City of Santa Clara
Meeting Agenda
Audit Committee
Virtual Meeting3:30 PMMonday, March 14, 2022
Pursuant to California Government Code Section 54953(e) and City of Santa Clara Resolution 22-9058, the Audit Committee meeting will be held by teleconference only. No physical location will be available for this meeting; however, the City of Santa Clara continues to have methods for the public to participate remotely:
Join from a PC, Mac, iPad, iPhone or Android device:
Please click this URL to join: https://santaclaraca.zoom.us/j/99199624617 Webinar ID: 991 9962 4617
Or join by phone:
US: +1 669 900 6833
CALL TO ORDER AND ROLL CALL
CONSENT CALENDAR
1. Audit Committee Minutes22-347
Approve the Audit Committee minutes of November
30, 2021.
Recommendation:
PUBLIC PRESENTATIONS
[This item is reserved for persons to address the body on any matter not on the agenda that is within the subject matter jurisdiction of the body. The law does not permit action on, or extended discussion of, any item not on the agenda except under special circumstances. The governing body, or staff, may briefly respond to statements made or questions posed, and appropriate body may request staff to report back at a subsequent meeting.]
GENERAL BUSINESS
2. Overview of the Single Audit Report for Fiscal Year Ended June 30, 2021
22-348
Accept the Single Audit Report for Fiscal Year Ended
June 30, 2021 and recommend that the reports are
forwarded to note and file to the full Council at the
March 22, 2022 Council and Authorities Concurrent
meeting.
Recommendation:
ADJOURNMENT
Future Audit Committee Meetings will be scheduled at a later date.
Audit Committee Meeting Agenda March 14, 2022
The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Santa Clara, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.
If a member of the public submits a speaker card for any agenda items, their name will appear in the Minutes. If no speaker card is submitted, the Minutes will reflect "Public Speaker."
In accordance with the requirements of Title II of the Americans with Disabilities Act of 1990 ("ADA"), the City of Santa Clara will not discriminate against qualified individuals with disabilities on the basis of disability in its services, programs, or activities, and will ensure that all existing facilities will be made accessible to the maximum extent feasible. The City of Santa Clara will generally, upon request, provide appropriate aids and services leading to effective communication for qualified persons with disabilities including those with speech, hearing, or vision impairments so they can participate equally in the City’s programs, services, and activities. The City of Santa Clara will make all reasonable modifications to policies and programs to ensure that people with disabilities have an equal opportunity to enjoy all of its programs, services, and activities.
Agendas and other written materials distributed during a public meeting that are public record will be made available by the City in an appropriate alternative format.
Contact the City Clerk’s Office at 1 408-615-2220 with your request for an alternative format copy of the agenda or other written materials.
Individuals who require an auxiliary aid or service for effective communication, or any other disability-related modification of policies or procedures, or other accommodation, in order to participate in a program, service, or activity of the City of Santa Clara, should contact the City’s ADA Coordinator at 408-615-3000 as soon as possible but no later than 48 hours before the scheduled event.
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-347 Agenda Date: 3/14/2022
SUBJECT
Audit Committee Minutes
RECOMMENDATION
Approve the Audit Committee minutes of November 30, 2021.
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City of Santa Clara
Meeting Minutes
Audit Committee
Draft
3:00 PM Virtual Meeting11/30/2021
Pursuant to the provisions of California Governor’s Executive Order N-29-20, issued on March 17, 2020, to prevent the spread of COVID-19, the City of Santa Clara has implemented methods for the public to participate remotely:
Join from a PC, Mac, iPad, iPhone or Android device:
Please click this URL to join: https://santaclaraca.zoom.us/j/99199624617 Webinar ID: 991 9962 4617
Or join by phone:
US: +1 669 900 6833
CALL TO ORDER AND ROLL CALL
Chairperson Watanabe called the meeting to order at 3:05 P.M.
Chair Kathy Watanabe, Member Sudhanshu Jain, and Member Kevin Park
Present 3 -
CONSENT CALENDAR
1. 21-1516 Audit Committee Minutes
Recommendation: Approve the Audit Committee minutes of September 16, 2021.
A motion was made by Member Jain, seconded by Member Park, to approve staff recommendation. The motion carried by the following vote:
Aye: Chair Watanabe, Member Jain, and Member Park3 -
PUBLIC PRESENTATIONS
None.
GENERAL BUSINESS
11/30/2021Audit Committee Meeting Minutes
2. 21-1518 Overview of the Draft City of Santa Clara Audited Annual Comprehensive Financial Report (ACFR) and Audited Silicon Valley Power (SVP) Financial Statements for Fiscal Year Ended June 30, 2021 Recommendation: Accept the City of Santa Clara Audited Annual Comprehensive Financial Report and Silicon Valley Power Financial Statements for Fiscal Year Ended June 30, 2021 and recommend that the reports are forwarded for note and file to the full Council at the December 14, 2021 Council and Authorities Concurrent meeting.
A motion was made by Member Jain, seconded by Member Park, to approve staff recommendation. The motion carried by the following vote:
Aye: Chair Watanabe, Member Jain, and Member Park3 -
ADJOURNMENT
Chairperson Watanabe adjourned the meeting at 3:54 P.M.
Future Audit Committee Meetings will be scheduled at a later date.
11/30/2021Audit Committee Meeting Minutes
The time limit within which to commence any lawsuit or legal challenge to any quasi-adjudicative decision made by the City is governed by Section 1094.6 of the Code of Civil Procedure, unless a shorter limitation period is specified by any other provision. Under Section 1094.6, any lawsuit or legal challenge to any quasi-adjudicative decision made by the City must be filed no later than the 90th day following the date on which such decision becomes final. Any lawsuit or legal challenge, which is not filed within that 90-day period, will be barred. If a person wishes to challenge the nature of the above section in court, they may be limited to raising only those issues they or someone else raised at the meeting described in this notice, or in written correspondence delivered to the City of Santa Clara, at or prior to the meeting. In addition, judicial challenge may be limited or barred where the interested party has not sought and exhausted all available administrative remedies.
If a member of the public submits a speaker card for any agenda items, their name will appear in the Minutes. If no speaker card is submitted, the Minutes will reflect "Public Speaker."
In accordance with the requirements of Title II of the Americans with Disabilities Act of 1990 ("ADA"), the City of Santa Clara will not discriminate against qualified individuals with disabilities on the basis of disability in its services, programs, or activities, and will ensure that all existing facilities will be made accessible to the maximum extent feasible. The City of Santa Clara will generally, upon request, provide appropriate aids and services leading to effective communication for qualified persons with disabilities including those with speech, hearing, or vision impairments so they can participate equally in the City’s programs, services, and activities. The City of Santa Clara will make all reasonable modifications to policies and programs to ensure that people with disabilities have an equal opportunity to enjoy all of its programs, services, and activities.
Agendas and other written materials distributed during a public meeting that are public record will be made available by the City in an appropriate alternative format.
Contact the City Clerk’s Office at 1 408-615-2220 with your request for an alternative format copy of the agenda or other written materials.
Individuals who require an auxiliary aid or service for effective communication, or any other disability-related modification of policies or procedures, or other accommodation, in order to participate in a program, service, or activity of the City of Santa Clara, should contact the City’s ADA Coordinator at 408-615-3000 as soon as possible but no later than 48 hours before the scheduled event.
City of Santa Clara
Agenda Report
1500 Warburton Avenue
Santa Clara, CA 95050
santaclaraca.gov
@SantaClaraCity
22-348 Agenda Date: 3/14/2022
REPORT TO AUDIT COMMITTEE
SUBJECT
Overview of the Single Audit Report for Fiscal Year Ended June 30, 2021
BACKGROUND
City Charter Section 1319 requires that an independent certified public accountant (CPA) audit the City’s records and accounts on an annual basis. In compliance with the Charter, the City engaged the audit firm of Maze & Associates to perform an independent audit of the City’s financial statements.
The City’s annual financial statement audit also includes the federally mandated “Single Audit” which is designed to meet the special reporting requirements of federal granting agencies, specifically Office of Management and Budget (OMB) Uniform Guidance 2.CFR.200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (formerly OMB A-133).
The standards governing Single Audit engagements require that agencies expending more than $750,000 in federal monies in a fiscal year have an independent audit not only on the fair presentation of the financial statements, but also on internal controls for compliance with the administrative requirements of federal awards.
DISCUSSION
The role of the Audit Committee (Committee) is to provide oversight of the City’s financial reporting processes, internal controls, and independent auditors. Amy Meyer, Audit Partner, from Maze & Associates will present the audit process and scope of work, as well as the audit results to the Committee. In addition, City staff will be present to address questions and the results of the audit.
Attached is the Single Audit report for FY 2020-21. Maze & Associates identified three major programs for this year’s audit: Housing and Urban Development (HUD) - Community Development Block (CDBG) - Entitlement Grant; Department of Treasury - State of California pass-through - Covid 19 - Coronavirus Relief Fund; and Department of Transportation - Highway Planning and Construction Grant. The audit yielded one finding related to the Federal Funding Accountability and Transparency Act (FFATA) reporting requirement for the CDBG program. The City subsequently provided documentation that showed the correct reporting data on March 10, 2022 and resolved the reporting discrepancy. As part of the Corrective Action Plan, Staff has revised the policies and procedures manual and developed a review process to ensure the compliance with the FFATA reporting requirement.
Additionally, part of the annual requirements for the Single Audit is to report on the status of any audit findings that were identified during the previous year. The Single Audit for FY 2018-19 resulted in a finding related to monitoring the CDBG program activities for compliance with program rules and regulations. The actions staff have taken, and the status of the prior year finding are outlined in the attached status of prior year audit findings.
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22-348 Agenda Date: 3/14/2022
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
Costs associated with the preparation of this report are included in the City’s FY 2021-22 Adopted Operating Budget.
PUBLIC CONTACT
Public contact was made by posting the Audit Committee agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, [email protected] <mailto:[email protected]>.
RECOMMENDATION
Accept the Single Audit Report for Fiscal Year Ended June 30, 2021 and recommend that the reports are forwarded to note and file to the full Council at the March 22, 2022 Council and Authorities Concurrent meeting.
Reviewed by: Kenn Lee, Director of Finance
Approved by: Office of the City Manager
ATTACHMENTS
1. Single Audit Report - Fiscal Year 2020-21
2. Single Audit Current Year Finding - Corrective Action Plan
3. Single Audit - Status of Prior Year Findings
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CITY OF SANTA CLARA
SINGLE AUDIT REPORT
FOR THE YEAR ENDED JUNE 30, 2021
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CITY OF SANTA CLARA
SINGLE AUDIT REPORT
For The Year Ended June 30, 2021
TABLE OF CONTENTS
TABLE OF CONTENTS
Page
Schedule of Findings and Questioned Costs .............................................................................. 1
Section I – Summary of Auditor’s Results ......................................................................... 1
Section II – Financial Statement Findings .......................................................................... 2
Section III – Federal Award Fi ndings and Questioned Costs ............................................. 2
Schedule of Expenditure s of Federal Awards ............................................................................ 3
Notes to Schedule of Expend itures of Federal Awards ............................................................. 5
Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................. 7
Independent Auditor's Report on Compliance for Each Major Federal Program; and on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance ...... 9
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CITY OF SANTA CLARA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For The Year Ended June 30, 2021
SECTION I – SUMMARY OF AUDITOR’S RESULTS
SECTION I—SUMMARY OF AUDITOR’S RESULTS
Financial Statements
Type of report the auditor issued on whether the financial statements audited were prep
ared in accordance with GAAP Unmodified
Internal control over financial reporting:
Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified? Yes X
None
Reported
Noncompliance material to financial statements noted? Yes X No Federal Awards
Internal control over major federal programs:
Material weakness(es) identified? Yes X No
Significant deficiency(ies) identified? Yes X
None
Reported
Type of auditor’s report i
ssued on compliance for major
federal programs: Unmodified
Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? X Yes No
Identification of major program(s):
Assistance Listing
(AL) #(s) Name of Federal Program or Cluster
21.019 Coronavirus Relief Fund
20.205 Department of Transportation – Highway Planning and Construction Grant
14.218 Community Dev elopment Block – Entitlement Grants Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee?
X Yes No
1 SECTION II – FINANCIAL STATEMENT FINDINGS
SECTION II – FINANCIAL STATEMENT FINDINGS
Our audit did not disclose any significant deficiencies, material weaknesses or instances of noncompliance material to the basic financial statements. We have also issued a separate Memorandum on Internal Control dated November 30, 2021, which is an integral part of our audits and should be read in conjunction with this report.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Our audit disclosed the following findings and questioned costs required to be reported in accordance with Uniform Guidance.
Finding Reference Number: SA2020-001 Federal Funding Accoun tability and Transparency Act (FFATA) Reporting
Assistance Listing Number: 14.218
Assistance Listing Title: Community Development Block Grant – Entitlement Grant
Name of Federal Agency: Department of Housing and Urban Development
Federal Award Identification Number: B-20-MC-06-0022
COVID-19 - B-20-MW-06-0022
Criteria: Under the requirements of the Federal Fundi ng Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252 that are codified in 2 CFR Part 170, direct recipients of grants are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subawards that are entered into the FSRS System shoul d be maintained so that any amendments to the su bawards are also reflected in the system.
Condition: We selected two of the City’s subawards fo r testing of the reporting on the FSRS. The two subawards tested were comprised of four contracts that were all more than $30,000. Although we noted that all four of the contracts tested were included in the FSRS, one of the contracts in the amount of $1,300,000 was reported in FSRS in the amount of $691,380.
Cause: We understand that program staff had initially input the contract in the FSRS in the amount of $691,380 based on the original funding estimate and did not update the FSR S to reflect the final contract amount of $1,300,000.
Effect: The City is not in compliance with the FFATA reporting requirements.
Recommendation: Although the City provided documentati on that the FSRS was updated on March 10, 2022 to reflect the final contract amount of $1,300,000, th e City should develop procedures to ensure that FFATA reporting is accurate at all times and reflects any contract amendments and final subaward funding amounts.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
2 CITY OF SANTA CLARA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Fiscal Year Ended June 30, 2021
Federal
Assistance Pass-Throu gh Pass-Throu gh
Federal Grantor/ Listing Identifying To Federal
Pass-Through Grantor/Program or Cluster Title Number Number Subrecipients Ex penditures U.S. Department of Housing and Urban Development Direct Programs Community Development Block Grant - Entitlement Grants 14.218 Program expenditures $828,238 $1,580,814
COVID-19 - Emergency Rental Assistance Program and Administration 730,831 1,020,771 Program subtotal 1,559,069 2,601,585
Home Investment Partnerships Program 14.239 994,599 1,090,636 Total U.S. Department of Housing and Urban Development 2,553,668 3,692,221 U.S. Department of Justice Direct Programs
COVID 19 - Coronavirus Emergency Supplemental Funding 16.034 29,956 Bureau of Justice Statistics and Federal Bureau of Investigation National Incident Based Reporting System
Special Data Collections and Statistical Studies 16.734 2,988 Edward Byrne Memorial Justice Assistance Grant Program 16.738 3,791 Equitable Sharing Program 16.922 139,173
Total U.S. Department of Justice 175,908
U.S. Department of Transportation Pass-Through Programs From:
Highway Planning and Construction
State of California Department of Transportation
Safe Routes to School Education Program 20.205 CML-5019 (033) 84,993 Santa Clara Streets and Roads Preservation 20.205 STPL-5019 (034) 2,356,000 Metropolitan Transportation Commission
Priority Development Area Planning Grant 20.205 1812 137,583 Program subtotal 2,578,576
State of California Office of Traffic Safety
National Priority Safety Programs 20.616 TR21062 24,800 Total U.S. Department of Transportation 2,603,376
U.S. Department of Treasury Pass-Through Program From:
State of California Department of Finance
COVID-19 - Coronavirus Relief Fund 21.019 295 1,594,064 U.S. Department of Homeland Security
Direct Program:
Federal Emergency Management Agency
Assistance to Firefighters Grant 97.044 75,121
Pass-Through Programs From:
California Task Force 3 Urban Search and Rescue
National Urban Search and Rescue Response System 97.025 CA-TF3 11,734 County of Santa Clara Office of Emergency Services
2019 Emergency Management Performance Grants 97.042 2019-003 / 085-00000 15,208 County of Santa Clara Office of Emergency Services
Homeland Security Grant Program (HSGP) 97.067 SHSGP 171,148 City and County of San Francisco
2019 Bay Area Urban Areas Security Initiative Grant 97.067 2019-0035 / 075-95017 185,000 Program subtotal 356,148
Total U.S. Department of Homeland Security 458,211
Total Expenditures of Federal Awards $2,553,668 $8,523,780 See Accompanying Notes to Schedule of Expenditures of Federal Awards 3 This Page Left Intentionally Blank
CITY OF SANTA CLARA
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For The Year Ended June 30, 2021
NOTES TO THE SCHEDULE
NOTE 1 – REPORTING ENTITY
The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of Santa Clara, Californi a, and its component units as disc losed in the notes to the Basic Financial Statements, except for federal awards of the Santa Clara Stadium Authority (Stadium Authority). Federal awards expended by the Stadium Authority, if any, are excluded from the Schedule and are subject to a separate Single Audit performed by other auditors.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measuremen t focus applied. All governmental funds and fiduciary funds are accounted for using the modified accrual basis of accounting. All proprietary funds are accounted for using the accrual basis of accounting. Expenditures of Federal Awards reported on the Schedule are recognized when incurred.
NOTE 3 – INDIRECT COST ELECTION
The City has not elected use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
NOTE 4 – CORONAVIRUS RELIEF PROGRAM (AL# 21.019)
The Schedule for the year ended June 30, 2021 include s expenditures for the Coronavirus Relief Program (AL# 21.019) for the period of March 1, 2020 to Dece mber 31, 2020. The period of performance for the grant was March 1, 2020 to December 31, 2020, but to rece ive the funding, the City was required to file a certification with the State Department of Finance by July 10, 2020 that the City would use the funds consistent with federal requirements, adhere to health orders and directives, return unspent funds, and repay any disallowed costs, among other compliance certifications. The City’s certification was filed on July 7, 2020.
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INDEPENDENT AUDITOR’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH
GOVERNMENT AUDITING STANDARDS
To the Honorable Members of the City Council
City of Santa Clara, California
We have audited, in accordance w ith the auditing standards generall y 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 St ates, the financial statemen ts 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, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financ ial statements, and have issued our report thereon dated November 30, 2021. Our repo rt includes a reference to other auditors who audited the financial statements of the City of Santa Clara Stadium Authority for the year ended March 31, 2021 and a reference to other auditors who audited the financial statements the Northern California Power Agency, Transmission Agency of Northern California and San Jose-Santa Clara Regional Wastewater Facility and Clean Water Financing Authority as of and for the year ended June 30, 2020, related to the calculation of the Investments in Joint Ventures, as described in our report on the C ity’s financial statements. This report includes our consideration of the results of th e other auditors’ testing of internal control over financial reporting and compliance and other matters that are reported on separately by those other auditors. However, this report, insofar as it relates to the results of the other auditors, is based solely on the reports of the other auditors.
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 cont rol) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the fi nancial 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 opera tion 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 re asonable possibility that a material misstatement of the City’s financial statements will not be prevente d, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of defici encies, in internal control that is less severe than a material weakness, yet important en ough to merit attention by those charged with governance.
Our consideration of internal control was for the lim ited purpose described in the first paragraph of this section and was not designed to identify all deficien cies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we and other auditors did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 7 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 comp liance 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 opinio n on compliance with those provisions was not an objective of our audit, and accordingly , we do not express such an opini on. The results of our tests and those of the other auditors disclosed no instances of noncompliance or other ma tters that are required to be reported under Government Auditing Standards.
We have also issued a separate Me morandum on Internal Control date d November 30, 2021, which is an integral part of our audit and should be read in conjunction with this report.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testin g of internal control and compliance and the result 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 integr al 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.
Pleasant Hill, California
November 30, 2021
8 INDEPENDENT AUDITOR'S REPORT ON
COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE;
AND REPORT ON THE SCHEDULE OF EXPENDITURES OF
FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
To the Honorable Members of the City Council
City of Santa Clara, California
Report on Compliance for Each Major Federal Program
The City of Santa Clara’s basic financial statements include the operations of the Santa Clara Stadium Authority (Stadium Authority), which is not included in the Schedule during the year ended June 30, 2021. Our audit, described below, did not include the operations of the Stadium Authority, because the
Stadium Authority engaged other auditors.
We have audited City’s compliance with the type s of compliance requirements described in the OMB Compliance Supplement that could have a direct and material e ffect on each of the City’s major federal programs for the year ended June 30, 2021. 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.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on complia nce for each of the City’s major federal programs based on our audit of the types of compliance requirem ents referred to above. 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; a nd 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). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assuran ce about whether noncompliance with the types of compliance requirements referred to above that could ha ve a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about City’s compliance with those requirements and performing such other proc edures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable ba sis for our opinion on co mpliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. 9 Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with th e 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, 2021.
Other Matters
The results of our auditing proced ures disclosed instances of noncom pliance 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 it em SA2020-001. Our opinion on each major federal program is not modified with respect to these matters.
The City’s response to the noncompliance findin gs identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. The City’s response was not subjected to the auditing procedures applied in the audit of compli ance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s in ternal control over compliance with the types of requirements that could have a direct and material effect on each major federa l program to determine the auditing procedures that are appropriate in the circum stances for the purpose of expressing an opinion on compliance for each major federal pr ogram and to test and report on in ternal control over compliance in accordance with the Uniform Guid ance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s s 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 ty pe 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 inte rnal control over compliance, such that there is a reasonable possibility that material noncompliance w ith a type of compliance requirement of a federal program will not be prevented, or det ected 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 im portant enough to merit attention by those charged with governance.
Our consideration of internal control over complian ce was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on intern al control over compliance is sole ly to describe the scope of our testing of internal control over comp liance and the results of that testin g based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 10 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the gover nmental activities, the business-type activities, each major fund, and the aggregate remainin g fund information of the City as of and for the year ended June 30, 2021, and the related notes to the fi nancial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated November 30, 2021, which contained an unmodified opinion on those basic financial statements. Our report incl udes a reference to other auditors who audited the financial statements of the City of Santa Clara Stad ium Authority for the year ended March 31, 2021 and a reference to other auditors who audited the financia l statements the Northern California Power Agency, Transmission Agency of Northern California and San Jose-Santa Clara Regional Wastewater Facility and Clean Water Financing Authority as of and for the year ended June 30, 2020, related to the calculation of the Investments in Joint Ventures, as described in our re port on the City’s financial statements. Our report, insofar as it relates to the results of the other auditors, is based solely on the reports of the other auditors.
Our audit was conducted for the purpose of forming an opinion on the financial stat ements that collectively comprise the basic financial statements. The accompa nying 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 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 pr ocedures applied in the audit of the basic financial statements and certain additional procedures, includi ng comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial st atements or to the basic financial statements themselves, and other additiona l procedures in accordanc e 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.
Pleasant Hill, California
March 10, 2022
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1500 Warburton Avenue ● Santa Clara, CA 95050 ● Phone: 408-615-2490 ● Fax: 408-248-3381 ● www.SantaClaraCA.gov Housing and Community
Services Division
SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2021
CORRECTIVE ACTION PLAN
FINANCIAL STATEMENT FINDINGS - CURRENT YEAR
There were no current year financial statement findings.
FEDERAL AWARD FINDINGS - CURRENT YEAR
Finding Reference Number: SA2020-001 Federal Funding Accountability and Transparency Act (FFATA) Reporting
Assistance Listing Number: 14.218
Assistance Listing Title: Community Development Block Grant – Entitlement Grant Name of Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-20-MC-06-0022
COVID-19 - B-20-MW-06-0022
• Name(s) of the contact person: Eric Calleja, Housing Development Officer
• Corrective Action Plan:
• The City has taken action and corrected the issues related with this finding. The City has also taken steps to implement improved processes to prevent this issue from occurring again. A checklist has been created for the execution of contracts and the input of federal contracts over $30,000 into the FFATA database. The steps will require the input of awardee information within 30 days of the City receiving its federal awards, the input of sub-awardee information within 30 days of federal contracts and any subsequent amendments over $30,000, and a review of amendments to make sure any contracts less than $30,000 do not cross the $30,000 threshold with the changes in the amendment.
• Anticipated Completion Date:
Finding SA2020-001: March 10, 2022
1500 Warburton Avenue ● Santa Clara, CA 95050 ● Phone: 408-615-2490 ● Fax: 408-248-3381 ● www.SantaClaraCA.gov Housing and Community
Services Division
SINGLE AUDIT
FOR THE YEAR ENDED JUNE 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FINANCIAL STATEMENT FINDINGS – PRIOR AUDIT
There were no prior year financial statement findings.
FEDERAL AWARD FINDINGS – PRIOR AUDIT
Finding Reference Number: SA2019-001 Monitoring CDBG and HOME Program Activities for Compliance with Program Rules and Regulations
CFDA number: 14.218 and 14.239
CFDA Title: Community Development Block Grant – Entitlement Grant HOME Investment Partnerships Program
Name of Federal Agency: Department of Housing and Urban Development
• Name(s) of the contact person: Eric Calleja, Housing Development Officer
• Fiscal Year of Initial Finding: 2018-2019
• Current Status:
The City has yet to receive clearance regarding Findings One, Two and Three from the grantor. The City did take the overarching CDBG guidelines to council on March 23, 2021.
These CDBG guidelines were approved. The City submitted the overarching CDBG guidelines to HUD; however, the City never officially received a clearance letter from HUD.
The City has not yet submitted the Subrecipient Monitoring and Oversight Manual to HUD.
City staff does meet with its HUD representative on a quarterly basis to go over outstanding issues and is currently working on formally closing out these items.
Finding One – The City accepts HUD’s findings on Subrecipient Oversight. The City conducts thorough “desk audit” reviews of submitted reports and supporting documentation for invoices; however, the City is in the process of implementing more thorough on- site monitoring visits. If the City does find consistent anomalies during the “desk review”, staff would complete an on-site visit to further investigate.
Although the City did not complete a formal Risk Assessment, the City does consider funding amounts and performance history with the sub-recipient when determining whether an on- site review would return anything different than a desk review. The documents and supporting documentation that are submitted with invoices are the same documents that would be reviewed during a typical on-site review.
Re: SINGLE AUDIT FOR THE YEAR ENDED JUNE 30, 2021
March 4, 2022
Moving forward, the City will complete the following actions:
1) The City has already submitted the overarching CDBG Guidelines to HUD for review per their request on a different program. The City has also formalized a more detailed Subrecipient Monitoring and Oversite Manual which provides policies, procedures, and methodology related to Subrecipient Risk Assessment. The City will be submitting this more detailed manual to HUD on or before June 30, 2022. 2) The City has updated its Grant Agreement template for the new program year to include all necessary provisions from 2 CFR 200. The City will submit contract template to HUD for review on or before June 30, 2022.
3) The City has also developed a Risk Assessment methodology which is included in the subrecipient manual.
Finding Two – The City agreed that St. Justin’s program intake form was inadequate; however, due to the nature of the primary population served (homeless and seniors), it is likely that the clientele is eligible.
The City has drafted a new intake form with updated income levels, a place for the client and staff to sign, and a place where the client can self -certify their homeless status.
Unfortunately, St. Justin’s voluntarily withdrew from the City’s public service funding program in 2020 due to the increased intake requirements; however, the City will continue to use the new intake form where required.
Finding Three – The City disagreed with this finding. In the City’s contract/agreement template that is used with all subrecipients, there is the clause requiring those grantees that expend $750,000 or more of federal financial assistance in a fiscal year to obtain a Single Audit.
The new policies and procedures detail when single audits are required and how they are reviewed by City staff. The updated contract template also details regulator language related to this concern.
The City has yet to formally receive clearance regarding these findings from the grantor. The City did take the overarching CDBG Guidelines to council in March 23, 2021. They were approved and these overarching CDBG Guidelines were submitted to HUD; however, the City never officially received a clearance letter from HUD . The City has been in conversations with its HUD representative, Meira Barrett, and she has directed the City to email all documents related to HUD’s monitoring visit of 2019 for her review.
Concern – While the City’s current TBRA Guidelines contain verbiage that the TBRA administrator is required to review the lease, staff acknowledges that this requirement could be clarified and further emphasized. Neither the City nor HUD discovered any specific proof that the TBRA administrator was not reviewing the leases.
The City has updated the TBRA Guidelines to make it clearer that the TBRA administrator is required to review leases, and that they need to send subsidy checks by a certain date every month.
In its December 20, 2019 letter to the City, the grantor indicated that this Concern is considered closed.