Attachment A
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CITY OF PASADENA, CALIFORNIA
FOR THE YEAR ENDED JUNE 30,2024SINGLE AUDIT REPORT
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CITY OF PASADENA, CALIFORNIA
Single Audit Report
For the Year Ended June 30, 2024
CITY OF PASADENA, CALIFORNIA
Single Audit Report
For the Year Ended June 30, 2024
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
,3
Schedule of Expenditures of Federal Awards for the
Year Ended June 30, 2024..
Notes to the Schedule of Expenditures of Federal Awards..
Schedule of Findings and Questioned Costs for the
Year Ended June 30, 2024..
....6
.....9
Summary Schedule of Prior Year Findings and Questioned Costs for the Year Ended June 30, 2023.
.10
.........13
LSL!
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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 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 City of Pasadena, State 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 December 23, 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.
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 a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2024-001 that we consider to be a significant deficiency.
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.
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
City's Response to Finding
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 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.
LSL. LLF
Irvine, California
December 23, 2024
2 LSL
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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 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 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.
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. Cocfe 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 Honorable Mayor and Members of the City Council
City of Pasadena, 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:
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.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as item 2024-002. Those instances of noncompliance related to the following programs and compliance requirements:
Finding #
2024-002
Assistance
Listing #
14.218
Program (or Cluster) Name
CDBG - Entitlement/Special
Purpose Grants Cluster
Compliance Requirement
Continuing Loan
Compliance
Our opinion on each major federal program is not modified with respect to these matters.
Government Auditing Standards requires the auditor to perform limited procedures on the City's response to the noncompliance findings identified in our compliance audit 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 compliance and, accordingly, we express no opinion on the response.
The City is responsible for preparing a corrective action plan to address each audit finding included in our auditors' report. The City's corrective action plan was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on it.
Report on Internal Control over Compliance
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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. 4 LSU
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To the Honorable Mayor and Members of the City Council
City of Pasadena, California
However, as discussed below, we did identify certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies.
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. We consider the deficiency in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2024-002 to be a significant deficiency.
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.
Government Auditing Standards requires the auditor to perform limited procedures on the City's response to the internal control over compliance findings identified in our compliance audit 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 compliance and, accordingly, we express no opinion on the response.
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, 2024, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated December 23, 2024, 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.
LSL. LLF
Irvine, California
March 28, 2025 (Except for the Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance, which is dated December 23, 2024)
5 CITf OF PASADENA, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Year Ended June 30,2024
Federal Grantor/Pass-Through
Grantor/Program or Cluster Title
Federal
Assistance Listing
Number
Unique Entity
Identifying Number
Passed-Through
to Subraclplents
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 Agricutture Programs
Total SNAP Cluster
CDSG - Entitlement Grants Cluster
Department of Housing and Urban Development Direct Programs:
Community Development Block Grants/Entitlement Grants * COVID-19 Community Development Block Grants/Entitfement 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 Choice 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 - Rapid Response * WIOA Dislocated Worker Formula Grants - Rapid Response Layoff Aversion * WIOA Quest National Dislocated Worker Disaster Relief • WIOA Dislocated Worker Formula Grants - Prison to Employment * WIOA Dislocated Worker Formula Grants - Foothill CalTech • Passed through County of Los Angeles:
WIOA Dislocated Worker Formula Grants - CalWorks
Subtotal-AL 17.278
Total WIOA Cluster
Total Department of Labor Programs
Transit Ser/ices Program Cluster
Pass-through State of California Department of Transportation:
Enhanced Mobility of Seniors and Individuals with Disabilities Total Department of Transportation Programs
Total Transit Services 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 Services Direct Programs; Medical Assistance Program
Passed through County of Los Angeles:
CHOUER Program
Subtotal AL 93.77S
Total Department of Health and Human Services Programs
Total Medlcald Program Cluster
10.561
14.218
14.218
14.218
14.671
14.871
14.871
17.258
17.259
17.278
17.278
17.278
17.278
17.278
17.278
20.513
20.600
20.608
93.778
93.778
JE73CDQUAPA7
N/A
N/A
N/A
$$
185,199
155.118
_340,317_
340.317
340,317
N/A
N/A
N/A
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
JK7YAK6HPFM6
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
N/A
JK7YAK6HPFM6
237,498
237.498
_237^498
1,573,091
346,128
27,159,649
29,078,868
29,078,868
29,078,868
19,329,914
2,626,921
50,000
22,006,835
22,006,835
22,006,835
1.300.724
_8?7,80Q^
292,170
24,906
208,362
84,140
205,404
814.982
207,634
1,022,616
3,221,140
3,221,140
239,284
239,284
239,284
J24.503_
266,655
391.158
391,158
_297,273
92,524
389.797
3S9797_
389,797
Tile notes to the schedule of expenditures of federal awards are an integral part of this schedule. 6 CIPr OF PASADENA, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Year Ended June 30,2024
Other Programs
Department of Agriculture:
Passed through State of California Department of Agriculture:
WIC Special Supplemental Nutrition Program for Women,
Infants and Children
Total Department of Agriculture Programs
Department of Housing and Urban Development
Direct Programs:
Community Development Block Grants Section 108 Loan Guarantees Emergency Solutions Grant Program
HOME investment Partnership Program
Beginning loan balances
Subtotal AL 14.239
Continuum of Care Program
Passed through City of Los Angeles:
Home Opportunities for Persons with AIDS
Total Department of Housing and Urban Development Programs Department of Justice:
Direct Programs:
Justice Reinvestment Initiative
Justice Reinvestment Initiative
Subtotal AL 16.827
Equitable Sharing Program - Justice
Total Department of Justice Programs
Department of Labor:
Passed through State of California Department:
WIOA Dislocated Worker Formula Grants
Total Department of Labor Programs
Department of Transportation:
Passed through the Caltfomia Department of Transportation Highway Planning and Construction - Holfy Street Bridge Seismic Retrofit Highway Planning and Construction - Union Street Cycte Track Highway Planning and Construction - Cordova Street Enhancement Highway Planning and Construction - Rapid Flashing Beacons Highway Planning and Construction - Inte^/al/Audibie Signal at Intersections Federal Transit Capital investment Grants - intelligent Transportation System Subtotal AL 20.205
Total Department of Transportation Programs
Department of Treasury:
Direct Programs:
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - PORT COVID-19 - Coronauirus State and Local Fiscal Recovery Funds Health Equity COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Extended Water and Wastewater Arrearage Payment Program
Subtotal AL 21.027
Total Department of Treasury Programs
Department of Health and Human Sen/ices Programs:
Direct Programs:
Substance Abuse and l\4ental Health Services Projects
of Regional and National Significance (MHAT)
Substance Abuse and Mental Health Services Projects
of Regional and National Significance (CDS)
Subtotal AL 93.243
Passed-through the County of Los Angeles, Department of Public Health ELC Strike (Health Assoc. Infection)
COG PH Infrastructure
COVID-19 Epidemiology Laboratory Capacity
Public Health Emergency Preparedness
CDC Disparities
Public Health Preparedness, Emergency and Response / Monkeypox Subtotal AL 93.354
HiV Prevention Activities Health Department Based
Total passed-through the County of Los Angeles, Department of Public Health Passed through State of California Department of Health Services:
Project Grants and Cooperative Agreements for Tuberculosis Control Programs Childhood Lead Poisoning Prevention Projects, State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children Immunization Cooperative Agreements
COVfD-19 Immunization Cooperative Agreements
Subtotal AL 93.268
CDC Work Force Development
State Health Disparity Grant - CERI
Subtotal AL 93.268
10.557
14.248
14.231
14.239
14.239
14.267
14,241
18.827
16.827
16.922
17.277
20.205
20.205
20.205
20.205
20.205
20.205
21.027
21.027
21.027
93.243
93.243
93.323
93.967
93.323
93.354
93.354
93.354
93.940
93.116
93.197
93.268
93.268
93,391
93.391
W7NKNDHMRD27
N/A
N/A
N/A
N/A
N/A
JK7YAK6HPFM6
N/A
N/A
N/A
JK7YAK6HPFM6
EHEGWCLJEVJ4
EHEGWCUEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
EHEGWCLJEVJ4
N/A
N/A
N/A
N/A
N/A
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
DN3NGS58SMT9
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
113,808
2,213,638
2,327,446
1,013,932
,1,013,992^
416,325
161.696
1,552,785
13,962,511
15,515,296
3,501,273
232,294
19.826.884
189,262
593,408
782.670
1,624,703
2,407,373
680,083
680,083
85,699
805,609
1,737,592
5,208
12,908
322,467
2.969.483
2,969,483
578,194
327,184
898.792
1,804,170
1,804,170
23,375
416,750
440,125
11,950
226,837
2,003,112
282,404
133,613
3,978
419,995
282.267
2,944,161
47,663
91,031
64,160
694.052
758,212
292,419
122.540
414,959
Ttie notes to the schedule of expenditures of federal awards are an integral part of this schedule. 7 CITY OF PASADENA, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Year Ended June 30,2024
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 Sen/ices Total Department of Health and Human Services Programs
Department of Homeland Security Direct Programs:
Direct Programs:
Hazard Mitigation Grant
Hazard Mitigation Grant
Subtotal AL 97.039
Disaster Grants • Public Assistance (Presidentiaiiy Declared Disasters) Totat 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 Expenditure* of Federal Awards
93.994
93.994
93.977
97.039
97.039
97.036
87,067
JE73CDQUAPA7
JE73CDQUAPA7
JE73CDQUAPA7
N/A
N/A
N/A
DN3NGSS8SMT9
_$_
652.602
652,602
2,980,048
3,320,365
115,342
619,464
734.806
72,641
2,119,312
5,503,598
85,054
3,514
88,568
1,683,598
1,772,166
652,602
2,424,768
36,630,351
92,194,931
* 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 expendttures of federal awards are an integral part of this schedule. 8 CITY OF PASADENA, 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. Scope of Presentation
The accompanying schedule presents only the expenditures incurred by the City of Pasadena (the "City), 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 welt 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 Housing 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, 2024, 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, 2024, consists of:
Assistance
Listing Number Program Name
Outstanding
Balance at
June 30,2024
14.218 Community Development Block Grants/Entitlement Grants
14.239 Home Investment Partnerships Program
14.871 Section 8 Housing Choice Vouchers
$ 28,153,134
14,836,484
50,000
$ 43,039,618
9 CITY OF PASADENA, CALIFORNIA
Schedule of Findings and Questioned Costs
For the Year Ended June 30,2024
SECTION I - SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of auditors' report issued:
Internal control over financial reporting:
Material weaknesses identified?
Significant deficiencies identified?
Unmodified Opinion
x
yes
yes
x
Noncompliance material to financial
statements noted?
Federal Awards
Internal control over major programs:
Material weaknesses identified?
Significant deficiencies identified?
Type of auditors' report issued on compliance for major programs:
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)
yesx
no
none identified
No
x
yes
yes
xNo
none identified
Unmodified Opinion
xyesno
Identification of major programs:
Assistance Listing Numbers:
14.218
14.871
17.258, 17.259, 17.278
Dollar threshold used to distinguish
between type A and type B program
Auditee qualified as low-risk auditee?
Name of Federal Program or Cluster
CDBG - Entitlement/Special Purpose Grants Cluster
Housing Voucher Cluster
WIOA Cluster
$2,765,848
-yesX no
10 CITY OF PASADENA, CALIFORNIA
Schedule of Findings and Questioned Costs
For the Year Ended June 30,2024
SECTION II - FINANCIAL STATEMENT FINDINGS
Reference Number
2024-001 -Year-End Close and Financial Reporting
Evaluation of Finding
Significant Deficiency
Condition
During the audit, we found the following conditions that resulted in significant audit adjustments to the financial statements:
Accuracy in External Financial Reporting
The year-end closing process was not thorough and did not ensure that account balances were reconciled and accurate in advance of the audit requiring a significant number of adjusting journal entries 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. There were no material adjustments to any opinion unit as a result of these journal entries.
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 significant volume and detail of general ledger transactions of the City, 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 item noted above, there is potential for significant misstatements to be present in the initial trial balance that is provided to the auditors.
Recommendation
The City should continue to enhance and improve their year-end close procedures to ensure the close is complete and reduce the amount of journal entries needed and errors identified after the closing process has been completed. We suggest management also continue to 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. While the City has implemented a year-end close checklist that has improved and captured year-end recordings in some areas, further refinement of this checklist and related processes is necessary to ensure a more comprehensive and efficient year-end process.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2024-002: Continuing Loan Compliance
Significant Deficiency - Noncompliance
Federal Award Information:
Assistance Listing Number: 14.218
Program Title: CDBG - Entitlement Grants Cluster
Federal Award Year(s): FY 2023-24
Name of Federal Agency: U.S. Department of Housing and Urban Development 11 CITY OF PASADENA, CALIFORNIA
Schedule of Findings and Questioned Costs
For the Year Ended June 30,2024
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement:
The City was unable to provide compliance supporting documentation for the CDBG loan proof of insurance and/or residency compliance requirements for the year ended June 30, 2024.
Condition:
We noted that of the loan balances that we sampled, the City was unable to provide supporting documentation for proof of insurance and/or residency for 2 of the selected loans.
Cause of the Condition:
Per our inquiries with the City, due to the significant age of the selected loans, City personnel were unable to obtain the supporting documentation as a significant number of the selected loans had inception dates often years or more.
Additionally, there wasn't a clear understanding of the compliance requirements to be performed by the grant administrator.
Effect or Possible Effect:
Adequate supporting documentation of outstanding loans are not being effectively maintained and archived by City personnel.
Context:
Out of the loans selected, City was unable to provide documentation on the monitoring procedures.
Repeat Finding:
N/A
Recommendation:
We recommend that management monitors each loan to ensure that the City maintains the most up-to-date information.
Management Response
The City acknowledges the finding regarding the lack of supporting documentation for ongoing compliance with the CDBG loans. The City will implement audit recommendations and maintain all compliance-related documentation on a regular basis to ensure all necessary documents are maintained such as proof of insurance and/or residency compliance requirements.
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SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2023
Finding: 2023-001: Timeliness of Bank Reconciliation Preparation Appropriate corrective actions were taken; this finding is considered resolved and is not repeated in the fiscal year ended June 30, 2024.
Finding: 2023-002: Year-End Close and Financial Reporting Reason for Recurrencei
The City identified and provided significant correcting entries after furnishing original trial balance to the auditors during the year ended June 30, 3024.
P!_an_ned Corrective Action:
Implementation of year-end closing checklist and a more comprehensive closing procedures.
Current Year Reference Number:
2024-001
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