HomeMy WebLinkAboutSingle Audit Report September 30, 2018
CITY OF FRIENDSWOOD, TEXAS
FEDERAL SINGLE AUDIT REPORT
For the Fiscal Year Ended
September 30, 2018
CITY OF FRIENDSWOOD, TEXAS
TABLE OF CONTENTS
Page
Report of Independent Auditors 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
Report of Independent Auditors on Compliance for Each Major Federal Program;
Report on Internal Control over Compliance; and Report on Schedule of Expenditure
of Federal Awards Required by the Uniform Guidance
3
Schedule of Findings and Questioned Costs
7
Schedule of Expenditures of Federal Awards
9
Notes to Schedule of Expenditures of Federal Awards
10
Summary Schedule of Prior Audit Findings
11
Corrective Action Plan
12
Houston Office
3737 Buffalo Speedway
Suite 1600
Houston, Texas 77098
713.621.1515 Main
whitleypenn.com
1
REPORT OF INDEPENDENT AUDITORS 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 Friendswood, Texas
We have audited, in accordance with the 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 aggregately discretely presented component units, each major
fund, and the aggregate remaining fund information of the City of Friendswood, Texas (the “City”), as of
and for the year ended September 30, 2018, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements, and have issued our report thereon dated
March 22, 2019. Our report includes a reference to other auditors who audited the financial statements of
West Ranch Management District, as described in our report on the City’s financial statement. 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 the City’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 the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
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 possibility 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.
To the Honorable Mayor and Members
of the City Council
City of Friendswood, Texas
2
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control 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 the City’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 con trol 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.
Houston, Texas
March 22, 2019
Houston Office
3737 Buffalo Speedway
Suite 1600
Houston, Texas 77098
713.621.1515 Main
whitleypenn.com
3
REPORT OF INDEPENDENT AUDITORS ON COMPLIANCE FOR EACH MAJOR
FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE;
AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED BY THE UNIFORM GUIDANCE
To the Honorable Mayor and Members
of the City Council
City of Friendswood, Texas
Report on Compliance for Each Major Federal Program
We have audited the City of Friendswood, Texas’s (the “City”) compliance with the types of
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, 2018. The City's major federal programs are identified in the summary of auditor’s
results section of the accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and terms and conditions of
its federal awards 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 requirements of Title 2 U.S Code of Federal
Regulations 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.
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.
To the Honorable Mayor and Members
of the City Council
City of Friendswood, Texas
4
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, 2018.
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 the 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 a 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 severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
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.
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 the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
To the Honorable Mayor and Members
of the City Council
City of Friendswood, Texas
5
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type activities, the
aggregately 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, 2018, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements. We issued our
report thereon dated March 22, 2019, which contained unmodified opinions on those financial statements.
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole.
The accompanying schedule of expenditures of federal awards is presented for purposes of additional
analysis as required by the Uniform Guidance and is not a required part of 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 basic financial statements. The information
has been subjected to the auditing procedures applied in the audit of the 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 basic 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.
Houston, Texas
March 22, 2019
6
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CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended September 30, 2018
7
I. Summary of Auditors’ Results
Financial Statements
Type of auditor’s report issued Unmodified
Internal control over financial reporting:
Material weakness (es) identified? No
Significant deficiency (ies) identified that are not considered to
be material weaknesses? None reported
Noncompliance material to the financial statements noted? No
Federal Awards
Internal controls over major programs:
Material weakness (es) identified? No
Significant deficiency (ies) identified that are not considered to
be material weaknesses? None reported
Type of auditor’s report issued on compliance for major
programs: Unmodified
Any audit findings disclosed that are required to be reported in
accordance with section 2 CFR 200.516(a)? No
Identification of Major Programs:
Name of Federal Program or Cluster CFDA Number
Disaster Grants - Public Assistance 97.036
Dollar threshold used to distinguish Between Type A
and Type B federal programs: $750,000
Auditee qualified as low-risk auditee? Yes
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (continued)
For the Year Ended September 30, 2018
8
II. Financial Statement Findings
None Noted
III. Federal Award Findings and Questioned Costs
None Noted
9
CITY OF FRIENDSWOOD, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended September 30, 2018
Federal
CFDA
Number
Pass-Through
Entity Identifying
Number
Federal
Expenditures
U.S. Department of Justice
Direct:
Bulletproof Vest Partnership Program 16.607 None 5,963$
Total Direct 5,963
Passed through the Texas Office of the Governor - Criminal Justice Division:
Crime Victim Assistance 16.575 2016-VA-GX-0033 69,813
Total passed through the Texas Office of the Governor - Criminal Justice Division 69,813
Total U.S. Department of Justice 75,776
U.S. General Services Administration
Passed through the Texas Facilities Commission
Non-Cash Assistance
Donation of Federal Surplus Personl Property 39.003 None 757
Total passsed through the Texas Facilities Commission 757
Total U.S. General Services Administration 757
U.S. National Endowment for the Humanties
Passed through the Texas State Library & Archives Commission
ILL Reimbursement Program 45.310 LS-00-16-0044-16 3,816
ILL Reimbursement Program 45.310 LS-00-16-0044-17 6,022
Totaled passsed through the Texas State Library & Archives Commission 9,838
Total U.S. National Endowment for the Humanties 9,838
U.S. Department of Homeland Security
Disaster Grants - Public Assistance 97.036 DR-4332 3,400,849
Emergency Management Performance Grant 97.042 17TX-EMPG-0338 33,315
Homeland Security Grant Program - Mobile Radio 97.067 3359301 63,480
Homeland Security Grant Program - Crisis Response Throw Phone System
97.067 3372401 28,500
3,526,144
Total U.S. Department of Homeland Security 3,526,144
Total Expenditures of Federal Awards 3,612,515$
Federal Grantor/Pass-Through Grantor/Program Title
Total passed through the Texas Department of Public Safety/ Division of
Emergency Management
Passed through the Texas Department of Public Safety/ Division of
Emergency Management:
CITY OF FRIENDSWOOD, TEXAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended September 30, 2018
10
Note 1 - Summary of Significant Accounting Policies
The City accounts for awards under federal programs in the General and Special Revenue governmental
funds.
In the Governmental funds, these programs are accounted for using a current financial resources
measurement focus. With this measurement focus, only current assets and current liabilities generally are
included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and
other financing sources) and decreases (i.e. expenditures and other financing uses) in net current assets.
The modified accrual basis of accounting is used for these funds. This basis of accounting recognizes
revenues in the accounting period in which they become susceptible to accrual, i.e., both measurable and
available, and expenditures in the accounting period in which the liability is incurred, if measurable,
except for certain compensated absences and claims and judgments, which are recognized when the
obligations are expected to be liquidated with expendable available financial resources. Expenditures are
recognized following the cost principles contained in the Uniform Guidance, wherein certain types of
expenditures are not allowable or are limited to reimbursement. Pass-through entity identifying numbers
are presented where available.
Federal grant funds are considered to be earned to the extent of expenditures made under the provisions of
the grant, and, accordingly, when such funds are received, they are recorded as unearned revenues until
earned. Generally, unused balances are returned to the grantor at the close of specified project periods.
The City has elected not to use the 10 percent de minimis indirect c ost rate allowed under the Uniform
Guidance.
Note 2 - Basis of Presentation
The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant
activity of the City under programs of the federal government for the year ended September 30, 2018.
The information in this schedule is presented in accordance with the requirements of the Office of
Management and Budget (OMB) Uniform Guidance. Because the schedule presents on a selected portion
of the operations of the City, it is not intended to and does not present the financial position, changes in
net assets or cash flows of the City.
CITY OF FRIENDSWOOD, TEXAS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the Year Ended September 30, 2018
11
Federal regulations, Title 2 U.S. Code of Federal Regulations §200.511 states, “The auditee is responsible
for follow-up and corrective action on all audit findings. As part of this responsibility, the auditee must
prepare a summary schedule of prior audit findings.” The summary schedule of prior audit findings must
report the status of the following:
All audit findings included in the prior audit’s schedule of findings and questioned costs and
All audit findings reported in the prior audit’s summary schedule of prior audit findings except
audit findings listed as corrected.
I. Prior Audit Findings
None reported
CITY OF FRIENDSWOOD, TEXAS
CORRECTIVE ACTION PLAN
For the Year Ended September 30, 2018
12
Federal regulations, Title 2 U.S. Code of Federal Regulations §200.511 states, “At the completion of the
audit, the auditee must prepare, in a document separate from the auditor's findings described in §200.516
Audit findings, a corrective action plan to address each audit finding included in the current year auditor's
reports.”
I. Corrective Action Plan
Not applicable