Item# 07
Date: September 6, 2022
To: Mayor and City Council
From: Jennifer Styczynski, Finance Director
Jim Schaad, City Manager
Subject: Receive and File the Single Audit Report for Fiscal Year ended June 30, 2021 Recommendation:
Pass a Motion to receive and file the Single Audit Report on Federal Award Programs for the year ended June 30, 2021.
Background:
The City's Single Audit is an organization-wide financial statement and federal awards’ audit which is required when the City expends $750,000 or more in federal funds in one year. It is intended to provide assurance to the Federal Government that the City has adequate internal controls in place and is generally in compliance with program requirements.
The purpose of this report is solely to describe the scope of audit testing of internal control and compliance and the results of that testing, and not to provide an auditor's 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 organization’s internal control and compliance.
Discussion and Analysis
As a recipient of Federal grant funds in excess of $750,000, the City’s Single Audit Report on Federal Awards is required to be submitted in compliance with the financial reporting requirement in accordance with Title 2, Code of Federal Regulations (CFR), Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The Single Audit Report includes the following:
• Independent Auditor’s 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 on Compliance for Each Major Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by Uniform Guidance;
• Schedule of Findings and Questioned Costs;
Item# 07
• Summary Schedule of Prior Audit Findings;
• Schedule of Expenditures of Federal Awards;
• Notes to the Schedule of Expenditures of Federal Awards; and • Corrective Action Plan
As part of the Single Audit, the City’s Auditor's considered the City's internal control over financial reporting to determine audit procedures that are appropriate in the circumstances for the purpose of expressing their opinions on the City's financial statements, but not for the purpose of expressing 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 City’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.
The auditors identified one deficiency in internal control over financial reporting that they considered to be a material weakness for the year ended June 30, 2021. Finding Number 2021-003 is related to tracking of equipment purchased with federal funds. Staff is working to address this issue for fiscal year ending June 30, 2022. Additionally, corrective action has been filed with the report.
These reports have been reviewed and approved by management and the Finance Committee. Copies of the Single Audit Report have been sent to the State as required by law.
Fiscal Analysis:
This agenda item is to receive and file, therefore; there is no fiscal impact associated with this action.
Attachment:
1) Single Audit Report FYE 2021