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HomeMy WebLinkAboutSingle Audit Report 2014 CITY OF FRIENDSWOOD, TEXAS SINGLE AUDIT REPORT SEPTEMBER 30, 2014 C O N T E N T S Page 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 ........................................... 1 Independent Auditor’s Report on Compliance for Each Major Program, on Internal Control Over Compliance and on the Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 .......................................................................................... 3 Schedule of Findings and Questioned Costs .............................................................................. 6 Schedule of Expenditures of Federal Awards ............................................................................. 8 Notes to the Schedule of Expenditures of Federal Awards ........................................................ 9 AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 24 GREENWAY PLAZA, SUITE 1800, HOUSTON, TX 77046 P: 713.850.8787 F: 713.850.1673 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 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 discretely presented component unit, 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, 2014, 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 16, 2015. Our report includes a reference to other auditors who audited the financial statements of the West Ranch Management District, a discretely presented component unit of the City, as described in our report on the City’s financial statements. The financial statements of the West Ranch Management District were not audited in accordance with Government Auditing Standards and accordingly this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance associated with the West Ranch Management District. 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 Page 2 2 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 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 control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’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. WEAVER AND TIDWELL, L.L.P. Houston, Texas March 16, 2015 AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 24 GREENWAY PLAZA, SUITE 1800, HOUSTON, TX 77046 P: 713.850.8787 F: 713.850.1673 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM, ON INTERNAL CONTROL OVER COMPLIANCE AND ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133 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’s) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 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, 2014. 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 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 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 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 Page 2 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, 2014. 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 as a basis for designing 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 OMB Circular A-133, 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 OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. To the Honorable Mayor and Members of the City Council City of Friendswood, Texas Page 3 5 Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated March 16, 2015, which contained unmodified opinions on those financial statements. The financial statements of the West Ranch Management District, a discretely presented component unit of the City, were audited by other auditors in accordance with auditing standards generally accepted in the United States of America, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the West Ranch Management District, is based on the report of the other auditors. 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 OMB Circular A-133 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 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 basic 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. WEAVER AND TIDWELL, L.L.P. Houston, Texas March 16, 2015 6 CITY OF FRIENDSWOOD, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2014 SECTION I – SUMMARY OF AUDITOR’S RESULTS Financial Statements An unmodified opinion was issued on the financial statements. Internal control over financial reporting: • Material weakness(es) identified? Yes X No • Significant deficiencies identified that are not considered to be material weakness(es)? Yes X None reported • Noncompliance material to financial statements noted? Yes X No Federal Awards Internal control over major programs: • Material weakness(es) identified? Yes X No • Significant deficiencies identified that are not considered to be material weakness(es)? Yes X None reported An unmodified opinion was issued on compliance for major programs. • Any audit findings disclosed that are required to be reported in accordance with section 510(a) or Circular A-133? Yes X No Identification of major programs: 14.228 Community Development Block Grant • Dollar threshold used to distinguish between type A and type B programs? $300,000 Auditee qualified as low-risk auditee? X Yes _ No 7 CITY OF FRIENDSWOOD, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS – CONTINUED FOR THE YEAR ENDED SEPTEMBER 30, 2014 SECTION II – FINANCIAL STATEMENT FINDINGS NONE SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS NONE SECTION IV – SCHEDULE OF PRIOR AUDIT FINDINGS AND QUESTIONED COSTS NONE SECTION V – CORRECTIVE ACTION PLAN N/A CITY OF FRIENDSWOOD, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 See Notes to the Schedule of Expenditures of Federal Awards. 8 Federal Grantor/ Federal Pass-Through Federal Pass-Through Grantor/ CFDA Entity Identifying Program Program Title Number Number Expenditures U.S. DEPARTMENT OF HOMELAND SECURITY Passed through Texas Department of Public Safety: Emergency Management Performance Grant 97.042 14TX-EMPG-0338 38,916$ Homeland Security Grant Program - State Homeland Security Program 97.067 13-SR 27648-01 140,000 Homeland Security Grant Program - Urban Area Security Initiative Program 97.067 11-SR 27648-01 123,000 Total Homeland Security Grant Program 263,000 Total U.S. Department of Homeland Security 301,916 U.S. DEPARTMENT OF COMMERCE Direct Program: Economic Adjustment Assistance Program 11.307 N/A 292,533 Total U.S. Department of Commerce 292,533 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Passed through Texas Department of Rural Affairs: Texas Community Development Block Grant Disaster Recovery Program 14.228 DRS010048 23,705 Texas Community Development Block Grant Disaster Recovery Program 14.228 DRS220048 886,138 Total U.S. Department of Housing and Urban Development 909,843 U.S. DEPARTMENT OF JUSTICE Direct Program: Bulletproof Vest Partnership Program 16.607 N/A 6,110 Passed through Office of the Governor - Criminal Justice Division: Crime Victim Assistance Program 16.575 VA-13-V30-14062-14 49,325 Crime Victim Assistance Program 16.575 VA-14-V30-14062-15 8,629 Total Crime Victim Assistance Program 57,954 Edward Byrne Memorial Justice Assistance Grant Program 16.738 DJ-12-A10-27599-01 14,775 Total passed through Office of the Governor 72,729 Total U.S. Department of Justice 78,839 EXECUTIVE OFFICE OF THE PRESIDENT Direct Program: High Intensity Drug Trafficking Areas Program 95.001 N/A 11,288 High Intensity Drug Trafficking Areas Program 95.001 N/A 3,817 Total Executive Office of the President 15,105 TOTAL EXPENDITURES OF FEDERAL AWARDS 1,598,236$ CITY OF FRIENDSWOOD, TEXAS NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 9 NOTE 1. GENERAL The accompanying schedule of expenditures of federal awards presents the activity of all applicable federal awards of the City of Friendswood, Texas (the City). The City’s reporting entity is defined in Note 1 to the City’s financial statements. Federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the respective schedule. NOTE 2. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards is presented using the modified accrual basis of accounting, which is described in Note 1 to the City’s financial statements. NOTE 3. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Grant expenditures reports as of September 30, 2014, which have been submitted to grantor agencies will, in some cases, differ slightly from amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of year-end accruals. The reports will agree at termination of the grant, as the discrepancies noted are timing differences.