CITY OF ORANGE, CALFORNIA
FOR THE YEAR ENDED JUNE 30, 2024 SINGLE AUDIT REPORT
CITY OF ORANGE, CALIFORNIA
Single Audit Report
For the Year Ended June 30, 2024
CITY OF ORANGE, CALIFORNIA
Single Audit Report
For the Year Ended June 30, 2024
Table of Contents
Page
Number
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ....................................................................................... 1 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ..................................................................................................... 3 Schedule of Expenditures of Federal Awards for the
Year Ended June 30, 2024 ............................................................................................................................... 6 Notes to the Schedule of Expenditures of Federal Awards ................................................................................. 7 Schedule of Findings and Questioned Costs for the
Year Ended June 30, 2024 ............................................................................................................................... 8 Summary Schedule of Prior Year Findings and Questioned Costs for the Year Ended June 30, 2023 ............................................................................................................................. 10
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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
City of Orange, California
We have audited, in accordance with the 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 Orange, California (the “City”), as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 3, 2025.
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.
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. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
To the Hon
orable Mayor and Members of the City Council
City of Orange, California
Purpose of This Report
The p
urpose 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.
Irvine, California
March 3, 2025
2 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE AND REPORT ON SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS REQUIRED BY UNIFORM GUIDANCE
To the Honorable Mayor and Members of the City Council
City of Orange, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Orange, California (the “City”)’s 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, 2024. 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 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, 2024.
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 inGovernment 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 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.
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 generally accepted auditing standards, Government Auditing Standards , and the Uniform Guidance will always detect material noncompliance when it exists.
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To the Hon
orable Mayor and Members of the City Council
City of Orange, California
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 generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit. x 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. x 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.
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. 4 To the Hon
orable Mayor and Members of the City Council
City of Orange, California
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, 2024, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated March 3, 2025, which contained unmodified opinions on those financial statements.
Our audit was performed 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. The information has been subjected to the auditing procedures applied in the audit of the 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
March 24, 2025 (Except for the Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance, which is dated March 3, 2025)
5 CITY OF ORANGE, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2024
Assistance
Listing Pass-Through Entity Total Federal
Number Unique Entity ID Expenditures
U.S Department of Housing and Urban Development
Direct Programs:
CDBG - Entitlement Grants Cluster
Community Development Block Grants/Entitlement Grants * 14.218 N/A 784,834$ Total CDBG - Entitlement Grants Cluster 784,834
Home I
nvestment Partnerships Program 14.239 N/A 1,151,727
Economic Development Initiative 14.251 N/A 65
Total U.S. Department of Housing and Urban Development 1,936,626 U.S. Department of Justice
Direct Programs:
Justice Assistance Grant 16.738 N/A 11,963
Equitable Sharing Program 16.922 N/A 283,082
Total U.S. Department of Justice 295,045
U.S. Department of Transportation
Pass-through Programs:
State of California Office of Traffic Safety:
Highway Safety Cluster
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 XCA4E3XL2KY7 328,056 T
otal Highway Safety Cluster 328,056
State of Cal
ifornia Department of Transportation (Caltrans):
Highway Planning and Construction * 20.205 D2C8ARJZKDJ7 713,522 Total U.S. Department of Transportation 1,041,578
U.S. Department of the Treasury
Direct Programs:
Equitable Sharing Program 21.016 N/A 32,618
Pass-through Programs:
County of Orange:
COVID-19--Coronavirus State and Local Fiscal Recovery Funds 21.027 GFFMCW9XDA53 64,652 Total U.S. Department of the Treasury 97,270
Institute of Museum and Library Services
Pass-through Programs:
California State Library:
STEM Education 45.310 SEF8B2944EP9 13,084
Grants to States 47.076 SEF8B2944EP9 921
Total Institute of Museum and Library Services 14,005
U.S. Department of Energy
Direct Programs:
Energy Efficiency and Conservation Block Grant Program 81.128 N/A 47,536 Total U.S. Department of Energy 47,536
U.S. Department of Homeland Security
Pass-through Programs:
County of Orange:
Hazard Mitigatoin Grant 97.039 GFFMCW9XDA53 3,637
Emergenc
y Management Performance Grants 97.042 GFFMCW9XDA53 9
Total U.S. Department of Homeland Security 3,646
Total Expenditures of Federal Awards 3,435,706$
* Major Program
1 There was no federal awards expended in the form of noncash assistance and insurance in effect during the year. 2 No amounts were passed through to subrecipients during the year.
Federal Grantor/Pass-Through
Grantor/Program or Cluster Title
See accompanying notes to this schedule.
6 CITY OF ORANGE, CALIFORNIA
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2024
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLICABLE TO THE SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS
A. Sco
pe of Presentation
Th
e accompanying schedule presents only the expenditures incurred by the City of Orange, California, that are reimbursable under federal programs of federal financial assistance. For the purposes of this schedule, federal awards include both federal financial assistance received directly from a federal agency, as we ll as federal funds received indirectly by the City from a non-federa l agency or other organization. Only the portion of program expenditures reimbursable with such federal funds is 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.
B. Basis
of Accounting
T
he expenditures included in the accompanying schedule were reported on the modified accrual basis of accounting.
Under the modified accrual basis of accounting, expenditures are incurred when the City becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures reported included any property or equipment acquisitions incurred under the federal program. The City has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
7 CITY OF ORANGE, CALIFORNIA
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024
SECTION I - SUMMARY OF AUDITORS' RESULTS
Financial Statements
Ty
pe of auditors' report issued: Unmodified Opinion
Internal control over financial reporting:
x Material weaknesse s identified? yes 3 no
x
Significant deficiencies identified? yes 3 non
e reported
Nonc
ompliance material to financial
statements noted? yes 3 no
Feder
al Awards
Int
ernal control over major programs:
x Material weaknesses identified? yes 3 no x
Significant deficiencies identified? 3 yes none reported T
ype of auditors' report issued on compliance for major programs: Unmodified Opinion Any audit findings disclosed that are required to be
reported 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)? yes 3 no
Ide
ntification of major programs:
Assistance Listing Number(s) Name of Federal Program or Cluster 1 4.218 Community Development Block Grant
20.205 Highway Planning and Construction
Dollar threshold used to distinguish
between type A and type B program $750,000
Auditee qualified as low-risk auditee? yes 3 no
8 CITY OF ORANGE, CALIFORNIA
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2024
SECTION II - FINANCIAL STATEMENT FINDINGS
No matters were reported.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Reference Number: 2024-001 (Repeat finding: 2023-004 in 2023 report) – Quarterly Cash on Hand Reports Not Filed Timely
Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing Number: 14.218
Federal Grantor: U.S. Department of Housing and Urban Development Evaluation of Finding
Significant Deficiency/Noncompliance
Criteria
Entitlement communities are required to complete the Cash on Hand Quarterly report and submit it to the grantee’s HUD local field office through IDIS. The Quarterly Cash on Hand report must be submitted to the respective field office within 30 days after the end of the reporting period. The following federal fiscal year quarter reporting periods are used for quarterly reports.
Reporting Period Due Date of Report
Quarter 1: 10/1 – 12/31 1/30
Quarter 2: 1/1 – 3/31 4/30
Quarter 3: 4/1 – 6/30 7/30
Quarter 4: 7/1 – 9/30 10/30
Condition
The Cash on Hand Quarterly reports for quarters 1, 2 and 4 were not filed by the due date.
Cause of Condition
The City of Orange did not submit the Cash on Hand Quarterly reports for quarters 1, 2 and 4 by the due date of the reports.
Effect or Potential Effect of Condition
The City is out of compliance.
Questioned Costs
None
Context
We reviewed all four required reports and determined that all reports were filed late.
Recommendation
We recommend that the City implement a process to ensure that the report is submitted in a timely manner each year.
Client Response
The Community Development Department has implemented the following steps for FY 2025.
1. Updated the City’s policy to identify the Housing Mana ger or designee as the responsible report ing party to
su
bmit the reports by the submission deadline.
2. Added to the policy administrative support staff to set calendar reminders in outlook for follow up.
3. Finance will add to the yearend checklist to ensure timely reporting. 9 CITY OF ORANGE
FINANCE
DIRECTOR
PHONE: (714) 744-2222 www.cityoforange.org FAX
: (714) 744-5147
ORANGE CIVIC CENTER x 300 E. CHAPMAN AVENUE x ORANGE, CA 92866-1591 x P.O. BOX 449 Printed on recycled paper
Summary Sc
hedule of Prior Year Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2023
Reference Number: 2023-001 – This matter is considered resolved.
Reference Number: 2023-002 – This matter is considered resolved.
Reference Number: 2023-003 – This matter is considered resolved.
Reference Number: 2023-004 – This matter is considered resolved. 10