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2004 City Compliance Reportsl~ 1 + ■ d u City of Rosemead Compliance Reports and Other Financial Information June 30, 2004 McGladrey& Pullen Certified Public Accountarits McGladrey & Pullen, ur is a member fin of RSM Intemafional, an afiliabon of separate and independent legal entities. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ Contents Schedule of Expenditures of Federal Awards Notes to schedule of expenditures of federal awards 2 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 GovemmentAudding Standards 3 Compliance with requirements applicable to each major program and on internal control over compliance in accordance with OMB Circular A-133 4 and 5 Schedule of Findings and Questioned Costs 6 Summarv Schedule of Prior Audit Findings 7 Independent Accountant's Report on Applying Agreed-upon Procedures 8 and 9 Appropriations Limit Calculation 10 City of Rosemead Schedule of Expenditures of Federal Awards Year Ended June 30, 2004 Federal Grantor/Pass-through Grantor Program Title U.S. Department of Housing and Urban Development: Direct Programs: Community Development Block Grant Entitlement Program Home Investment Partnership Program Total U.S. Department of Housing and Urban Development U.S. Department of Justice: Direct Programs: Narcotics Forfeiture & Seizure Passed through from the Local Law Enforcement Block Grant Total U.S. Department of Justice Total federal awards expended Denotes a major program N/A-not applicable See Notes to Schedule of Expenditures of Federal Awards. Catalog of Federal Pass-through Domestic Entity Assistance Identifying Federal 14.218 N/A $ 1,543,919 14.239 N/A 116,589 1,660,508 16.XXX N/A 58,241 16.592 N/A 120,753 178,994 $ 1,839,502 0 ■ ■ ■ ■ ■ ■ ■ ■ ■ City of Rosemead Notes to Schedule of Note 1. Basis of Presentation of Federal Awards The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Rosemead, California, (the City) 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: Federal Amount Program Title Provided CFDA Number Expended Community Development Block Grant Entitlement Program HOME Investment Partnerships Program 14.218 $ 129,135 14.239 12,179 2 F] ■ McGladrey& Pullen Certified Public Accountants ■ ■ ■ Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an ■ Audit of Financial Statements Performed in accordance with Government Auditing Standards ■ To the Honorable Mayor and ■ Members of the City Council ■ City of Rosemead Rosemead, California ■ We have audited the financial statements of the governmental activities, 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, 2004, and have issued our report thereon dated October 8, 2004. 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. ■ 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 opinion on the financial statements and not to provide assurance on internal control over financial reporting. Our consideration of internal control over financial ■ reporting 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 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 ■ 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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. ■ This report is intended for the information and use of the City Council, management and applicable governmental ■ control agencies, and is not intended to be, and should not be, used by anyone other than these specified parties. Pasadena, California ■ October 8, 2004 ■ ■ McGladrey 8 Pullen, uP is a member inn of RSM Intemalional, ■ an affiliation of separate and independent legal enfibes. ■ ■ ■ McGladrey&Pullen Certified Public Accountants ■ ■ ■ ■ Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over ■ Compliance in accordance with OMB Circular A-133 ■ To the Honorable Mayor and Members of the City Council ■ City of Rosemead . Rosemead, California ■ Compliance ■ We have audited the compliance of the City of Rosemead, California, (the City) with the types of compliance requirements described in U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to its major federal program for the year ended June 30, 2004. The City's major federal program is identified in the summary of 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 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 program for the year ended June 30, 2004. ■ 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 the internal control over compliance in accordance with OMB Circular A-133. ■ ■ ■ ■ McGladrey 8 Pullen, LLP is a member fin of RSM International, ■ an affiliation of separate and independent legal entities. 4 ■ ■ ■ ■ 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 Awards ■ We have audited the 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, 2004 and have issued our report thereon dated October 8, 2004. Our audit was performed for the purpose of forming 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 as required by 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 and use of the City Council, management and federal awarding ■ agencies, and is not intended to be, and should not be, used by anyone other than these specified parties. ■ /ZAcu~, /z-41-~ Lcf ■ Pasadena, California ■ October 8, 2004 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ City of Rosemead Schedule of Findings and Questioned Costs Year Ended June 30, 2004 1. 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 programs • Material weakness(es) identified? • Reportable condition(s) identified that are not considered to be material weakness(es)? 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? Identification of major programs: Yes X No Yes X None Reported Yes X No Yes X No Yes X None Reported Yes X No CFDA Number Name of Federal Program 14.218 Community Development Block Grant Entitlement Program Dollar threshold used to distinguish between type A and type B programs $ 300,000 Auditee qualified as low-risk auditee? X Yes No It. Findings Related to the Financial Statement Audit as Required to be Reported in accordance with Generally Accepted Government Auditing Standards None reported. III. Findings and Questioned Costs for Federal Awards None reported. 6 ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ F1 ■ ■ ■ City of Rosemead Summary Schedule of Prior Audit Findings Year Ended June 30, 2004 There were no audit findings reported during the year ended June 30, 2003. 7 ■ McGladrey&Pullen Certified Public Accountants Independent Accountant's Report on Applying Agreed-upon Procedures To the Honorable Mayor and Members of the City Council City of Rosemead Rosemead, California We have applied the procedures enumerated below to the accompanying Appropriations Limit Calculation of the City ■ of Rosemead, California, (the City) for the year ended June 30, 2004. 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 XIIIB of the Califomia Constitution, were performed solely to assist the City in meeting the requirements of Section 1.5 of Article 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: 1. 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 years limit, to line E, total ■ adjustments, and compared the resulting amount to line F, this years limit. . Finding: No exceptions were noted as a result of our procedures. . 3. We compared 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. 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. McGladrey & Pullen, LLP is a member film of RSM International, ■ an affiliation of separate and independent legal entities. 8 ■ ■ ■ ■ ■ ■ ■ [A ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 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 Rosemead, 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 appropriations limit for the base year, as defined by Article XII IB of the California Constitution. This report is intended solely for the information and use of the City Council and management of the City of Rosemead, California, 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. Pasadena, California October 8, 2004 9 i i i i i i s i i i i i ■ i i i i ■ ■ ■ i ■ ■ ■ ■ ■ City of Rosemead Appropriations Limit Calculation Year Ended June 30, 2004 Amount Source A. Last Years Limit $ 27,938,531 B. Adjustment Factors 1. Population change 2. Inflation change Total adjustment [(B.1. x B.2.)-1] C. Annual Adjustment D. Other Adjustments: Lost responsibility Transfer to private Transfer to fees Assumed responsibility Subtotal 1.0166 State Finance 1.0231 State Finance 0.0401 1,119,873 (BxA) E. Total Adjustments 1,119,873 (C+D) F. This Year's Limit $ 29,058,404 (A + E) 10