CITY OF CORONADO
Coronado, California
Single Audit Report on Federal Awards
Year ended June 30, 2023
Attachment 4
CITY OF CORONADO
Single Audit Report on Federal Awards
Year ended June 30, 2023
TABLE OF CONTENTS
Page
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
Report on Compliance for Each Major Federal Program; Report on Internal Control over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3
Schedule of Expenditures of Federal Awards 6
Notes to the Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs 8
Summary Schedule of Prior Audit Findings 12
Attachment 4
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
Independent Auditor’s Report
City Council
City of Coronado
Coronado, California
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, each major fund, and the aggregate remaining fund information of City of Coronado (“City”) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise City of Coronado’s basic financial statements, and have issued our report thereon dated July 5, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered City’s internal control over financial reporting (internal control) as a basis for designing 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’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.
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 that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We identified certain deficiencies in internal control, described in the accompanying Schedule of Findings and Questioned Costs, as items 2023-001, 2023-002, 2023-003 that we consider to be material weaknesses.
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Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether 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 financial statements. 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 one item of noncompliance required to be reported under Government Auditing Standards, and which is described in the accompanying Schedule of Findings and Questioned Costs as item 2023-003.
City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our engagement and described in the accompanying Schedule of Findings and Questioned Costs. The City’s responses were not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
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.
Irvine, California
July 5, 2024
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REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; AND REPORT ON
THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED BY THE UNIFORM GUIDANCE
Independent Auditor’s Report
City Council
City of Coronado
Coronado, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Coronado’s (“City”) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2023. 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.
In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2023.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit 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). Our responsibilities under those standards and Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City’s federal programs.
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Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
• Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances 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 the City’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on 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 a 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.
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Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
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.
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, each major fund, and the aggregate remaining fund information of the City as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon, dated July 5, 2024, which contained unmodified 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 the 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 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 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.
Irvine, California
July 5, 2024
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Federal
Program Assistance Financial Amount
Federal Grantor/Pass-through Identification Listing Assistance Paid to Grantor/Program Title Number Number Expenditures Subrecipients U.S. Department of Housing and Urban Development
Direct Programs:
Community Development Block Grant Entitlement Cluster:
Community Development Block Grant B-20-UC-06-0501 14.218 $ 24,604 $ - Community Development Block Grant B-21-UC-06-0501 14.218 14,329 - Subtotal of Community Development Block Grant Entitlement Cluster 38,933 - Total - U.S. Housing and Urban Development 38,933 -
U.S. Department of Homeland Security
Passed through the County of San Diego, OES:
2020 State Homeland Security Grant Program (SHSP) EMW-2020-SS-00095-S01 97.067 6,686 - Total - U.S. Department of Homeland Security 6,686 -
U.S. Department of Justice
Direct Programs:
Bulletproof Vest Partnership Program
BVP (Bulletproof Vests) (100-5750) 2020BUBX20022889 16.607 5,608 - Equitable Sharing Program:
Asset Forfeiture (DEA, US Marshalls) N/A 16.922 22,775 - Narcotics Task Force Reimbursement / DCESP N/A 16.922 19,763 - Joint Terrorism Task Force (FBI) N/A 16.922 3,691 -
Total - U.S. Department of Justice 51,837 -
U.S. Department of the Treasury
Passed through the State of California:
Coronavirus State and Local Fiscal Recovery Fund 1505-0271 21.027 2,838,480 - Total - U.S. Department of the Treasury 2,838,480 -
U.S. Department of National Highway Traffic Safety Administration Direct Programs:
Highway Safety Cluster:
National Priority Safety Program:
Ride to Live (2021) 69A3752130000405FCA1 20.616 5,269 - Ride to Live (2022) 69A3752030000405FCA1 20.616 28,420 - Subtotal Highway Safety Cluster 33,689 -
Total - U.S. Department of National Highway Traffic Safety Administration 33,689 - Total Expenditures of Federal Awards $ 2,969,625 $ -
CITY OF CORONADO
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
See notes to schedule of expenditures of federal awards 6 Attachment 4
CITY OF CORONADO
Notes to the Schedule of Expenditures of Federal Awards Year ended June 30, 2023
(1) Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of Federal Awards
(a) Scope of Presentation
The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) includes the federal grant activity of each of the City of Coronado’s major programs of the federal government for the year ended June 30, 2023. The information in the schedule is presented in accordance with 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”).
Because the Schedule presents only a selected portion of the operations of the City of Coronado, it is not intended to and does not present the financial position, changes in net assets or cash flows of the City of Coronado. The City has not elected to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
(b) Basis of Accounting
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards wherein certain types of expenditures are not allowable or are limited as to reimbursement.
(c) Subrecipients
During the fiscal year ended June 30, 2023, the City of Coronado did not disburse any funds to subrecipients.
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CITY OF CORONADO
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section I - Summary of Auditor's Results
Financial Statements
1. Type of auditor's report issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified
2. Internal control over financial reporting:
a. Material weakness(es) identified? Yes
2023-001
2023-002
2023-003
b. Significant deficiency(ies) identified? No
3. Noncompliance material to the financial statements noted? Yes 2023-003
Federal Awards
1. Internal control over major programs:
a. Material weakness(es) identified? No
b. Significant deficiency(ies) identified? No
2. Type of auditors’ report issued on compliance for major programs:
Unmodified
3. Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516 (a)? No
4. Identification of major programs:
Assistance Listing Number Name of Federal Program or Cluster
21.027 Coronavirus State and Local Fiscal
Recovery Funds
5. Dollar threshold used to distinguish between Type A and Type B programs: $750,000
6. Auditee qualified as a low-risk auditee? No
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CITY OF CORONADO
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section II - Financial Statement Findings
There are three financial statement findings that qualified for reporting in this category.
Finding 2023-001 – Timely and Accurate Financial Reports We noted the City’s accounting and reporting processes were delayed for the fiscal year ended June 30, 2023. The City experienced a significant turnover in key staff, as well as a new system implementation that resulted in significant delays in recording of daily transactions and timely reporting. As a result, we were not able to begin the final stage of the audit until February 2024 and concluded in May 2024. Delays in receiving timely and current financial information can be significantly impact management’s ability to effectively guide an organization.
Recommendation
We recommend management take steps necessary to ensure daily accounting transactions are recorded in a timely manner and year end closing journal entries are accurate and recorded. This may require the hiring of additional staff to bring the current books and records up to date. If it is determined that the department is understaffed, steps should be taken to alleviate this problem so that work can remain current without undue hardship for any one employee.
Management’s Response Regarding Corrective Action Taken or Planned As noted by the auditor, the City experienced a significant turnover in key staff and challenges in hiring consistent temporary help during numerous vacancies. The City has been actively recruiting for vacant positions, and the staffing level will be evaluated as key positions are fully or close to being fully staffed. The management also continues to work on certain post go-live implementations of additional features and functionalities of the new system to enhance the streamlining of financial workflows.
Finding 2023-002 – Material Audit Adjustments
During our audit, we had approximately 5 journal entries detected as a result of audit procedures.
Recommendation
We recommend the City establish procedures to identify adjustments in the reporting period in which the related transactions occurred. In addition, management should take time to review account balances at year-end to ensure all adjusting journal entries have been properly recorded.
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CITY OF CORONADO
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section II - Financial Statement Findings (Continued)
Management’s Response Regarding Corrective Action Taken or Planned The new team of City staff assigned to their first year of audit required these additional journal entries to be provided as the mostly related to necessary adjustments identified during the preparation of audit-related schedules and inquiries. We expect greater continuity of staff for next year’s audit, which will help improve the City’s preparation and review process for various audit-related schedules. The City will also review all journal entries proposed by the City and the auditors in this year’s audit to ensure that all applicable adjustments are properly recorded as part of next year’s final trial balance preparation.
Finding 2023-003 – Preparation of the Single Audit
“Upon the completion of the single audit, the reporting package (described in paragraph 5.38) and the data collection form (described in paragraph 5.39) must be electronically submitted by the auditee to the FAC. That submission must be completed within the earlier of 30 calendar days after receipt of the auditor’s reports or 9 months after the end of the audit period. If the due date falls on a Saturday, Sunday, or federal holiday, the reporting package is due the next business day.”
The City exceeded the reporting threshold of $750,000 in federal expenditures during the year ended June 30, 2023, and the Single Audit was due March 31, 2024. The City experienced a significant turnover in key staff, as well as a new system implementation that resulted in delays completing the single audit.
Recommendation
We recommend the City work toward completing subsequent single audits within the timeframe prescribed above.
Management’s Response Regarding Corrective Action Taken or Planned The City experienced significant turnover in key staff and challenges in hiring consistent temporary help during numerous vacancies. The City has been actively recruiting for vacant positions, and the staffing level will be evaluated as key positions are fully or close to being fully staffed. The management also continues to work on certain post go-live implementations of additional features and functionalities of the new system to enhance the streamlining of financial workflows.
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CITY OF CORONADO
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
Section III – Federal Award Findings and Questioned Costs There were no federal award findings for the year ended June 30, 2023. 11 Attachment 4
CITY OF CORONADO
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2023
Section IV – Summary of Prior Audit Findings and Current Status Finding 2022-001 – Timely and Accurate Financial Reports We noted the City’s accounting and reporting processes were delayed for the fiscal year ended June 30, 2022. The City experienced significant turnover in key staff, as well as a new system implementation that resulted in significant delays in recording of daily transactions and timely reporting. As a result, we were not able to begin the final stage of the audit until February 2023 and concluded in August 2023. Delays in receiving timely and current financial information can significantly impact management’s ability to effectively guide an organization.
Status of Corrective Action
The finding has been repeated as 2023-001.
Finding 2022-002 – Material Audit Adjustments and Excessive Journal Entries During our audit, we were provided with a significant number of journal entries after we received the final trial balance. In addition, we had approximately 6 journal entries detected as a result of audit procedures. Of the journal entries proposed as a result of our audit procedures, one resulted in a material prior period adjustment to the Wastewater Fund.
Status of Corrective Action
There was a significant decrease in the number of journal entries after receiving the final trial balance. However, there were 5 journal entries detected as a result of audit procedures. The material adjustments finding has been repeated as 2023-002.
Finding 2023-003 – Preparation of the Single Audit
“Upon the completion of the single audit, the reporting package (described in paragraph 5.38) and the data collection form (described in paragraph 5.39) must be electronically submitted by the auditee to the FAC. That submission must be completed within the earlier of 30 calendar days after receipt of the auditor’s reports or 9 months after the end of the audit period. If the due date falls on a Saturday, Sunday, or federal holiday, the reporting package is due the next business day.”
The City exceeded the reporting threshold of $750,000 in federal expenditures during the year ended June 30, 2022, and the Single Audit was due March 31, 2023. The City experienced a significant turnover in key staff, as well as a new system implementation that resulted in delays completing the single audit.
Status of Corrective Action
The finding has been repeated as 2023-003.
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