HomeMy WebLinkAbout6.l. Acceptance of 2010 Report on Federal Awards 4 ROSEMOUNT EXECUTIVE SUMMARY
CITY COUNCIL
City Council Meeting Date: June 21, 2011
AGENDA ITEM: Acceptance of 2010 Report on Federal AGENDA SECTION:
Awards Consent
PREPARED BY: Jeff May, Finance Director AGENDA NO. V. 1.
ATTACHMENTS: Report on Federal Awards APPROVED BY:
op.]
RECOMMENDED ACTION: Motion to Accept the Report on Federal Awards for the year
ended December 31, 2010.
ISSUE
Accept the 2010 Report on Federal Awards.
BACKGROUND
When our Comprehensive Annual Financial Report (CAFR) was presented and accepted back in May the
representative from our audit firm noted that the required federal single audit (Report on Federal Awards)
would be completed and submitted to the Council for their acceptance at a later date. This audit has been
completed and is being provided to the Council at this time. This formally completes all phases of the
2010 audit process.
SUMMARY
Recommend the above motion to accept the Report on Federal Awards for the year ended December 31,
2010.
CITY OF ROSEMOUNT
Rosemount, Minnesota
REPORT ON FEDERAL AWARDS
For the Year Ended December 31, 2010
CITY OF ROSEMOUNT
TABLE OF CONTENTS
December 31, 2010
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 Govemment Auditing Standards 1— 2
Independent Auditors' Report on Compliance with Requirements that Could Have
a Direct Effect on Each Major Program and on Internal Control Over Compliance in
Accordance with OMB Circular A -133 and the Schedule of Expenditures of Federal Awards 3 4
Schedule of Expenditures of Federal Awards 5
Notes to Schedule of Expenditures of Federal Awards 6
Schedule of Findings and Questioned Costs 7 8
BAKER TILLY
VIRCHOW KRAUSE, LLP
Baker Tilly Virchow Krause, LLP
225 S Sixth Sr, See 2300
Minneapolis, MN 55402 -4661
te1 612 876 4500
fax 612 238 8900
bakectilty.com
INDEPENDENT AUDITORS' REPORT Oa 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 Rosemount
Rosemount, Minnesota
We have audited the financial statements of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund information of City of Rosemount, Minnesota as of and for the year
ended December 31, 2010, which collectively comprise City of Rosemount's basic financial statements and
have issued our report thereon dated May 12, 2011. 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 Govemment Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered City of Rosemount's intemai control over financial reporting
as a basis for designing our auditing procedures 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 Rosemount's
internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of City of
Rosemount's internal control over financial reporting.
A deficiency in intemal 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 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.
Our consideration of the 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 intemal control over financial
reporting that might be deficiencies, 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. However, we identified certain deficiencies in internal control over financial reporting, described in the
accompanying schedule of findings and questioned costs as item 10-1 that we consider to be a significant
deficiency in internal control over financial reporting. A significant deficiency is a deficiency, or combination of
deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit
attention by those charged with govemance.
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BAKER TILLY
INTERNATIONAL An AErirmativeAction Equal Opportunity Employer
To The Honorable Mayor and Members of the City Council
City of Rosemount
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Rosemount'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
Govemment Auditing Standards.
We noted certain matters that we have reported to management of City of Rosemount, Minnesota in a separate
letter dated May 12, 2011.
City of Rosemount's response to the finding identified in our audit is described in the accompanying schedule of
findings and questioned costs. We did not audit City of Rosemount's response and, accordingly, we express no
opinion on it.
This report is intended solely for the information and use of City of Rosemount's management, others within the
entity, federal awarding agencies and pass through entities, and Minnesota Office of the State Auditor and is not
intended to be, and should not be, used by anyone other than these specified parties.
r JA:6ViA.61t4w-
Minneapolis, Minnesota
May 12, 2011
Page 2
BAKER TILLY
VIRCHOW KRAUSE, LLP
Baker Tilly Virchow Krause, LLP
225 S Sixth St, Ste 2300
Minneapolis, MN 55402-4661
te1 612 876 4500
fax 612 238 8900
bakertillycom
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE
IN ACCORDANCE WITH OMB CIRCULAR A -133
AND THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
To The Honorable Mayor and Members of the City Council
City of Rosemount
Rosemount, Minnesota
Compliance
We have audited the financial statements of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund information of City of Rosemount, Minnesota's compliance with the
types of compliance requirements described in the OMB Circular A -133 Compliance Supplement that could have
a direct and material effect on the City of Rosemount's major federal program for the year ended December 31,
2010. City of Rosemount's major federal program is 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 program is the responsibility of City of
Rosemount's management. Our responsibility is to express an opinion on City of Rosemount'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
Govemments, 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 City of Rosemount'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 of City of Rosemount's compliance with those requirements.
In our opinion, City of Rosemount complied, in all material respects, with the compliance requirements referred
to above that could have a direct and material effect on its major federal program for the year ended
December 31, 2010.
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BAKER TILLY
I NTE RNATIONAL AnAfSrmame Action Equal OpporwnirpEmployer
To The Honorable Mayor and Members of the City Council
City of Rosemount
Internal Control Over Compliance
Management of City of Rosemount is responsible for establishing and maintaining effective intemal control over
compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In
planning and performing our audit, we considered City of Rosemount's internal control over compliance with the
requirements that could have a direct and material effect on a major federal program to determine the auditing
procedures for the purpose of expressing our opinion on compliance and to test and report on intemal control
over compliance in accordance with OMB Circular A -133, but not for the purpose of expressing an opinion on
the effectiveness of the intemal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of City of Rosemount's intemal control over compliance.
A deficiency in internal contral 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.
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 deficiencies, 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 Expendltures of Federal Awards
We have audited the financial statements of the governmental activities, the business -type activities, each major
fund, and the aggregate remaining fund information of City of Rosemount, Minnesota as of and for the year
ended December 31, 2010 and have issued our report thereon dated May 12, 2011. Our audit was performed
for the purpose of forming opinions on the financial statements that collectively comprise City of Rosemount'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 City of Rosemount's management, others within the
entity, federal awarding agencies and pass- through entities, and Minnesota Office of the State Auditor and is not
intended to be, and should not be, used by anyone other than these specified parties.
4 4 1 4, TA6 Vftt-edww- Kevv24-- 4,4
Minneapolis, Minnesota
June 14, 2011, except for the schedule of expenditures
of federal awards, as to which the date is May 12, 2011
Page 4
CITY OF ROSEMOUNT
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED DECEMBER 31, 2010
Federal Grantor/ Federal
Pass- Through Agency CFDA Federal
Grant Program Title Number Expenditures
U.S. Department of Labor
Passed Through Minnesota Department of Labor and Industry
ARRA Occupational Safety and Health State Program 17.503 6,123
U.S. Department of Transportation
Passed Through Minnesota Department of Public Safety
Minimum Penalties for Repeat Offenders While Driving While Intoxicated 20.608 3,791
Safety Belt Performance Grants 20.609 2,384
Passed Through Minnesota Department of Transportation
Highway Planning and Construction 20.205 2,146,506
Total Department of Transportation 2,152,681
U.S. Department of Energy
Passed Through Minnesota Department of Commerce
ARRA Energy Efficiency and Conservation Block Grant Program 81.128 22,309
Total Federal Awards 2,181,113
See accompany notes to schedule of expenditures of federal awards.
Page 5
CITY OF ROSEMOUNT
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2010
NOTE 1 REPORTING ENTITY
This report on federal awards includes the federal awards of City of Rosemount, Minnesota. The reporting entity
for City of Rosemount is based upon criteria established by the Govemmental Accounting Standards Council.
NOTE 2 BASIS OF PRESENTATION
The accounting records for grant programs are maintained on the modified accrual basis of accounting. Under
the modified accrual basis, revenues are recorded when susceptible to accrual, i.e., both measurable and
available. Available means collectible within the current period or soon enough thereafter to be used to pay
liabilities of the current period. Expenditures are recorded when the liability is incurred.
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.
Page 6
CITY OF ROSEMOUNT
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended December 31, 2010
SECTION I SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(s) identified? Yes
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(s) identified not considered to be material weaknesses? No
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 Circular A -133, Section .510(a)? No
Identification of major federal programs:
CFDA Number Name of Federal Program
20.205 Highway Planning and Construction
Dollar threshold used to distinguish between type A and type B programs: 300,000
Auditee qualified as low -risk auditee? yes X no
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CITY OF ROSEMOUNT
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (cont.)
For the Year Ended December 31, 2010
SECTION II FINANCIAL STATEMENT FINDINGS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS
10-1 Internal Control Over Financial Reporting Financial Statements and Journal Entries
Condition: City of Rosemount relies on its extemal auditors to draft the financial statements, including
the schedule of expenditures of federal awards, and there were significant journal entries made to the
city's records as a result of the audit.
Criteria: City staff should be capable of presenting the auditor with a set of complete financial
statements, including the schedule of expenditures of federal awards, in such a condition that the
auditor is not able to identify any significant changes as a result of the audit and the City should present
the books and records to the auditor in such a condition that the auditor is not able to identify any
significant journal entries as a result of the audit procedures.
Effect: The City's accounting records and financial statements may contain significant errors or
omissions, and the schedule of expenditure of federal awards may not contain all of the grants required
to be reported.
Recommendation: The City's management should consider whether it wants to hire additional staff
and /or arrange for additional training so that the City can draft its own financial statements and provide
additional control over its financial reporting processes.
Management's Response: Because of its size, the City does not feel it is cost effective to hire an
employee(s) with the experience and technical training to prepare its financial statements. Our financial
staff continues to gain experience, but will continue to rely on the auditors to provide assistance with
year -end accounting. The City of Rosemount Finance Director will prepare the schedule of expenditures
of federal awards for the year ending December 31, 2011 prior to the 2011 audit.
SECTION III FEDERAL. FINDINGS AND QUESTIONED COSTS
None
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