2009-04-22 (Report) (2)
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Special Meeting of the
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: i ENCINITAS HOUSING AUTHORITY
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. F . AGENDA REPORT..... .
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Meeting Date: Apri122, 2009
TOi ' Encinitas Housing Authority (EHA) Board of Directors
VIA: Phil Cotton, EHA Executive Director ~ FROM: eRon Jennifer Smith and Jay Lembach, Fina Depa~-tmen~Jr~"'~
Barefield, Housing Administrator ~
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SUBJECT: Acceptance and Filing of the City of Encmrta4'JY 2007 2008
Single Audit of Federally Assistecl Grant Prograrvis
BACKGROUND: At the conclusion of eacli fiscal year, the City is required to prepare aiid publish
an Annual Financial Report focusing specifically on a11 City activities:related to Federal Grant
Programs. 'This report is referred to as the Single Audit of l'ederally Assisted Grant Progf°anzs (the
"Single Audit"). The Single Audit inust be prepared in compliance with Gerrerally Accepted
Account.ing Principles and the regulatory requirements of the applicable government ageiicies, and z-nust
be audited by a qualified independent CPA firnl following Generally.Accepted.4uditing StaJZdards aizd
the'standards applicable ta financial audits contained in Goveniment Auditin Standards' issued by tlle :
Comptroller Geileral of the IInited States. The Single Audit is broken down-into a series of Auditors'
Reports on'Internal Control and Cornpliance, a Schedule of Expenditures of Federal Awai•ds, and a
Schedule of Findiiigs and Questioned Costs. Staff is submitting the Single Audit Report at this Special
Meeting, since the Federal Programs covered by this report affect both the City of Encinitas:and the
Encinitas Housing Authority. '
ANALYSIS: The City's FY 2007 2008 Federal Prograin Expenditures totaled $1;874,181; as detailed on
page -6- ofthe Report. Cunent year Programs included the Department of Housing and Urban
Development (HUD), the Department of Justice, and the Department of Health and Human Services. The
amounts shown in ihe Report represent the actua] amounts expended in the fiscal yeai; which does not
always match the grant amount for that year. In the case of HUU Programs (and subject to certain limits);
unused ainounts in any particular year are carried forward and are available for use in Future periods;
Additional inforniation on the City's Federal Programs is available in the City's Comprehensive Annuccl
Financial Report, which is on the City's WeUSite http
..;//www.ciivofencimtas:or~(iNRfrdonl xes/F88rC48F,- .
93CD-4C1E Bf1B9-870876C1D7,36/0/2008 CAFRL.vdf :
T,he City a•eceived'an Zlnqualified Auclitors' Opinion on its Single Audit, which includes vei-ification of the
Federal amounts expended, review of the City's Internal Control Program over Federal Awards, and its
compliance with reyuirements applicable to each Major Program. There were no filldings or questioned '
costs in FY 2007-2008. There were two findings in FY 2006-2007 related to recertifications and
inspections in the Section 8 Housing C,hoice Voucher Pi`ogram (under HCJD), that were subsequently;
corrected. The City is in compliance with all required regulatory filings related to its:Federal Prograins, and
has:had no coxnmunications from regulatory agencies i`elating to compliance or other matters.
RECOMMF.NDATION: Accept and file the City a£Encinitas' F1' 2007-2008 Single Aur,lit of
Federally flssisted Grcrytt Progranas
G;\AiJDIT\Audit62008\04-22-2009 EHA Single Audit Subinission.doc
: 25
CITY OF ENCINITAS, CALIFORNIA
SINGLE AUDIT OF FEDERALLY ASSISTED
GRANT PROGRAMS
JUNE 30, 2008
CITY OF ENCINITAS, CALIFORNIA
TABLE OF CONTENTS
June 30, 2008
Page
Number
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 Auditin~ Standards 1- 2
Independent Auditors' Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control Over
Compliance in Accordance with OMB Circular A-133 and on
Supplementary Schedule of Expenditures of Federal Awards 3- 5
Schedule of Expenditures of Federal Awards and
Schedule of Findings and Questioned Costs:
Schedule of Expenditures of Federal Awards 6
Notes to Schedule of Expenditures of Federal Awards 7
Schedule of Findings and Questioned Costs 8-10
DIEHL EVANS ~ ~~MPANY LLP ~ ~
CERTIFIED PUBLIC ACCOUNTANTS ~ CONSULTANTS
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS *PHILIP H. HOLTKAMP, CPA
*THOMAS M PERLOWSKI, CPA
2965 ROOSEVELT STREET *xaRV~y 1. sc~oE~Ex, cpa CARLSBAD CALIFORNIA 92008-2389 KE~Txx. a~s, cpa ~ *WILLIAM C. PENTZ, CPA
(760) 729-2343 • FAX (760) 729-2334 MICH~L x. Lu~r~, cpa
www.diehlevans.com cxalGw. sp~~R, cpa NTTIN P. PATEL, CPA ROBERT J. CALLANAN, CPA
* A PROFESSIONAL CORPORATION
December 8, 2008
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
The Honorable Mayor and
Members of City Council
City of Encinitas
Encinitas, California
We have audited the financial statements of the governmental activities, the business-type activities,
each maj or fund and the aggregate remaining fund information of the City of Encinitas, California, as
of and for the year ended June 30, 2008, which collectively comprise the City's basic financial
statements and have issued our report thereon dated December 8, 2008. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditin~ 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 of Encinitas, California'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 of Encinitas, California's internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of the City of Encinitas, California's
internal control over financial reporting.
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OTHER OFFICES AT: 613 W. VALLEY PARKWAY, SUITE 330 5 CORPORATE PARK, SLTITE 100 ESCONDIDO, CALIFORNIA 92025-2598 IRVINE, CALIFORNIA 92606-5165
(760) 741-3141 • FAX (760) 741-9890 (949)-399-0600 ~ FAX (949) 399-0610
A control deficiency 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
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects City of Encinitas, California's ability to initiate, authorize,
record, process, or report financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of City of Encinitas,
California's financial statements that is more than inconsequential will not be prevented or detected by
City of Encinitas, California's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the financial statements will not be
prevented or detected by City of Encinitas, California's internal control.
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 significant deficiencies or material weaknesses. VVe did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Encinitas, California's financial
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 did not disclose any instance of noncompliance
or other matter that is required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the City Council and management of the
City of Encinitas, 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 ~ ~~MPANY LLP ~ ~
CERTIFIED PUBLIC ACCOUNTANTS ~ CONSULTANTS
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS *PHILIP H. HOLTKAMP, CPA
*THOMAS M PERLOWSKI, CPA
2965 ROOSEVELT STREET *xaRV~y 1. sc~oE~Ex, cpa CARLSBAD CALIFORNIA 92008-2389 KE~Txx. a~s, cpa ~ *WILLIAM C. PENTZ, CPA
(760) 729-2343 • FAX (760) 729-2334 MICH~L x. Lu~r~, cpa
www.diehlevans.com cxalGw. sp~~R, cpa NTTIN P. PATEL, CPA ROBERT J. CALLANAN, CPA
* A PROFESSIONAL CORPORATION
December 8, 2008
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE INACCORDANCE WITH OMB CIRCULARA-133 AND ON
SUPPLEMENTARY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
The Honorable Mayor and
Members of City Council
City of Encinitas
Encinitas, California
Compliance
We have audited the compliance of City of Encinitas, California with the types of compliance
requirements described in the U.S. Office of Mana~ement and Bud.~et (OMB) Circular A-133
Compliance Supplement that are applicable to its major federal programs for the year ended June 30,
2008. The City of Encinitas, California's maj or 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 its maj or federal
programs is the responsibility of the City of Encinitas, California's management. Our responsibility is
to express an opinion on the City of Encinitas, California'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 financial audits contained in Government
Auditin~ Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,
Audits of States' Local Governments, and Non-Profit Or~anizations. Those standards and
OMB Circular A-13 3 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 of Encinitas, California'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 of Encinitas, California's compliance with those requirements.
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OTHER OFFICES AT: 613 W. VALLEY PARKWAY, SUITE 330 5 CORPORATE PARK, SLTITE 100
ESCONDIDO, CALIFORNIA 92025-2598 IRVINE, CALIFORNIA 92606-5165 (760) 741-3141 • FAX (760) 741-9890 (949)-399-0600 ~ FAX (949) 399-0610
In our opinion the City of Encinitas, California complied, in all material respects, with the
requirements referred to above that are applicable to its maj or federal programs for the year ended June
30, 2008.
Internal Control Over Compliance
The management of the City of Encinitas, California 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 of
Encinitas, California'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 our auditing procedures for the
purpose of expressing our opinion on compliance, 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 of Encinitas, California's internal control over compliance.
A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a
federal program on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the entity's ability to administer a federal program such that
there is more than a remote likelihood that noncompliance with a type of compliance requirement of a
federal program that is more than inconsequential will not be prevented or detected by the entity's
internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that material noncompliance with a type of compliance requirement
of a federal program will not be prevented or detected by the entity's internal control.
Our consideration of internal control over compliance 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 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.
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Schedule of Expenditures of Federal Awards
We have audited the financial statements of the governmental activities, the business-type activities,
each maj or fund and the aggregate remaining fund information of the City of Encinitas, California as
of and for the year ended June 30, 2008 and have issued our report thereon dated December 8, 2008.
Our audit was performed for the purpose of forming opinions on the financial statements that
collectively comprise the City of Encinitas, California's basic financial statements. The accompanying
Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as
required by OMB Circular A-133 and is not a required part of the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, 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 the City Council and management of the
City of Encinitas, 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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SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
CITY OF ENCINITAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ended June 30, 2008
Federal Grant
Federal Grantor/Pass - Through CFDA Identification Federal
Grantor/Program Title Number Number Expenditures
De~artment of Housin a~nd
Urban Develo~ment
Community Development Block Grant 14.218 B-03-MC-06-0574 $ 704,179 ~
Section 8 Housing Choice Vouchers 14.871 CA16-VISS-001 1,052,545 ~
De~artment of Justice
Byrne Formula Grant Program 16.579 2005-DJ-BX-1522 16,708
Department of Health and Human Services
Special Programs for the Aging - Title III
Part C- Nutrition Services 93.045 45814 100,749
TOTAL EXPENDITURES
OF FEDERAL AWARDS $ 1,874,181
~ - Maj or Program
See Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Program and Internal
Control Over Compliance in Accordance with OMB Circular A-133 and Supplementary Schedule of Expenditures of
Federal Awards (pages 3 through 5) and Notes to Schedule of Expenditures of Federal Awards (page 7).
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CITY OF ENCINTAS, CALIFORNIA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The Schedule of Expenditures of Federal Awards includes federal grant activity of the City of
Encinitas and is presented on the modified accrual basis of accounting. The information in this
schedule is presented in accordance with OMB Circular A-133, "Audits of States, Local
Government, and Non-Profit Organizations". Therefore, some amounts presented in this schedule
may differ from amounts presented in, or used in the preparation of the City's financial statements.
Schedule of Expenditures of Federal Awards
The Schedule of Expenditures of Federal Awards presented is prepared from only the accounts of
the grant programs and, therefore, does not present the financial position or results of operations of
the City of Encinitas, California. The City's reporting entity is defined in Note 1 to the City's
financial statements.
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 Auditin~
Standards and Independent Auditors' Report on Compliance with Requirements Applicable to Each Major
Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on
Supplementary Schedule of Expenditures of Federal Awards (pages 1 through 5).
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CITY OF ENCINTAS, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2008
SUMMARY OF AUDITORS' RESULTS:
l. Type of Report on Financial Statements:
Unqualified Opinion
2. Reportable Conditions at Financial Statement Level:
None noted
3. Noncompliance Material to Financial Statements:
None noted
4. Reportable Conditions for Maj or Program:
None noted
5. Type of Report on Compliance for Maj or Program:
Unqualified opinion
6. Findings Required by OMB Circular A-133:
None noted
7. Dollar Threshold Used to Distinguish Between Type A and Type B Programs:
$300,000.
8. Major Programs:
Section 8 Housing Choice Vouchers 14.871
Community Development Block Grant 14.218
9. Low-Risk Auditee:
The City of Encinitas was determined to be a low-risk Auditee.
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 Auditin~
Standards and Independent Auditors' Report on Compliance with Requirements Applicable to Each Major
Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on
Supplementary Schedule of Expenditures of Federal Awards (pages 1 through 5).
CITY OF ENCINITAS, CALIFORNIA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(CONTINUED)
For the year ended June 30, 2008
FINDINGS - FINANCIAL STATEMENT AUDIT
There were no reportable conditions or noncompliance material to the financial statements which were
disclosed by the audit of the financial statements of the City of Encinitas for the year ended June 30,
2008.
FINDINGS AND QUESTIONED COSTS - MAJOR PROGRAM
There were no reportable findings or noncompliance material to the major programs which were
disclosed by the single audit of the federally assisted grant programs of the City of Encinitas 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 Auditin~
Standards and Independent Auditors' Report on Compliance with Requirements Applicable to Each Major
Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on
Supplementary Schedule of Expenditures of Federal Awards (pages 1 through 5).
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CITY OF ENCINITAS, CALIFORNIA
SCHEDULE OF PRIOR FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2008
SUMMARY OF PRIOR YEAR FINDINGS
2007-1 The City was not able to provide supporting documentation for annual recertification
documentation to support the amount of payments made in the Section 8 Housing Choice
Vouchers program for four of the tested program participants during the 2006/2007 fiscal
year.
This finding has been corrected.
2007-2 The City was not able to provide supporting documentation for annual inspection
documentation to support that required annual inspection of housing units were made for
four of the tested program participants during the 2006/2007 fiscal year.
This finding has been corrected.
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 Auditin~
Standards and Independent Auditors' Report on Compliance with Requirements Applicable to Each Major
Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and on
Supplementary Schedule of Expenditures of Federal Awards (pages 1 through 5).
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