RPVCCA_SR_2011_04_19_03_Single_Audit_ReportCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
Project Manager:
HONORABLE MAYOR &CITY COUNCIL MEMBERS
DENNIS McLEAN,DIRECTOR OF FINANCE &
INFORMATION TECHNOLOGY '?D tf7 DefY\.c.
APRIL 19,2011
FY09-10 SINGLE AUDIT REPORT
CAROLYN LEHR,CITY MANAGE~
Kathryn Downs,Deputy Director of Finance &Information
Technology
RECOMMENDATION
Receive and file the Single Audit of Federally Assisted Grant Programs dated June 30,
2010 ("Single Audit Report",see attached).
DISCUSSION
A Single Audit of federal financial assistance is required when local governments spend
more than $500,000 for projects funded with federal monies.The City expended
$1,599,887 on federal funded projects during FY09-1 0;therefore,the City's independent
auditor,Diehl,Evans &Company,LLP,completed a Single Audit prior March 31,2011 as
required by law.The Single Audit Report dated January 19,2011 has been filed with the
appropriate agencies by the March 31 st deadline.
The Single Audit Report includes two opinion letters from the Auditor.The Auditors'Report
on Internal Control and Compliance states that no deficiencies were identified.The
Auditors'Report on Compliance with Requirements,states that the City complied,in all
material respects,with applicable requirements.
In addition to the opinion letters noted above,the Single Audit Report contains a Schedule
of Findings and Questioned Costs.There were no findings and questioned costs noted.
Currently,based on the expected amount of federal grants for the current fiscal year,Staff
does not expect that a Single Audit will be required for FY1 0-11.
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CITY OF RANCHO PALOS VERDES,CALIFORNIA
SINGLE AUDIT OF FEDERALLY ASSISTED
GRANT PROGRAMS
JUNE 30,2010
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•
CITY OF RANCHO PALOS VERDES,CALIFORNIA
TABLE OF CONTENTS
June 30,2010
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 with Requirements
That Could Have a Direct and Material Effect on Each Major
Program and on Internal Control Over Compliance in Accordance
with OMB Circular A-133 and on the Schedule of Expenditures
of Federal Awards
Schedule of Expenditures of Federal Awards and
Schedule of Findings and Questioned Costs
Schedule of Expenditures of Federal Awards
Notes to Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Page
Number
1-2
3-4
5
6
7-8
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~DIEHL,EVANS &:COMPANY,LLP
~CERTIFIED PUBLIC ACCOUNTANTS &:CONSULTANTS
A PARTNERSHlP INCLUDING ACCOUNTANCY CORPORATIONS
5 CORPORATE PARK.,SUITE 100
IRVINE,CALIFORNIA 92606-5165
(949)399-0600.FAX(949)399-0610
www.diehlevans.com
January 19,2011
MICHAELR LUDlN,CPA
CRAIG W.SPRAKER,CPA
NITINP.PATEL,CPA
ROBERT I.CALLANAN,CPA
"PHILIP H.HOLTKAMP,CPA
"THOMAS M PERLOWSKI,CPA
"HARVEY I.SCHROEDER,CPA
KENNETHR AMES,CPA
WILLIAM C.PENTZ,CPA
"A PROFESSIONAL CORPORATION
INDEPENDENT AUDITORS'REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FlNANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor
and Members of City Council
City of Rancho Palos Verdes
Rancho Palos Verdes,California
We have audited the financial statements of the governmental activities,the business-type activities,
each major fund and the aggregate remaining fund information of the City of Rancho Palos Verdes,
California as of and for the year ended June 30,2010,which collectively comprise the City's basic
fmancial statements and have issued our report thereon dated January 19,2011.We conducted our
audit in accordance with auditing standards generally accepted in the United States ofAmerica and the
standards applicable to financial audits contained in Government Auditing Standards,issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit,we considered the City's internal control over financial reporting
as a basis for designing our auditing procedures 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 over financial reporting.Accordingly,we do not express an opinion on the
effectiveness of the City's internal control over financial reporting.
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.
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OTHER OFFICES AT:2965 ROOSEVELT STREET
CARLSBAD,CALIFORNIA 92008-2389
(760)729-2343 •FAX (760)729-2234
613 W.VALLEY PARKWAY,SUITE 330
ESCONDIDO,CALIFORNIA 92025-2598
(760)741-3141 •FAX (760)741-9890
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Internal Control Over Financial Reporting (Continued)
Our consideration of internal control over financial reporting was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in internal control
that might be deficiencies,significant deficiencies or material weaknesses.We did not identify any
deficiencies in internal control over fmancial reporting that we consider to be material weaknesses,as
defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Rancho Palos Verdes,California's
fmancial statements are free of 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 determination of financial statement amounts.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 and other matters that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of City Council,management,and others
within the City of Rancho Palos Verdes,California,and federal awarding agencies and pass-through
entities and is not intended to be and should not be used by anyone other than these specified parties.
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~DIEHL,EVANS &:COMPANY,LLP
~CERTIFIED PUBLIC ACCOUNTANTS &:CONSULTANTS."
A PARTNERSIDP INCLUDING ACCOUNTANCY CORPORATIONS
5 CORPORATE PARK,SUITE 100
IRVINE,CALIFORNIA 92606-5165
(949)399-0600 •FAX (949)399-0610
www.diehIevans.com
MICHAEL R.LUDIN,CPA
CRAIGW.SPRAKER,CPA
NITINP.PATEL,CPA
ROBERT I.CALLANAN,CPA
"PHILIP H.HOLTKAMP,CPA
"THOMAS M PERLOWSKI,CPA
*HARVEY I.SCHROEDER,CPA
KENNETH R.AMES,CPA
WIlLIAM C.PENTZ,CPA
"A PROFESSIONAL CORPORATION
1
INDEPENDENT AUDITORS'REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE
IN ACCORDANCE WITH OMB CIRCULARA-133 AND ON THE SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS
To the Honorable Mayor
and Members of City Council
City of Rancho Palos Verdes
Rancho Palos Verdes,California
Compliance
We have audited the City of Rancho Palos Verdes,California's (the City)compliance with the types of
compliance requirements described in the U.S.Office of Management and Budget (OMB)
Circular A-133 Compliance Supplement that could have a direct and material effect on each of the
City's major federal programs for the year ended June 30,2010.The City's major federal programs are
identified in the summary of auditors'results section of the accompanying schedule of findings and
questioned costs.Compliance with the requirements of laws,regulations,contracts and grants
applicable to each of its major federal programs are the responsibility of the City's management.Our
responsibility is to express an opinion on the City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America;the standards applicable to fmandal audits contained in Government
Auditing Standards,issued by the Comptroller General of the United States;and OMB Circular A-133,
Audits of States,Local Governments,and Non-Profit Organizations.Those standards.and
OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the types of compliance requirements referred to above that could have a
direct and material effect on a major federal program occurred.An audit includes examining,on a test
basis,evidence about the City's compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances.We believe that our audit provides a
reasonable basis for our opinion.Our audit does not provide a legal determination on the City's
compliance with those requirements.
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 identified in
the accompanying schedule offmdings and questioned costs for the year ended June 30,2010.
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OTHER OFFICES AT:2965 ROOSEVELT STREET
CARLSBAD,CALIFORNIA 92008-2389
(760)729-2343 •FAX (760)729-2234
613 W.VALLEY PARKWAY,SUITE 330
ESCONDIDO,CALIFORNIA 92025-2598
(760)741-3141.FAX (760)741-9890
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Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over
compliance with the requirements of laws,regulations,contracts,and grants applicable to federal
programs.In planning and performing our audit,we considered the City's internal control over
compliance with the requirements that could have a direct and material effect on a major federal
program in order to determine the auditing procedures for the purpose of expressing our opinion on
compliance and to test and report on internal control over compliance in accordance with OMB
Circular A -133,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 internal
control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees,in the normal course of performing their
assigned functions,to prevent or detect and correct,noncompliance with a type of compliance
requirement of a federal program on a timely basis.A material weakness in internal control over
compliance is a deficiency,or 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.
Our consideration of internal control over compliance 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 deficiencies,significant deficiencies,or material weaknesses.We did not
identify any deficiencies in internal control over compliance that we consider to be material
weaknesses,as defined above.
Schedule of Expenditures of Federal Awards
We have audited the fmancial statements of the governmental activities,the business-type activities,
each major fund and the aggregate remaining fund information of the City of Rancho Palos Verdes,
California,as of and for the year ended June 30,2010,and have issued our report thereon dated
January 19,2011.Our audit was performed for the purpose of forming opinions on the fmancial
statements that collectively comprise the City's basic financial statements.The schedule of
expenditures of federal awards is presented for purposes of additional analysis as required by u.s.
Office of Management and Budget Circular A-133, Audits of States,Local Governments,and Non-
Profit Organizations,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 fmancial statements.The information 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 financial statements of the City or to the
fmancial statements themselves,and other additional procedures in accordance with auditing standards
generally accepted in the United States of America.In our opinion,the information is fairly stated in
all material respects in relation to the basic financial statements taken as a whole.
This report is intended solely for the information and use of City Council,management,and others
within the City of Rancho Palos Verdes,California,and federal awarding agencies and pass-through
entities and is not intended to be and should not be used by anyone other than these specified parties.
JJPdt/~~~/fIPJ
March 10,2011,except to the date for the Schedule of Expenditures of Federal Awards,to which the
date is January 19,2011.
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SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
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1
CITY OF RANCHO PALOS VERDES
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30,2010
See Independent Auditors'Report on Compliance with Requirements That Could Have a Direct and
Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with
with OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 3 and 4)
and Notes to the Schedule of Expenditures of Federal Awards (page 6).
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1
CITY OF RANCHO PALOS VERDES,CALIFORNIA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERALAWARDS
June 30,2010
1.GENERAL:
The accompanying Schedule of Expenditures of Federal Awards only presents the activity of
federal award programs 'of the City of Rancho Palos Verdes,California (the City),and,therefore,
does not present the fmancial position or results of operation of the City.The City's reporting
entity is defmed in Note 1 to the City's basic fmancial statements.
2.BASIS OF ACCOUNTING:
The activity of the City's federal award programs is recorded within the general fund and special
revenue funds of the City.The City utilizes the modified accrual basis of accounting for these fund
types as described in Note 1 to the City's basic fmancial statements.Accordingly,the
accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual
basis of accounting.
3.RELATIONSHIP TO COMPREHENSIVE ANNUAL FINANCIAL REPORT:
Amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree to
amounts reported within the City's Comprehensive Annual Financial Report.
4.DEFERRED LOANS RECEIVABLE:
The balance of the Community Development Block Grant Program deferred loans receivable at
June 30,2010 was $433,375.
5.CONTINGENCIES:
Under the terms of federal grants,additional audits may be requested by the grantor agencies,and
certain costs may be questioned as not being appropriate expenditures under the terms of the
grants.Such audits could lead to a request for reimbursement to the grantor agencies.
See Independent Auditors'Report on Compliance with Requirements That Could Have a Direct and
Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with
OMB Circular A-133 and on the Schedule of Expenditures of Federal Awards (pages 3 and 4).
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CITY OF RANCHO PALOS VERDES,CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30,2010
A.Summary ofAudit Results:
1.The independent auditors'report expresses an unqualified opinion on the financial statements
of the City of Rancho Palos Verdes,California.
2.There were no significant deficiencies disclosed by the audit of the fmancial statements of the
City of Rancho Palos Verdes,California.
3 No instances of noncompliance material to the fmancial statements of the City of Rancho Palos
Verdes,California,which would required to be reported in accordance with Government
Auditing Standards,were disclosed during the audit.
4.There were no significant deficiencies in internal control over major federal award programs
disclosed by the audit of the financial statements of the City of Rancho Palos Verdes,
California.
5.The independent auditors'report on compliance with requirements applicable to each major
federal award program for the City of Rancho Palos Verdes,California expresses an unqualified
opinion on all major federal programs.
6.No audit findings that are required to be reported in accordance with Section 510(a)of OMB
Circular A-133 are reported in this schedule.
7.The programs tested as major programs were:
Community Development Block Grants/Entitlement Grants -CFDA #14.218
Community Development Block GrantARRA Entitlement Grants -CFDA #14.253
ARRA -Highway Planning and Construction -CFDA #20.205
8.The threshold used for distinguishing Type A and B programs was $300,000.
9.The City of Rancho Palos Verdes,California did not qualify as a low-risk auditee.
(Continued)
See 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 and Independent Auditors'Report on Compliance with Requirements
That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over
Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal
Awards (pages 1 -4).
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CITY OF RANCHO PALOS VERDES
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(CONTINUED)
For the year ended June 30,2010
B.Summary Schedule of Prior Year Findings:
There were no findings or questions costs identified in the Single Audit for the year ended
June 30,2008.
See 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 and Independent Auditors'Report on Compliance with Requirements
That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over
Compliance in Accordance with OMB Circular A-133 and on the Schedule of Expenditures of Federal
Awards (pages 1 -4).
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