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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. .9F lod000nflont of Page 1 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. Air M.„....., 041.01 01 Page 3 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 Page 7 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 Page 8