Attachment A
LSU
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CITY OF PASADENA, CALIFORNIA
FOR THE YEAR ENDED JUNE 30,2023SINGLE AUDIT REPORT
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CITY OF PASADENA, CALIFORNIA
Single Audit Report
For the Year Ended June 30,2023
CITY OF PASADENA, CALIFORNIA
Single Audit Report
For the Year Ended June 30,2023
Table of Contents
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..
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.
Page
Number
1 Schedule of Expenditures of Federal Awards for the
Fiscal Year Ended June 30, 2023
Notes to the Schedule of Expenditures of Federal Awards.
Schedule of Findings and Questioned Costs for the
Fiscal Year Ended June 30, 2023.
3 .6
.7
Summary Schedule of Prior Year Findings and Questioned Costs for the Fiscal Year Ended June 30, 2022
-.8
10 LS L::::
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 hlonorable Mayor and Members of the City Council City of Pasadena, 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Pasadena, California (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 December 28, 2023.
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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control 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 and 2023-002 that we consider to be significant deficiencies.
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 financial statements. hlowever, 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. ^ PrimeGlobai;^^ .l",^:.W^i^A^-
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203 N. Brea Blvd, Suite 203
Brea, CA 92821
(714) 672-0022
24422 Avenida de la Cartota. Suite 275
Laguna Hills, CA 92653
(949) 829-8299
1611 E. Fourth Street. Suite 200
Santa Ana. CA 92701
(714)569-1000
2151 River Plaza Dr., Suite 150
Sacramento. CA 95833
(916) 503-9691
21 Watenway Avenue, Suite 30089
The Woodlands. TX 77380
(936) 828-4587
LSU
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To the hlonorable Mayor and Members of the City Council City of Pasadena, California
City of Pasadena'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 as described in the accompanying 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 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.
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Brea, California
December 28, 2023
2 LS L::::
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
To the hlonorable Mayor and Members of the City Council City of Pasadena, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Pasadena, California (the "City")'s compliance with the types of compliance requirements identified as subject to audit in the 0MB Compliance Supplement Vna[ 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 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.
Bas/s 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 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.
www.Sslcpas.com
203 N. Brea Blvd. Suite 203
Brea. CA 92821
(714)672-0022
PrimeGloba! I'•srA"i,»:'.''tt~<i".>-'li'^C\:.-
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24422 Avenida de la Carlota. Suite 275
Laguna Hills, CA 92653
(949) 829-8299
1611 E. Fourth Street, Suite 200
Santa Ana. CA 92701
(714)569-1000
2151 River Plaza Dr.. Suite 150
Sacramento, CA 95833
(916)503-9691
Waterway Avenue, Suite 30089
The Woodlands. TX 77380
(936) 828-4587
LSL:
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To the hlonorable Mayor and Members of the City Council City of Pasadena, California
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. 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:
•Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.
A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
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, hlowever, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. 4 LSL!
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
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, the aggregate discretely presented component units, 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 December 28, 2023, 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. ^ ^^ ^^^44 ^^>
Brea, California
March 27, 2024 (Except for the Report on Schedule
Uniform Guidance which is dated December 28, 2023)
of Expenditures of Federal Awards Required by the
5 CIFC OF PASADENA
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2023
Federal Grantor/Pass-Through
Grantor/Program or Cluster Title
Federal
Assistance Listing
Number
Unique Entity
Identifying Number
Passed-Th rough
to Subrecipients
Total Federal
Expenditures
SNAP Cluster
Department of Agriculture:
Passed through State of California Department of Health Services:
State Administrative Matching Grants for the
Supplemental Nutrition Assistance Program
Total Department of Agriculture Programs
Total SNAP Cluster
CDBG - Entitlement Grants Cluster
Department of Housing and Urban Development Direct Programs:
Community Development Block Grants/Entitlement Grants
COVID-19 Community Development Block Grants/Entitlement Grants Beginning loan balances
Subtotal-AL 14.218
Total Department of Housing and Urban Development Programs Total CDBG - Entitlement Grants Cluster
Housing Voucher Cluster
Department of Housing and Urban Development Direct Programs; Section 8 Housing Choice Vouchers
COVID-19 Section 8 Housing Choica Vouchers (CARES Act)
Beginning loan balances
Subtotal-AL 14.871
Total Department of Housing and Urban Development Programs Total Housing Voucher Cluster
WIOA Cluster
Department of Labor
Passed through State of California Department:
WIOA Adult Program
WIOA Youth Activities
WIOA Dislocated Worker Formula Grants
WIOA Dislocated Worker Formula Grants - Regional Planning Implementation 4.0 WIOA National Dislocated Worker Formula Grants
WIOA Dislocated Wori<er Formula Grants - Rapid Response Layoff Aversion Subtotal-AL 17.278
Total Department of Labor Programs
Total WIOA Cluster
Transit Services Program Cluster
Pass-through State of California Department of Transportation:
Enhanced Mobility of Seniors and Individuals with Disabilities Total Department ofTranspoUation Programs
Total Transit Sen/ices Programs Cluster
Highway Safety Program Cluster
Pass-through State of California Department of Transportation:
State and Community Highway Safety
Minimum Penalties for Repeat Offenders for Driving While Intoxicated - OTS Selective Traffic Enforcement Program (STEP)
Total California Department of Transportation Programs
Total Highway Safety Programs Cluster
Medicaid Program Cluster
Department of Health and Human Sen/ices Direct Programs:
Medical Assistance Program
Passed through County of Los Angeles:
CHOUER Program
Total Department of Health and Human Services Programs
Total Medicaid Program Cluster
10.561
14.218
14.218
14.218
JE73CDQUAPA7
N/A
N/A
N/A
$$
175,118
66.454
241,572
241,572
241,572
14.871
14.871
14.871
N/A
N/A
N/A
17.258
17.259
17.277
17.278
17.278
17.278
JK7YAK6HPFM8
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
20.513
20.600
20.608
93.778
93.778
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
N/A
JK7YAK6HPFM6
307,846
307,846
307,846
3,663,208
279.739
26.148.378
30.091.325
30.091,325
30,091,325
17,561,600
1.543.738
50,000
19,155,338
19,155,338
19,155,338
574.033
382.458
528.512
97,729
831,064
124.907
1.053.700
2,538,703
2,538,703
487,587
487,587
487,587
33,985
27.903
61.888
61,888
186.572
32,569
219.141
219,141
The notes to the schedule of expenditures of federalirds are an integral part of this schedule. 6 CITY OF PASADENA
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30,2023
Other Programs
Department of Agriculture:
Passed through State of California Department of Agriculture:
W[C Special Supplemental Nutrition Program for Women,
Infants and Children 10.557
Total Department of Agriculture Programs
Department of Housing and Urban Development:
Direct Programs:
Community Development Block Grants Section 108 Loan Guarantees 14.248 Emergency Solutions Grant Program 14.231
COVID-19 Emergency Solutions Grant Program 14.231
Subtotal AL 14.231
HOME Investment Partnership Program* 14.239
Beginning loan balances 14.239
Continuum of Care Program* 14.267
Passed through City of Los Angeles:
Home Opportunities for Persons with AIDS 14.241
Total Department of Housing and Urban Development Programs Department of Interior
Direct Programs:
Water Conservation Field Services HDP 15.530
Total Department of Interior Programs
Department of Justice-
Direct Programs:
Equitable Sharing Program - Justice 16.922
Total Department of Justice Programs
Department of Transportation;
Passed through the California Department of Transportation Highway Planning and Construction - Holly Street Bridge Seismic Retrofit • 20.205 Highway Planning and Constmction - Union Street Cycle Track * 20.205 Highway Planning and Construction - Repair of Existing Damaged Guardrails * 20.205 Highway Planning and Construction - Cordova Street Enhancement' 20.205 Highway Planning and Construction - Safety Enhance Fair Oaks/Colorado; Mountain/Lakes 20.205 Highway Planning and Construction - Rapid Flashing Beacons * 20.205 Highway Planning and Construction - Inten/al/Audible Signal at Intersections • 20.205 Federal Transit Capital Investment Grants - Intelligent Transportation System * 20.205 Subtotal AL 20.205
Total Department of Transportation Programs
Department of Treasury:
Direct Programs:
COVID-19-Coronavims State and Local Fiscal Recovery Funds* 21.027 COVID-19-Coronavirus State and Local Fiscal Recovery Funds - PORT* 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Health Equity* 21.027 Subtotal AL 21.027
Total Department of Treasury Programs
Department of Health and Human Services Programs:
Direct Programs:
Substance Abuse and Mental Health Services Projects
of Regional and National Significance 93.243
Passed-through the County of Los Angeles, Department of Public Health ELC Strike (Health Assoc. Infection) 93.323
CDC PH Infrastructure 93.967
COVID-19 Epidemiology Laboratory Capacity 93.323
Public Health Emergency Preparedness 93.354
CDC Disparities 93.354
Subtotal AL 93.354
HIV Prevention Activities Health Department Based 93.940 Total passed-through the County of Los Angeles. Department of Public Health Passed-th rough the State of California
Temporary Assistance for Needy Families (TANF) 93.558
Passed through State of California Department of Health Services:
Project Grants and Cooperative Agreements for Tuberculosis Control Programs 93.116 Childhood Lead Poisoning Prevention Projects, State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children 93.197 Immunization Cooperative Agreements 93.268
COVID-19 Immunization Cooperative Agreements 93.268
Subtotal AL 93.268
CDC Work Force Development 93.391
State Health Disparity Grant - CERI 93.391
Subtotal AL 93.268
W7NKNDHMRD27
N/A
N/A
N/A
N/A
N/A
N/A
JK7YAK6HPFM6
N/A
N/A
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
N/A
N/A
N/A
N/A
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
JK7YAK6HPFM6
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
156,663
951.607
1,108.270
1.902.329
3,010,599
1.173.986
1,173.986
424,073
168,930
982,368
1,151,298
1,288.078
12,947,380
14.235,458
3,245,566
106,304
19,162.699
32,302
32,302
1,014,330
1,014,330
45.675
4,775,976
280.153
727,137
190,391
9.393
63,840
153,380
6,245,945
6,245,945
32,860,146
185,321
288,511
33,333.978
33,333,978
112,419
24.197
41.043
2.587.974
227.838
193,230
421,068
175,695
3.249.977
34,762
32.202
67,107
25,332
666,127
691,459
222,980
69,630
292.610
The notes to the schedule of expenditures of federal awards are an Integral part of this schedule. 7 CITf OF PASADENA
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2023
Maternal and Child Health Services Block Grant to the States Maternal and Child Health Services Block Grant to the States Subtotal AL 93.268
DIS Workforce Development
Total passed-through the State of California Department of Health Services Total Department of Health and Human Services Programs
Department of Homeland Security Direct Programs:
Direct Programs:
Hazard Mitigation Grant
Hazard Mitigation Grant
Total direct programs
Passed through County of Los Angeles
Homeland Security Grant Program - FY 2020 Urban Areas Security Initiative Total Department of Homeland Security Programs
Total Other Programs
Total Expenditures of Federal Awards
93.994
93.994
93.977
97.039
97.038
97.067
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
N/A
N/A
DN3NGS58SMT9432.346
432.346
3,442,945
3,684,517
111,604
274,711
386,315
46.496
1,516,189
4,913,347
614,372
140,710
755,082
432.346
1,187,428
67,064,015
119,925,843
* Major Program
There was no federal awards expended in the form of noncash assistance and insurance in effect during the year.
The notes to the schedule of expenditures of federal awards are an integral part of this schedule. 8 CITY OF PASADENA
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30,2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLICABLE TO THE SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS
A. Scope of Presentation
The accompanying schedule presents only the expenditures incurred by the City of Pasadena, California, that are reimbursable underfederal 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 well as federal funds received indirectly by the City from a non-federal 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
The 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.
NOTE 2: SECTION 108 LOAN GUARANTEE PROGRAM
On October 29, 2015, the City entered into a Contract for Loan Guarantee Assistance under Section 108 with the U.S. Department of hlousing and Urban Development in the amount of $6,000,000 for the Robinson Park Project. On March 28, 2019 the loan was refinanced at $5,100,000 to lock in permanent fixed interest rates. Principal is payable in annual installments of $300,000 commencing on August 1, 2019 and ending August 1, 2035. Interest rate is fixed between 2.54%-3.635%. Interest payment is paid semi-annually from the effective date of March 28, 2019. The balance outstanding as of June 30, 2023, is $3,900,000.
NOTE 3: LOAN PROGRAMS WITH CONTINUING COMPLIANCE REQUIREMENTS The program costs listed below are administered directly by the City of Pasadena, and balances and transactions relating to these programs are included in the City's basic financial statements. Loans made during the year are included in the federal expenditures presented in the Schedule of Expenditures of Federal Awards. The balance of loans outstanding at June 30, 2023, consists of:
Assistance
Listing
NumberProgram Name
Outstanding
Balance at
^Jyne 30, 2023
Community Development Block Grants/Entitlement
14.218 Grants $ 27,159,649
14.239 Home Investment Partnerships Program 13,962,511
14.871 Section 8 Housing Choice Vouchers 50,000
$ 41,172,160
9 CITY OF PASADENA
Schedule of Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2023
SECTION I - SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of auditors' report issued: Unmodified Opinion
Internal control over financial reporting:
Material weaknesses identified? _yes
Significant deficiencies identified? X yes
X no
.none reported
Noncompliance material to financial
statements noted?
Federal Awards
Internal control over major programs:
Material weaknesses identified?
Significant deficiencies identified?
/esJL_no
les
les
JL_no
X none reported
Type 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 X no
Identification of major programs:
Assistance Listing Number(s)
21.027
14.267
14.239
20.205
Dollar threshold used to distinguish
between type A and type B program
Auditee qualified as low-risk auditee? _yes
Name of Federal Program or Cluster
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Continuum of Care Program
Home Investment Partnerships Program
Highway Planning and Construction
$3,597,775
X no
10 CITY OF PASADENA
Schedule of Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2023
SECTION II - FINANCIAL STATEMENT FINDINGS
Reference Number
2023-001 -Timeliness of Bank Reconciliation Preparation Evaluation of Finding
Significant Deficiency
Condition
A cash reconciliation that reconciles from the bank balance to the general ledger balance should be prepared to determine that all cash transactions have been recorded properly and to discover bank errors. Bank statements in some instances were accumulated for several months before they were reconciled to the appropriate general ledger controls. Not reconciling the accounts on a monthly and timely basis means that errors or other problems might not be recognized or resolved on a timely basis. We recommend that all bank accounts be reconciled each month prior to preparation of monthly financial statements.
Criteria
In order to make the financial reports generated by the accounting system as meaningful as possible, the City should reconcile to the general ledger accounts for cash on a monthly basis as timely as possible.
Cause of Condition
Due to the significant volume and detail of individual cash transactions, in addition to staffing and personnel issues experienced by the City, there were instances where the City did not possess the capacity to perform the monthly bank reconciliations on a timely basis.
Effect or Potential Effect of Condition
Not reconciling the accounts on a monthly and timely basis means that errors or other problems might not be recognized or resolved on a timely basis.
Recommendation
The Finance Department should look at ensuring that sufficient experienced personnel are available to help facilitate the monthly bank reconciliation processes.
Management Response
We agree with the finding. The City is currently implementing efficiency improvements to the monthly bank reconciliation process in hopes to alleviate this occurrence during Fiscal Year 2024. 11 CITY OF PASADENA
Schedule of Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2023
SECTION II - FINANCIAL STATEMENT FINDINGS (CONTINUED)
Reference Number
2023-002 - Year-End Close and Financial Reporting
Evaluation of Finding
Significant Deficiency
Condition
During the audit, we found the following conditions that resulted in significant adjustments to the financial statements.
Accuracy in External Financial Reportina
The year-end closing process did not ensure that account balances were reconciled and accurate in advance of the audit requiring a significant number of correcting journal entries provided by the City to correct the final financial statements. It appears these errors were primarily caused by the trial balance being prepared from data that was not always complete, contained errors, and appropriate year end reconciliations had not been performed.
Criteria
Management is responsible for the preparation and fair presentation, as well as the accuracy of its financial statements, including disclosures in accordance with accounting principles generally accepted in the United States of America. This includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to error or fraud.
Cause of Condition
Due to the significant volume and detail of general ledger transactions of the City, in addition to newly issued complex Government Accounting Standards Board (GASB) Pronouncements, some processes were not fully executed and reflected in the City trial balance prior to being furnished to the auditors.
Effect or Potential Effect of Condition
Due to the items noted above, there is a potential for significant misstatements to be present in the initial trial balance that is provided to the auditors.
Recommendation
The City should put in place formalized year-end close procedures to ensure the close is complete and reduce the amount of journal entries needed and errors found after the closing process has been completed. We suggest management also establish effective review policies and procedures, including but not limited to; apply analytical procedures on the trial balance numbers and perform reconciliations of all significant accounts.
Management Response
Management agrees with the finding. Due to the implementation of the newly issued and complex GASB pronouncement, a number of journal entries and corrections were made by City staff. The City will implement and follow formal year-end closing processes and procedures to ensure sufficient review and corrections to the trial balance are made, prior to year-end close.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS No matters were reported.
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SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2022
Finding: 2022-001
Co_ndition:
Appropriate corrective actions were taken; this finding is considered resolved and is not repeated in the fiscal year ended June 30, 2023.
Finding: 2022-002
Condition:
Appropriate corrective actions were taken; this finding is considered resolved and is not repeated in the fiscal year ended June 30, 2023.
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