City of Hawthorne, California
Single Audit Report on Federal Awards
Year Ended June 30, 2023
City of Hawthorne
Single Audit Report on Federal Awards
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 Schedule of Expenditures of Federal Awards Required in Accordance with the Uniform Guidance .......................................................... 3 Schedule of Expenditures of Federal Awards ........................................................................... 7 Notes to the Schedule of Expenditures of Federal Awards ...................................................... 8 Schedule of Findings and Questioned Costs:
Section I: Summary of Auditor's Results ............................................................................. 9 Section II: Financial Statements Findings ......................................................................... 10 Section III: Federal Awards Findings and Questioned Costs ............................................ 10
Summary Schedule of Prior Audit Findings ............................................................................ 11 -1-
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
To the Honorable City Council
City of Hawthorne
Hawthorne, 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 the City of Hawthorne (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, and have issued our report thereon dated January 29, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) 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 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.
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Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies.
Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the city’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
San Bernardino, California
January 29, 2024
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REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM; REPORT ON INTERNAL CONTROL OVER
COMPLIANCE; AND REPORT ON SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS IN ACCORDANCE
WITH THE UNIFORM GUIDANCE
Independent Auditor’s Report
To the Honorable City Council
City of Hawthorne
Hawthorne, California
Report of Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Hawthorne’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 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 the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
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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.
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.
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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.
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 January 29, 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.
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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.
San Bernardino, California
March 27, 2024 (except for our report on the Schedule of Expenditures of Federal Awards, for which the date is January 29, 2024)
City of Hawthorne
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2023
See accompanying notes to the schedule of expenditures of federal awards. -7-
Federal Grantor/ Assistance Agency or Amount
Pass-Through Grantor/ Listing Pass-Through Federal Provided to Program Title Number Number Expenditures Subrecipients
U.S. Department of Housing and Urban Development
Direct Assistance:
Community Development Block Grant Cluster 14.218 B-09-MC-06-0519 565,249 $ 139,514 $ COVID-19 CARES Act - CDBG 14.218 Various 806,118 -
Total - Community Development Block Grant Cluster 1,371,367 139,514 Home Investment Partnership Program (HOME) 14.239 M-09-MC-06-0513 42,327 - Total - Assistance Listing 14.239 - 42,327
CDBG 108 Guaranteed Loan 14.248 Various 360,573 -
Total - Assistance Listing 14.248 - 360,573
Housing Assistance Payment Program Section 8 14.871 HAPP Various 9,181,779 - Passed through the County of Los Angeles and Other Cities:
Housing Assistance Payment Program Section 8 14.871 Various 2,475,677 - Total - Assistance Listing 14.871 - 11,657,456
Total U.S. Department of Housing and Urban Development 13,431,723 139,514 U.S. Department of Justice
Direct Assistance:
Equitable Sharing Program 16.922 CA0192800 1,229,729 -
Total - Assistance Listing 16.922 - 1,229,729
Total U.S. Department of Justice - 1,229,729
U.S. Department of Transportation
Direct Assistance:
Federal Aviation Administration:
Airport Rescue Grant 20.106 3-06-0101-022-2021 185
Taxiway Rehab Project 21 20.106 3-06-0101-021-2021 132,181 Airport Improvement Program - Noise Study (Part 150) 20.106 3-06-0101-015-2015 108 - Total - Assistance Listing 20.106 - 132,474
Passed through the State of California Office of Traffic Safety:
Highway Safety Cluster
Selective Traffic Enforcement Program 20.600 PT20057 230,009 - Selective Traffic Enforcement Program 20.600 MC20003 89,823 - Total - Highway Safety Cluster - 319,832
Total U.S. Department of Transportation - 452,306
U.S Department of Treasury
Direct Assistance:
Equitable Sharing Program 21.016 CA0192800 956,252
Total - Assistance Listing 21.016 - 956,252
American Rescue Plan Act 21.027 UNK 8,472,519 -
Total - Assistance Listing 21.027 - 8,472,519
Total U.S. Department of Treasury - 9,428,771
U.S. Department of Homeland Security
Direct Assistance:
Robert T. Stafford Disaster Relief and Emergency Assistance Act COVID-19 Reimbursable Emergency Protective Measures 97.036 UNK 107,263 - Total - Assistance Listing 97.036 - 107,263
Emergency Food & Shelter National Board Program 97.024 UNK 70,980 - Total - Assistance Listing 97.024 - 70,980
Urban Area Security Initiative (UASI) - 2020 97.067 UNK 76,193 - Total - Assistance Listing 97.067 - 76,193
Building Resilient Infrastructure and Communities (BRIC) 97.047 UNK 29,954 - Total - Assistance Listing 97.047 - 29,954
Total U.S Department of Homeland Security 284,390 -
Total Expenditures of Federal Awards 24,826,919 $ 139,514 $ City of Hawthorne
Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2023
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NOTE 1: BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (SEFA) includes the federal award activity of the City of Hawthorne (the City) that are reimbursable under federal programs of the federal government for the year ended June 30, 2023. The information in this SEFA is presented in accordance with Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the SEFA presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or fund balance, or cash flows of the City. For the purposes of this schedule, federal financial assistance includes both federal financial assistance received directly from a federal agency, as well as federal funds received indirectly by the City from a nonfederal agency or other organization. Only that portion of program expenditures reimbursable with such federal funds are reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying schedule.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the SEFA are reported on the modified accrual basis of accounting.
Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the SEFA, if any, represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The City has elected to use the 10-percent de minimis indirect cost rate, where applicable, allowed under the Uniform Guidance.
NOTE 3: SUBRECIPIENTS
During the fiscal year ended June 30, 2023, the City disbursed $139,514 of federal awards to several subrecipients.
City of Hawthorne
Schedule of Findings and Questioned Costs
Year Ended June 30, 2023
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Section I - Summary of Auditor's Results
Financial Statements
Internal control over financial reporting:
Material weakness identified? Yes X No
Significant deficiencies identified
that are not considered to be
material weaknesses? Yes X None Reported
Noncompliance material to financial
statements noted? Yes X No
Federal Awards
Internal control over major programs:
Material weakness identified? Yes X No
Significant deficiencies identified
that are not considered to be
material weaknesses? Yes X None Reported
Any audit findings disclosed that
are required to be reported in
accordance with 2 CFR 200.516(a)? Yes X No
Identification of major programs:
Assistance Listing Number
14.871
16.922
21.016
21.027
Dollar threshold used to distinguish
between type A and type B programs: $750,000
Auditee qualified as low-risk auditee? X Yes No
Type of auditor's report issued on compliance for major programs: Unmodified Name of Federal Program
Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified
Housing Assistance Payment Program Section 8
Equitable Sharing Program
Equitable Sharing Program
American Rescue Plan Act
City of Hawthorne
Schedule of Findings and Questioned Costs (continued)
Year Ended June 30, 2023
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Section II: Financial Statement Findings
No findings to be reported.
Section III: Federal Awards Findings and Questioned Costs No findings to be reported.
City of Hawthorne
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2023
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Financial Statement Findings
Finding 2022-001 Significant Deficiency
Corrective action was appropriately taken by the City.
Federal Awards Findings and Questioned Costs
Finding 2022-002 Noncompliance
Corrective action was appropriately taken by the City.