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HomeMy WebLinkAboutSingle Audit Report September 30, 2017 CITY OF FRIENDSWOOD, TEXAS SINGLE AUDIT REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2017 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF FRIENDSWOOD, TEXAS SINGLE AUDIT REPORT TABLE OF CONTENTS SEPTEMBER 30, 2017 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 – 2 Independent Auditors’ Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance in Accordance with Uniform Guidance ..................................................................................................... 3 – 5 Schedule of Expenditures of Federal Awards ............................................................... 6 Notes to Schedule of Expenditures of Federal Awards ................................................ 7 Schedule of Findings and Questioned Costs ................................................................. 8 THIS PAGE LEFT BLANK INTENTIONALLY 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 The Honorable Mayor and City Council of City of Friendswood, Texas We have audited 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, the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of City of Friendswood, Texas as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise City of Friendswood, Texas’s basic financial statements, and have issued our report thereon dated March 26, 2018. Our report includes a reference to other auditors who audited the financial statements of West Ranch Management District, as described in our report on City of Friendswood, Texas’s financial statements. The financial statements of West Ranch Management District were not audited in accordance with Government Auditing Standards. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered City of Friendswood, Texas’s internal control over financial reporting (internal control) to determine the 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 City of Friendswood, Texas’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Friendswood, Texas’s internal control. 1 2 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 pos sibility 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 over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Friendswood, Texas’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 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. 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 entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Waco, Texas March 26, 2018 4 REPORT OF INDEPENDENT AUDITORS’ ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH UNIFORM GUIDANCE To the Honorable Mayor and City Council of City of Friendswood, Texas Report on Compliance for Each Major Federal Program We have audited the City of Friendswood’s (the “City”) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended September 30, 2017. The City’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. 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 (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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. 3 4 We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program 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 September 30, 2017. Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with Uniform Guidance, 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 deficiency in internal control over compliance exists when the design or operation of 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 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 server than a material weakness in internal control over compliance, yet important enough to merit attention by those charges with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 5 Report on Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, the business-type activities, discretely presented component units, each major fund, and the aggregate remaining fund information of the City as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated March 26, 2018, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on those financial statements. Our audit was conducted 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 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 financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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. 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 Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Waco, Texas March 26, 2018 Federal Grantor/Federal Pass-Through Pass-Through Grantor/CFDA Grantor's Federal Pass-Through Program Title Number Number Expenditures Expenditures U.S. Department of Housing & Urban Development Office of Community Planning and Development Passed through the Texas Department of Rural Affairs: Community Development Block Grant/State's Program 14.228 DRS010048 26,143$ -$ Total U.S. Department of Housing & Urban Development Office of Community Planning and Development 26,143 - U.S. Department of Justice Passed through the Office of the Governor: Crime Victim Assistance Program 16.575 2017-VA-GX-0009 48,578 - Direct Programs: Bullet Proof Vest Partnership Program 16.607 None 4,003 - Total U.S. Department of Justice 52,581 - U.S. General Services Administration Passed through the Texas Facilities Commission Donation of Federal Surplus Personal Property 39.003 40960 63,153 - Total U.S. General Services Administration 63,153 - U.S. Institute of Museum and Library Services Passed through the Texas State Library and Archive Commission Libraries and Literacy Grant 45.310 481-17024 2,777 - Total U.S. Institute of Museum and Library Services 2,777 - Executive Office of the President Direct Program: High Intensity Drug Trafficking Areas Program 95.001 G17HN0018A 2,965 - Total Executive Office of the President 2,965 - U.S. Department of Homeland Security Passed through Texas Department of Public Safety FEMA Disaster Recovery - Hurricane Harvey 97.036 DR-4269 1,183,534 - Emergency Management Performance Grant 97.042 17TX-EMPG0338 35,132 - Homeland Security-Ballistic Shields 97.067 EMW-2016-SS-00056 5,064 - Total U.S. Department of Homeland Security 1,223,730 - Total Federal Expenditures 1,371,349$ -$ FOR THE YEAR ENDED SEPTEMBER 30, 2017 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS CITY OF FRIENDSWOOD, TEXAS 6 7 CITY OF FRIENDSWOOD, TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2017 Basis of Accounting The Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of accounting. The modified accrual basis of a ccounting is described in Note I of the basic financial statements. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Therefore, some of the amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. Basis of Presentation The Schedule of Expenditures of Federal Awards presents the activity of all applicable federal awards programs of the City. The City’s reporting entity is defined in Note I of the basic financial statements. Federal awards received directly from federal agencies, as well as awards passed through other government agencies, are included on the Schedule of Expenditures of Federal Awards. Indirect Costs The City has elected not to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance. Summary of Auditors' Results Financial Statements: Type of auditors' report issued:Unmodified Internal control over financial reporting: Material weakness(es) identified that are not considered to be material weaknesses?No Significant deficiencies identified that are not considered to be material weaknesses?None reported Noncompliance material to the financial statements noted?No Federal Awards: Internal control over major programs: Material weakness(es) identified?No Significant deficiency(ies) identified that are not considered to be material weaknesses?None reported Type of auditors' report issued on compliance with major programs.Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516 (a) of Uniform Guidance?No Identification of major programs: Name of federal program CFDA Number FEMA Disaster Recovery - Hurricane Harvey 97.036 Dollar threshold used to distinguish between type A and type B programs $750,000 Auditee qualified as low risk auditee?No Financial Statement Findings None Federal Award Findings None CITY OF FRIENDSWOOD, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2017 8