City of Fresno
Fresno, California
Single Audit and
Independent Auditors’ Reports
For the Year Ended June 30, 2023
City of Fresno
Single Audit and Independent Auditors’ Reports
For the Year Ended June 30, 2023
Table of Contents
Page
Single Audit:
Independent Auditors’ Reports:
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 .................................................................................... ........................ 7
Notes to the Schedule of Expenditures of Federal Awards ...................................................................................... 11
Schedule of Findings and Questioned Costs .................................................................................... ....................... 15
Summary Schedule of Prior Audit Findings ............................................................................................................. 21
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200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
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 Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Fresno
Fresno, California
We have audited, in accordance with the auditing standa rds 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 basic financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund informati on of the City of Fresno, California (the “City”) as of and for the year ended June 30, 2023, and the related notes to the financial st atements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 20, 2024. Our report includes a reference to other auditors who audited the financial statements of the Successor Agency to the Fresno Redevelopment Agency Private-Purpose Trust Fund, the Lo w and Moderate Income Housing Asset Special Revenue Fund, the Fire and Police Retirement System Pension Tr ust Fund, and the Employees Retirement System Pension Trust Fund, blended component units of the City, as described in our report on the City’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial stat ements, we considered the 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 the City’s internal c ontrol. 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 assi gned 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 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 significan t deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any de ficiencies in internal contro l that we consider to be material weaknesses. We identified certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as items 2023-001 that we consider to be a significant deficiency.
To the Honorable Mayor and Members of City Council
of the City of Fresno
Fresno, California
2 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s basic 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 a nd material effect on the fina ncial statements. However, providing an opinion on compliance with those provisions w as 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.
The 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 audit and described in the acco mpanying schedule of findings and questioned costs. The City’s response was 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 entit y’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 c ontrol and compliance. Accordingly, this communication is not suitable for any other purpose.
Santa Ana, California
March 20, 2024
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
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
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Fresno
Fresno, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Fresno, California’s (the “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 resp ects, 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 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; the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principl es, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are fu rther described in the Auditors’ 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 fo r 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 comp liance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over complia nce with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs.
To the Honorable Mayor and Members of City Council
of the City of Fresno
Fresno, California
4 Auditors’ 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 hi gh level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally acc epted auditing standards, Government Auditing Standards , and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting ma terial noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional om issions, misrepresentations, or the override of internal control. Noncompliance with the complia nce 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 w ith auditing standards generally accepted in the United States of America, 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 noncomplian ce, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Su ch 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 circumstan ces 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 deficienci es 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 c ourse of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of complian ce 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 progr am 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 combinati on 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 impor tant enough to merit atten tion by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose d escribed in the Auditors’ Responsibilities for the Audit of Complia nce section above and was not designe d to identify all deficiencies in internal control over compliance that might be material weaknesses or sign ificant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any de ficiencies 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.
To the Honorable Mayor and Members of City Council
of the City of Fresno
Fresno, California
5 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 the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activiti es, 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 compri se the City’s basic financial statements. Other auditors audited the financial statements the Successor Agency to the Fresno Redevelopment Agency Private-Purpose Trust Fund, the Low and Moderate Income Housing Asset Special Revenue Fund, the Fire a nd Police Retirement System Pension Trust Fund, and the Employees Retirement System Pe nsion Trust Fund, as described in our report on the City’s financial statements. We issued our report th ereon dated March 20, 2024, wh ich contained unmodified opinions on those financial statements. Our audit was perfo rmed 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 anal ysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such info rmation 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 a udit of the financial statements and certain additional procedures, including comparing and r econciling such information directly to the underlying accounting and other records used to prepare the basic fina ncial statements or to the basic financial statements themselves, and other additi onal procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the sch edule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
Santa Ana, California
March 26, 2024, except for the Schedule of Expenditures and Federal Awards, as to which the date is March 20, 2024
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City of Fresno
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2023
See accompanying Notes to the Schedule of Expenditures of Federal Awards
7 Assistance Grant Amount
Lis ting Identification Federal Prov ided to
Number Number Expenditures Sub recip ients
U .S. Department of Commerce
E conomic Dev elopment Cluster:
Direct Programs:
COVID-19 - Economic Adjustment Assistance 11.307 EDA 07-39-02434 858,972$ 858,972 $ Revolving Loan Fund - E conom ic Adjustm ent Assistance 11.307 EDA 07-39-02434 1,822,396 1,822,396 Subtotal - Program 11.311 2,681,368 2,681,368 Total E conomic Dev elopment Cluster 2,681,368 2,681,368 Total U.S. Department of Commerce 2,681,368 2,681,368 U.S . De partment of Hous i ng and Urban De vel opment Community Development Block Grant (CDBG) - Entitlement Grants Cluster:
Direct Programs:
Com m unity Developm ent Block G rant 14.218 B-15-MC 06-0001 2,427,545 - Com m unity Developm ent Block G rant 14.218 B-16-MC-06-0001 481,225 - Com m unity Developm ent Block G rant 14.218 B-17-MC-06-0001 2,734,020 - Com m unity Developm ent Block G rant 14.218 B-18-MC-06-0001 374,088 - Com m unity Developm ent Block G rant 14.218 B-19-MC-06-0001 863,894 14,701 Com m unity Developm ent Block G rant 14.218 B-20-MC-06-0001 1,495,939 388,575 COVID-19 - Community Development Block Grant 14.218 B-20-MW-06-0001 2,717,488 2,708,158 Com m unity Developm ent Block G rant 14.218 B-21-MC-06-0001 1,503,609 435,121 Com m unity Developm ent Block G rant 14.218 B-22-MC-06-0001 3,735,209 2,656,870 Com m unity Developm ent Block G rant 14.218 B-23-MC-06-0001 14,214 - Total CDBG - Entitlement Grants Cluster 16,347,231 6,203,425 COVID-19 - Emergency Solutions Grant Program 14.231 E-20-MW-06-0001 3,334,950 2,763,113 Em ergency Solutions G rant Program 14.231 E-21-MC-06-0001 429,677 391,022 Em ergency Solutions G rant Program 14.231 E-22-MC-06-0001 106,852 100,868 Total E mergency Solutions Grant Program 3,871,479 3,255,003 HOME Investment Partnership 14.239 M-17-MC-06-0204 181,557 181,557 HOME Investment Partnership 14.239 M-18-MC-06-0204 1,104,086 - HOME Investment Partnership 14.239 M-19-MC-06-0204 3,631,082 - HOME Investment Partnership 14.239 M-20-MC-06-0204 2,748,878 - HOME Investment Partnership 14.239 M-21-MC-06-0204 516,300 - HOME Investment Partnership - ARP 14.239 M-21-MP-06-0204 1,590 - HOME Investment Partnership 14.239 M-22-MC-06-0204 206,651 80,467 HOME Investment Partnership 14.239 M-23-MC-06-0204 116,879 - Total HOM E Inv estment Partnership 8,507,023 262,024 Housing Opportunities for Persons with AIDS (HOPWA) 14.241 CAH20F011 71,302 66,191 Housing Opportunities for Persons with AIDS (HOPWA) 14.241 CAH21F011 646,348 626,640 Housing Opportunities for Persons with AIDS (HOPWA) 14.241 CAH22F011 58,726 58,043 Total Housing Opportunities for Persons with AIDS (HOPWA) 776,376 750,874 Total U.S . Hous i ng and Urban Devel opment 29,502,109 10,471,326 U.S. Department of Justice
Direct Programs:
Edward Byrne Memorial Jus tice As sistance Grant 16.738 2019-DJ-BX-0536 23,147 - Edward Byrne Memorial Jus tice As sistance Grant 16.738 2020-DJ-BX-0227 196,009 - Edward Byrne Memorial Jus tice As sistance Grant 16.738 15PBJA-21-GG-01222-JAGX 45,841 - Total - Program 16.738 264,997 -
Federal Grantor/Pass - Through
Grantor/Program Title
City of Fresno
Schedule of Expenditures of Federal Awards (Continued)
For the Year Ended June 30, 2023
See accompanying Notes to the Schedule of Expenditures of Federal Awards
8 Listing Identification Federal Provided to
Number Number Expenditures Subrecipients
Direct Programs:
Sexual Assault Kit Initiative Grant 16.833 2019-AK-BX-0021 80,764 - Sexual Assault Kit Initiative Grant 16.833 2020-AK-BX-0002 877,256 44,190 Total - Program 16.883 958,020 44,190
16.123 2019-MU-MU-0013 109,840 -
Project Safe Neighborhoods 16.609 15PBJA-22-GG-00714-GUNP 346,873 - Byrne Discretionary Community Program Funding 16.753 15PBJA-22-GG-01211-BRND 3,407 - Law Enforcement Mental Health and Wellness Act (LEMHWA) 16.710 2020-MH-WX-K011 11,747 - Community Policing Devlopment (CPD) De-Escalation Training 16.710 15JCOPS-21-GG-02451-SPPS 158,063 - Total - Program 16.710 169,810 -
Total U.S. Department of Justice 1,852,947 44,190 U.S. Department of Transportation
Airport Improvement Program:
Direct Programs:
Airport Improvement Program 20.106 3-06-0087-082-2018 203,023 - Airport Improvement Program 20.106 3-06-0087-086-2020 764,711 - COVID-19 - Airport Improvement Program 20.106 3-06-0087-085-2020-CARES ACT 5,218,231 - Airport Improvement Program 20.106 3-06-0087-091-2021 1,021,881 - Airport Improvement Program 20.106 70T04020T9CAP1093 138,865 - Airport Improvement Program 20.106 3-06-0087-094-2022 3,175,398 - Airport Improvement Program 20.106 3-06-0087-095-2022 22,710 - Airport Improvement Program 20.106 3-06-0088-028-2022 80,370 - Airport Improvement Program 20.106 3-06-0087-096-2022 70,358 - Total - Airport Improvement Program 10,695,547 - Passed through the California Department of Transportation:
Highway Planning and Construction Program 20.205 Master Agreement 06-5060 17,555,653 - Total - Program 20.205 17,555,653 -
Passed through the California High Speed Rail Authority:
ARRA - High Speed Rail (Engineering & Plan Review Contract) 20.319 HSR 11-29 66,216 - High Speed Rail (Engineering & Plan Review Contract) 20.319 HSR 16-57 1,302,146 - Total - Program 20.319 1,368,362 -
Passed through the Fresno Council of Governments:
Technical Assistance and Workforce Development Program 20.513 CA-2018-126 6,109 - Highway Safety Cluster:
Passed through California Office of Traffic Safety:
Selective Traffic Enforcement Program (STEP) FFY2022 20.600 PT22174 20,828 - Selective Traffic Enforcement Program (STEP) FFY2022 20.600 PT23032 73,354 - Pedestrian and Bicycle Safety Program 20.600 PS22034 6,700 - Pedestrian and Bicycle Safety Program 20.600 PS23004 65,287 - Total Highway Safety Cluster 166,169 -
Passed through California Office of Traffic Safety:
Selective Traffic Enforcement Program (STEP) FFY2022 20.608 PT22174 105,406 - Selective Traffic Enforcement Program (STEP) FFY2022 20.608 PT23032 215,295 - Total - Program 20.608 320,701 -
Federal Grantor/Pass - Through
Grantor/Program Title
Community-Based Violence Prevention Program - Support for Victims of Gang Violence Grant
City of Fresno
Schedule of Expenditures of Federal Awards (Continued)
For the Year Ended June 30, 2023
See accompanying Notes to the Schedule of Expenditures of Federal Awards
9 Number Number Expenditures Sub recip ients
Federal Transit Cluster:
Direct Program:
Federal Transit Capital Investm ent G rants 20.500 CA-03-0821 31,001 - Urban Mass Transportation Capital, CMAQ 20.507 CA-95-X072-01 82,290 - Urban Mass Transportation Capital, CMAQ 20.507 CA-2018-044 9,464 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-90-Y947 4,176 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-2017-081-00 249,061 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-2018-002-00 148,095 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-2018-006-00 83,167 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-2019-044-01 279,821 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-2019-044-02 146,964 - Urban Mass Transportation Capital Planning, Operating Assistance 20.507 CA-2022-047-00 125,611 - FAX FY 20 and FY 21 Capital and Planning G rant 20.507 CA-2022-047-00 162,032 - FY21 CRRSAA/Section 5307 Operating Assistance Grant 20.507 CA-2023-080-00 5,605,241 - FY21 ARP/5307 Operating Assistance Grant 20.507 CA-2023-081-00 28,944,625 - Total - Program 20.507 35,840,547 -
Bus and Bus Facilities Form ula Program 20.526 CA-2016-106 2,145,991 - Bus and Bus Facilities Form ula Program 20.526 CA-2019-045 1,078,344 - Total - Program 20.526 3,224,335 -
Total Federal Trans it Clus ter 39,095,883 - Total U.S. Department of Transportation 69,208,424 - U .S. Dep artment of Treasury
Direct Program:
State and Local Fiscal Recovery Fund 21.027 SLT-1246 44,050,309 7,878,153 Direct Program:
Em ergency Rental Assistance Program (ERAP) 21.023 ERA 2-0092 5,944,099 5,944,099 Passed through the State of California Department of Housing and Community Development:
Em ergency Rental Assistance Program (ERAP) 21.023 20-ERAP-00015 6,609,285 113,836 Em ergency Rental Assistance Program (ERAP) 21.023 21-ERAP-20015 12,265,688 1,302,029 Total - Program 21.023 24,819,072 7,359,964
Total U.S. Department of Treasury 68,869,381 15,238,117 E nv ironmental Protection Agency
Direct Program:
Brownfields Training, Research, and Technical Assistance G rants and Cooperative Agreem ents 66.814 99T91201 112,120 - Direct Program:
Brownfields Multipurpose, Assessm ent, Revolving Loan Fund, and Cleanup Cooperative Agreem ents 66.818 BF98T08001 191,637 191,000 Total Environmental Protection Agency 303,757 191,000 U .S. Dep artment of Health and Human Serv ices
Aging Cluster:
Passed through the Fresno-Madera Area Agency on Aging:
Special Program s for the Aging: Senior Hot Meals 93.045 22-0310ARP 20,966 - Total Aging Cluster 20,966 -
Direct Program:
Equitable Com m unity Response to COV ID-19 93.137 1 CPIMP211263-01-00 1,493,231 - Total U .S. Dep artment of Health and Human Serv ices 1,514,197 - Grantor/Program Title
City of Fresno
Schedule of Expenditures of Federal Awards (Continued)
For the Year Ended June 30, 2023
See accompanying Notes to the Schedule of Expenditures of Federal Awards
10 Number Number Expenditures Sub recip ients
U .S. Department of Homeland Security
Passed through the California Governor's Office of Emergency Services:
COVID-19 Screening 97.036 FEMA-4482-DR-CA, Cal OES ID: 53,616 - Passed through the California Department of Emergency Services:
Homeland Security Grant Program (HSGP) 97.067 2020-0095 210,324 - Homeland Security Grant Program (HSGP) 97.067 2021-0081 63,147 - Total - Program 97.067 273,471 -
Direct Programs:
Staffing for Adequate Fire and Em ergency Response G rant Program 97.083 EMW-2020-FF-01300 4,283,536 - Staffing for Adequate Fire and Em ergency Response G rant Program 97.083 EMW-2021-FF-00276 502,077 - Total - Program 97.083 4,785,613 -
Total U .S. Department of Homeland Security 5,112,700 - Total E xpenditures of Federal Aw ards 179,044,883$ 28,626,001 $ Grantor/Program Title
City of Fresno
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2023
11 Note 1 – Reporting Entity
The financial reporting entity, as defined by the Governmental Accounting Standard Board (“GASB”), consists of the primary government, which is the City of Fresno, Califor nia (the “City”), organizations for which the primary government is financially accountable, and other organizations for which th e nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. The City’s reporting entity is defined further in Note 1a to the City’s basic financial statements.
Note 2 – Basis of Accounting
Funds received under the various grant programs have been r ecorded within the general fund, special revenue funds and proprietary funds of the City. The City utilizes the modified accrual method of acc ounting for the General Fund and special revenue funds and accrual method of accountin g for proprietary funds. The accompanying Schedule of Expenditures of Federal Awards (the “Schedule”) is pr esented 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 (the “Uniform Guidance”). Therefore, some amounts presented in the Schedule may differ from amounts presented in, or used in, the preparation of the City’s basic financial statements.
Note 3 – Schedule of Expenditures of Federal Awards
The accompanying Schedule presents the activity of all fe deral financial assistance programs of the City. Federal financial assistance received directly from federal agenci es as well as federal financial assistance passed through the State of California and Fresno Council of Governments, is included in the Schedule. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financia l position, change in fund balance, or results of operations of the City.
Note 4 – Assistance Listing Numbers
The Assistance Listing Numbers (ALNs) included in th e accompanying Schedule were determined based on the federal program name, review of grant contract inform ation, and the U.S. General Services Administration’s SAM.gov website.
Note 5 – Indirect Cost Rate
The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance.
Note 6 – State Revolving Loan Funds
Beginning in fiscal year 2007, the City received Federal cross-cut revolving gran t funds from the State in the form of loans from the U.S. Environmental Prot ection Agency, Office of Water, passed through the California State Water Resources Control Board and the Californ ia Department of Public Health, u nder Capitalization Grants for Clean Water State Revolving Funds (Assistance Listing Number 66. 458) and Capitalization Grants for Safe Drinking Water State Revolving Funds (Assistance Listing Number 66.468). Th e purpose of the grants/loans is to assist in financing the construction of projects that will enable the City to co mply with statutory clean and safe drinking standards. The City received funds under ten grants/loans.
City of Fresno
Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Year Ended June 30, 2023
12 Note 6 – State Revolving Loan Funds (Continued)
The terms of the grants/loans and the outstanding balances as of June 30, 2023, are as follows:
Grant Outstanding Loan
Fiscal Agreement Project Interest Rate Balances as of
Year Number Description Number Not to Exceed and Term June 30, 2023 2007 SRF06CX150 Wellsite Chlorination Project 10100007-004 2,210,000 $ 2.2923% / 20 yrs* 937,950 $ 2000 SRF08SWX101 Enterprise/Jefferson Canal Project 10100007-011 1,968,136 2.2923% / 20 yrs* 599,244 2011 SRF11CX104 Residential Water Meter Project 10100007-026C 51,405,432 0.0000% / 20 yrs* 28,272,988 2015 C-06-7893-110 Wastewater Teitiaty Plant C-067893-110 33,138,638 1.00-1.70% / 30 yrs* 26,320,280 2016 D15-01011 Recycled Water Distribution Southwest C-068061-110 52,475,049 1.00% / 30yrs* 52,914,446 2016 D15-02012 Southeast Surface Water Tr eatment Facility 1 010007-028C 195,489,000 1.663% / 30yrs* 154,193,470 2016 D15-02040 Friant-Kern Canal Raw Water Pipeline 1010007-029C 26,520,000 1.6% / 30yrs* 18,507,233 2016 D15-02042 Kings River Pipeline 1010007-031C 75,165,000 1.6% / 30yrs* 49,992,361 2017 D16-02031 Regional Transuission Mains 1010007-030C 75,900,000 1.6% / 30yrs* 61,137,447 2018 D18-02014 Northeast Surf ace WaterTreatment Facility 1 010007-032C 14,000,000 1.8% / 30 yrs* 13,347,542 406,222,961$
* Term begins at com pletion of project.
These loans are not considered to have continuing co mpliance requirements under Title 2 CFR Part 200, and, therefore, are only reported on the Schedule in the year in which funds are expended a nd drawn. The City expended $0 in federal funds under the loans during fiscal year ended June 30, 2023.
Note 7 – Economic Development Assistance Revolving Loan Fund (RLF) Calculation
The amount reported on the Schedule for expenditures rela ted to the Economic Adjustment Assistance Revolving Loan Fund (RLF) Grant ALN 11.307 is calculated using various criteria as defined by Title 2 CFR Part 200. The calculation for the year ended June 30, 2023, is as follows:
EDA
Program Rev olv ing
Loan Fund
Grant Award Number 07-39-02434
Balance of RLF loans outstanding at June 30, 2023 797,220 $ Cash and investment balance in the RLF at June 30, 2023 835,422 Administrative ex penses paid out of RLF incom e
during the fiscal year ended June 30, 2023 50,091
Write offs during the fiscal year ended June 30, 2023 139,663 Subtotal 1,822,396
Federal share (calculated grant rate) 100%
Economic Adjustm ent Assistance RLF G rant federal award expenditures for the fiscal year ended June 30, 2023 1,822,396 $
City of Fresno
Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Year Ended June 30, 2023
13 Note 8 – Economic Development Assistance CARES Revolving Loan Fund (RLF) Calculation
The amount reported on the Schedule for expenditures rela ted to the Economic Adjustment Assistance CARES Revolving Loan Fund (RLF) Grant ALN 11.307 is calculated using various criteria as defined by Title 2 CFR Part 200. The calculation for the year ended June 30, 2023, is as follows:
EDA CARES
Program Rev olv ing
Loan Fund
Grant Award Number 07-39-02434
Balance of RLF loans outstanding at June 30, 2023 699,786 $ Cash and investment balance in the RLF at June 30, 2023 60,271 Administrative ex penses paid out of RLF incom e
during the fiscal year ended June 30, 2023 23,915
Write offs during the fiscal year ended June 30, 2023 75,000 Subtotal 858,972
Federal share (calculated grant rate) 100%
Economic Adjustm ent Assistance RLF G rant federal award expenditures for the fiscal year ended June 30, 2023 858,972 $
Note 9 – Prior Year Expenditures included in the Schedule of Expenditures of Federal Awards
The Schedule includes the following expenditures that were incurred in the prior year:
The City incurred costs totaling $758,579 under the Air port Improvement Program (AIP) during the year ended June 30, 2022, for which funding was approved in fiscal year 2023.
The City incurred pre-award costs as follows: $5,605 ,241 under the FY21 CRRSAA/Section 5307 Operating Assistance Grant, and $28,944,625 under the FY21 ARP/ 5307 Operating Assistance Grant under the ALN 20.507 during the year ended June 30, 2023, prior to receiving the official grant awards.
City of Fresno
Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Year Ended June 30, 2023
14 Note 10 – Nonfederal Awards Listed Separately as Required by the Grantor
The following is a list of nonfederal (state and local) award expenditures that are required to be listed separately by the Grantor:
Grant
State Pass-through Identification State or Local
Agency Grantor Number E xpenditures
California State Department of Finance
CA Division of Mass Transportation - Direct Program:
Prop 1B-FAX DOF Prop 1B 8,657,088$
Total California State Department of Finance 8,657,088
Caltrans - Pass-Through Program:
SB1 - State of G ood Repair Program DOT SB1_FAX 487,254 Total California State Department of Transportation 487,254 California State Water Resources Control Board
Office of Water - Direct Program:
Capitalization G rant G roundWater
Contruction/Implementation - PCE P117 CSWRCB PCE-D181252400 1,052,924 Total Office of Water - Direct Program 1,052,924
Total California State Water Resources Control Board 1,052,924 Total Expenditures of State and Local Awards 10,197,266$ State or Local Grantor/Pass - Through
Grantor/Program Title
City of Fresno
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2023
15 Section I – Summary of Auditors’ Results
Financial Statements
Type of report the auditors issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(ies) identified? 2023-001
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None Reported
Type of auditors’ report issued on compliance for major programs Unmodified
Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No
Identification of major programs:
F ed eral Assistance
Listing Number(s) Name of Federal Program or Cluster E xpenditures
14.239 HOME Investment Partnership Program 8,507,023 $
21.023 Emergency Rental Assistance Program 24,819,072
21.027 State and Local Fiscal Recovery Fund Program 44,050,309
97.083 Staffing for Adequate Fire and Emergency Response Grant Program 4,785,613 Total Expenditures of All Major Federal Programs 82,162,017 $ Total Expenditures of Federal Awards 179,044,883 $
Percentage of Total Ex penditures of Federal Awards 45.89%
Dollar threshold used to distinguish between type A and type B program $3,000,000
Auditee qualified as low-risk auditee in accordance with 2 CFR 200.520? No 16 City of Fresno
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
Section II – Financial Statement Findings
A. Current Year Findings – Financial Statement Audit
Finding 2023-001 Improve Internal Controls Over Financial Reporting
Criteria:
Management is responsible for the preparation and fa ir presentation, as well as the accuracy of its financial statements, including disclosures in accordance with accounting principl es generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. As part of satisfying that responsibility, staff should possess the skills, knowledge, and experience necessary to complete year-end close and diligently employ that knowledge, skill, and experience to produce reliable and accurate financial information.
Generally accepted auditing standards de fined internal control as a process – affected by the Members of City Council, management, and other pe rsonnel – designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
Reliability of financial reporting
Effectiveness and efficiency of operations, and
Compliance with applicable laws and regulations.
The Committee of Sponsoring Organizations of the Tr eadway Commission (“COSO”) established the following framework that stress the need for policies and procedures to promote effective internal control for an entity:
Control Environment – Establish structures, reporting lines, authorities and responsibilities
Risk Assessment – Select and develop control activities that mitigate risks
Control Activities – Deploy control activities through policies and procedures
Information and Communication – Communicate internal control information internally
Monitoring – Evaluations are used to determine if controls are present and functioning
An overall purpose of internal control over financial reporti ng is to foster the preparation of reliable financial statements and that reliable financial statements must be materially accurate.
Condition:
The City’s monthly bank reconciliation process was not properly completed during the period of the audit. During our review of the bank reconciliation process, we found th at the bank reconciliations for fiscal year 2022/23 had not been finalized timely.
Cause:
The City implemented a new Accounting Software (Tyler) during the fiscal year that created challenges in the bank reconciliation process. Staff had to take on additional responsibilities a nd did not have sufficient resources to properly review and reconcile the sub-ledger to the ge neral ledger to ensure the accuracy of the financials.
Additionally, the lack of documented policies and proce dures exacerbated the challenges when staff responsible for key elements of the work were unavailable.
17 City of Fresno
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2023
Section II – Financial Statement Findings (Continued)
B. Current Year Findings – Financial Statement Audit (Continued)
Finding 2023-001 Improve Internal Contro ls Over Financial Reporting (Continued)
Context:
Reconciliations and adjustments to year end balances th at either are not recorded or are posted after the preparation of fiscal year end reports decreases the relia bility and usefulness of the reports. In addition, not following formal policies and procedures regarding intern al control over individual transaction cycles could lead to inconsistency in processing transactions and increase the ri sk that errors will not be detected and corrected in a timely manner.
Effect:
Due to the change in the accounting system during the aud it period ended June 30, 2023, the City did not have a process for ensuring that the timely reconciliation of the bank accounts is completed, by the end or soon after the fiscal year-end. The challenges with the transition were further complicated by staffing issues.
Recommendation:
We recommend that the City put in place procedures in order to improve the timeliness of the reconciliation of the bank accounts to the general ledger. A dditional personnel should be considered to enhance the City’s internal control over the financial reporting and within each tr ansaction cycle to ensure transactions are thoroughly evaluated, reviewed and recorded in order to facilitate the accurate and comp lete year-end closing of the general ledger.
View of Responsible Official:
The City agrees with this recommendation and the Treasury Unit is working on developing a manual reconciliation process that will occur outside of the accounting system to ensure timeliness of all bank reconciliations moving forward. Given that the bank rec onciliation module within the Ty ler financial system has been deemed ineffective, the team has had to result to this alternative process. In addition, the Treasury Unit will work in close collaboration with the Accounting/GL and A ccounts Receivable units to ensure all activity for prior periods is posted timely so that a reconciliation for each transaction cycle can be completed monthly.
C. Current Year Findings and Questioned Costs – Major Federal Award Program Audit
No findings or questioned costs were noted on the City’s major federal programs for the year ended June 30, 2023.
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19 PRIOR AUDIT FINDINGS STATUS
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City of Fresno
Summary Schedule of Prior Audit Findings
For the Year Ended June 30, 2023
21 Reference Number: Financial Statement Finding 2022-001 (Significant Deficiency) Audit Finding:
Status of Management’s
Corrective A
ction:
Reference Number:
Audit Finding:
Status of Management’s
Corrective Action:
During the audit, as d iscussed in Note 15 to the basic financial statements, th e City restated its beginning net positio n/fund balance of the government-wide governmental activities, the governmental funds and the custodial funds, in order to correct the prev iously reported financia l statements to comply with the GASB Statement No. 84, Fiduciary Activities, that was required to be implemented as of the year ended June 30, 2021. The govern mental activities beginning net po sition was restated by $3.9 million.
Implemented.
Financial Statement Finding 2022-002 (Significant Deficiency) During our review of the Sch edule of Expenditures of Federal Awards (“Schedule”) provided by the City, we noted the City federal expenditures for the Emergency Rental Assistance Program, passed through th e State of Californ ia in th e amount of $12,239,896 were excluded in th e schedule. We also noted federal expen ditures in the sch edule for the State and Local Fi scal Recovery Fund were u nderstated b y $14,391,754.
Implemented.
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