5 CITY OF ROSEMEAD Notes to the Schedule of Expenditures of Federal Awards Year ended June 30, 2007 (1) Sum mary of Significant Accounting Policies Applicable to the Schedule of Federal Awards (a) Scope of Presentation ' The accompanying schedule presents only the expenditures incurred by the City of Rosemead that are reimbursable by agencies providing federal assistance. For the purposes of this schedule, federal financial assistance includes both federal ' financial assistance received directly from a federal agency, as well as federal funds received indirectly from a non-federal agency or other organization. Only the portion of program expenditures reimbursable with such federal funds are 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 recognized when the agency becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures ' reported include any property or equipment acquisitions incurred under the federal program. (c) Subrecipient Expenditures Payments to subrecipients totaled $186,595 for the Community Development Block Grant for the fiscal year ended June 30, 2007. I 1 1 1 1 i 1 i i 1 1 1 1 1 i 1 P 1 1 CITY OF ROSEMEAD Schedule of Findings and Questioned Costs Year ended June 30. 2007 (A) Summary of Auditors' Results 1. An unqualified report was issued by the auditors on the financial statements of the auditee. 2. There were no material weaknesses in internal control over financial reporting based upon our audit of the financial statements of the auditee. 3. The audit disclosed no noncompliance which is material to the financial statements of the auditee. 4. There were no significant deficiencies or material weaknesses in internal control over the major program of the auditee. 5. An unqualified opinion was issued by the auditors on compliance for major programs. 6. The audit disclosed no audit finding that is required to be reported under paragraph .510(a) of OMB Circular A-133. 7. The major programs of the auditee were U.S. Department of Housing and Urban Development, Community Development Block Grant, CFDA No. 14.218. 8. The dollar threshold used to distinguish Type A and Type B programs was $300,000. 9. The auditee qualified as a low risk auditee, as defined by OMB Circular A-133, paragraph .530, for the year ended June 30, 2007 for the purpose of determining major programs. There are no auditors' findings to be reported in accordance with GAGAS. (C) Findings and Questioned Costs for Federal Awards as Defined in Paragraph 510(a) of OMB Circular A-133 There are no auditors' findings to be reported in accordance with OMB Circular A-133. 7 ' CITY OF ROSEMEAD Summary Schedule of Prior Audit Findings ' Year ended June 30, 2007 1 Findings and Questioned Costs for Federal Awards as Defined in Paragraph .510(a) of OMB Circular A-133 that were reported for the year ended June 30. 2006: There were no audit findings for the year ended June 30, 2006. 1 1 I 8 I 1 p 1 I 1 I 1 [1 11 11