CITY OF SANTA CLARA
SINGLE AUDIT REPORT
FOR THE YEAR ENDED JUNE 30, 2022
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CITY OF SANTA CLARA
SINGLE AUDIT REPORT
For the Year Ended June 30, 2022
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 ............................................................................ 4
Notes to the Schedule of Expe nditures 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 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, 2022
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 prepared 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 issued 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
Number(s) Name of Federal Program or Cluster
14.239 Home Investment Partnerships Program
21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Dollar threshold used to distinguish between type A and type B programs: $945,838
Auditee qualified as low-risk auditee? X
Yes No
1 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, 2022, 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 Our audit disclosed the following findings and questione d costs required to be re ported in accordance with Uniform Guidance.
Finding Reference Number: SA2022-001 Compliance with Grant Deadlines Assistance Listing Number: 21.027
Assistance Listing Title: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of Treasury
Federal Award Identification Number: SLFRP0002
68-0283471
68-0281986
Name of Pass-Through Entity: State of California Department of Community Services California State Water Resources Control Board
Criteria: The City’s three California Arrearage Payment Program (CAP P) grants included a number of deadlines for transaction processing, reporting and return of unused funds as follows:
• Electric Utility Arrearage CAPP Program Notice No. 2022-01 requires the filing of the Close-Out Report within six months of receipt of the grant funds, or August 7, 2022. • California Water and Wastewater Arrearage Payment Program Guidelines Section B requires that the City allocate Water Arrearage Program payments as bill credits to customer accounts within 60 days of receiving payment or March 26, 2022.
• California Water and Wastewater Arrearage Payment Program Guidelines Appendix A, Section 6.3, requires the return of unspent Wastewater Arrear age Program funds within six months of receiving payment or November 30, 2022
Condition: The City did not comply with the required reporting and ot her program deadlines above as follows:
• Electric Utility Arrearage Close-Out Report was not filed until August 30, 2022. • Water Utility Arrearage Program bill
credits were not applied to customer accounts until April 4, 2022. • Wastewater unused funds were not returned to the State Water Resources Control Board until January 6, 2023.
Cause: W
e understand that staff shortages as well as the complexities of calculating the customer credits led to the reporting, deposit, credit and payment delays.
2 SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) Finding Reference Number: SA2022-001 Compliance with Gr ant Deadlines (Continued) Effect: The City is not in compliance wi th the terms and conditions of payment related to the required reporting and other program deadlines of the California Arrearage Payment Programs. As a result, the City could have been required to return moneys to the grantors.
Recommendation: Although it does not appear that the grantors disallowed any of the program costs, the City must develop procedures to ensure compliance with gr ant award terms and conditions of payment, including timely filing of reports, timely use of grant funds and timely return of unspent grant funds.
View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
3 CITY OF SANTA CLARA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Fiscal Year Ended June 30, 2022
Federal
Assistance Pass-Throu gh Pass-Throu gh
Federal Grantor/ Listin g 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 $358,753 $956,936
COVID-19 - Emergency Rental Assistance Program and Administration 580,677 618,613 Program subtotal 939,430 1,575,549
Home Investment Partnerships Program 14.239 1,047,938 1,144,749 Total U.S. Department of Housing and Urban Development 1,987,368 2,720,298 U.S. Department of Justice Direct Programs
COVID 19 - Coronavirus Emergency Supplemental Funding 16.034 9,967 Bureau of Justice Statistics and Federal Bureau of Investigation National Incident Based Reporting System
Special Data Collections and Statistical Studies 16.734 200,089 Edward Byrne Memorial Justice Assistance Grant Program 16.738 40,791 Equitable Sharing Program 16.922 61,727
Total U.S. Department of Justice 312,574
U.S. Department of Transportation Pass-Through Programs From:
Metropolitan Transportation Commission
Highway Planning and Construction
Priority Development Area Planning Grant 20.205 1812 27,791 State of California Office of Traffic Safety
State and Community Highway Safety 20.600 402PT-22 12,313 Minimum Penalties for Repeat Offenders for Driving
While Intoxicated 20.608 164AL-22 25,248
Total U.S. Department of Transportation 65,352
U.S. Department of Treasury
Direct Program:
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 26,231,326 Pass-Through Programs From:
COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 State of California Department of Community Services
and Development
2021 California Arrearage Payment Program - Energy 68-0283471 1,313,013 California State Water Resources Control Board
California Water and Wastewater Arrearage Payment Program 68-0281986 806,167 Total U.S. Department of Treasury 28,350,506
U.S. Department of Homeland Security
Direct Program:
Federal Emergency Management Agency
COVID-19 - Assistance to Firefighters Supplemental Grant 97.044 32,745 Pass-Through Programs From:
California Task Force 3 Urban Search and Rescue
National Urban Search and Rescue Response System 97.025 CA-TF3 16,013 County of Santa Clara Office of Emergency Services
2019 Emergency Management Performance Grants 97.042 2019-003 / 085-00000 22,414 County of Santa Clara Office of Emergency Services
Homeland Security Grant Program (HSGP) 97.067 SHSGP 8,031 Total U.S. Department of Homeland Security 79,203
Total Expenditures of Federal Awards $1,987,368 $31,527,933 See Accompanying Notes to Schedule of Expenditures of Federal Awards 4 CITY OF SANTA CLARA
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2022
NOTE 1 – REPORTING ENTITY
The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of Santa Clara, California, an d its component units as disclosed 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 statemen ts, regardless of the measurement focus applied. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting . The proprietary and fiduciary fund fina ncial statements are reported using the economic resources measurement focus and 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 elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. 5 This Page Left Intentionally Blank
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 wi th 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 Stat es, the financial statements of the governmental activities, the business-type activities, each major fund , and the aggregate remain ing fund information of the City of Santa Clara as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s ba sic financial statements, a nd have issued our report thereon dated November 30, 2022.
Our report includes a reference to other auditors who au dited the financial statements of the City of Santa Clara Stadium Authority for the year ended March 31, 2022 and a reference to other auditors who audited the financial statements the Nort hern California Power Agency, Tr ansmission Agency of Northern California and San Jose-Santa Clara Regional Wastew ater Facility and Clean Water Financing Authority as of and for the year ended June 30, 2021, related to the calculation of the Investments in Joint Ventures, as described in our report on the City’s financial statements. This report includes our consideration of the results of the other auditors’ testing of internal control over financia l 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. Our report also included an emphasis of a matter paragraph disclosing the implementation of new accounting principles.
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 st atements, 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 a ssigned 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 poss ibility 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 deficiencies, in internal control that is less severe than a material weakness, yet important en ough to merit attention by those charged with governance.
7 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 the other auditors did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether 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 thos e 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 matters 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, 2022, 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 testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectivenes s 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, 2022
8 3
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
Opinion on Each Major Federal Program
We have audited City of Santa Clara’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the y ear ended June 30, 2022. 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.
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, 2022. Our audit, described below, did not include the operations of the Stadium Authority, because the Stadium Authority engaged other auditors.
In our opinion, the City complied, in all material respects, with the 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, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of complian ce in accordance with auditing stan dards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller Ge neral of the United States ( Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Co st 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 au dit. 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.
9 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 cont racts or grant agreements applicable to the City’s federal programs.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assuran ce 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 th erefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance w ill always detect material noncompliance when it exists. The ri sk of not detecting material nonc ompliance 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 cont rol. Noncompliance with the compliance requirements referred to above is considered mate rial, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a r easonable 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 GAAS, 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 Ci ty’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 Guid ance, 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. 10 Other Matters
The results of our auditing procedur es disclosed instances of noncomp liance which are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying Schedule of Findings and Questione d Costs as item SA2022-001. Our opinion on each major federal program is not modified with respect to these matters.
Government Auditing Standards require the auditor to perform limite d procedures on the City’s response to the noncompliance findings identified in our 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.
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 cour se 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 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 impo rtant enough to merit attention by those charged with governance.
Our consideration of internal control over complia nce 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 comp liance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expres sing 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 resu lts of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 11 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the gove rnmental activities, the business-type activities, each major fund, and the aggregate remainin g funds information of the City as of and for the year ended June 30, 2022, and the related notes to the financial stat ements, which collectively co mprise the City’s basic financial statements. We issued our report ther eon dated November 30, 202 2, which contained an unmodified opinion on those financial statements. Ou r report includes a reference to other auditors who audited the financial statements of the City of Sa nta Clara Stadium Authority for the year ended March 31, 2022 and a reference to other auditors who audited the financial statements the Northern California Power Agency, Transmission Agency of Northern California and Sa n Jose-Santa Clara Regional Wastewater Facility and Clean Water Financing Author ity as of and for the year ended June 30, 2021, related to the calculation of the Investments in Joint Ventures, as described in our report on the City’s financial statements. Our report, in so far as it relate s to the results of the othe r auditors, is based solely on the report of the other auditors. Our audit was conducted 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 pur poses 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 info rmation has been subjected to the auditing procedures applied in the audit of the basic 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 financia l statements or to the basic financial statements themselves, and other additional proc edures in accordance with auditi ng standards generally accepted in the United States of America. In our opinion, the sc hedule 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 24, 2023
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