HomeMy WebLinkAboutAzusa Single Audit Report Final
CITY OF AZUSA, CALIFORNIA
SINGLE AUDIT REPORT
JUNE 30, 2015
CITY OF AZUSA, CALIFORNIA
SINGLE AUDIT REPORT
JUNE 30, 2015
CITY OF AZUSA, CALIFORNIA
SINGLE AUDIT REPORT
JUNE 30, 2015
TABLE OF CONTENTS
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 Auditing Standards ...................................................................... 1
Independent Auditors’ Report on Compliance for Each Major Program and on Internal
Control Over Compliance; and Report on Schedule of Expenditures of Federal
Awards Required by OMB Circular A-133 ........................................................................................... 3
Schedule of Expenditures of Federal Awards
for Fiscal Year Ended June 30, 2015 .................................................................................................. 6
Notes to Schedule of Expenditures of Federal Awards .......................................................................... 7
Schedule of Findings and Questioned Costs
for Fiscal Year Ended June 30, 2015 .................................................................................................. 8
Schedule of Prior Year Findings and Questioned Costs
for Fiscal Year Ended June 30, 2014 ................................................................................................ 12
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
City of Azusa, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Azusa, California, (the City) as of and for the year ended June 30, 2015, and the related notes
to the financial statements, which collectively comprise the City’s basic financial statements, and have
issued our report thereon dated January 29, 2016.
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) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not
express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and
was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were
not identified. However, we identified certain deficiencies in internal control that we consider to be material
weaknesses and significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity’s
financial statements will not be prevented, or detected and corrected on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance. As
described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies
in internal control that we consider to be a material weakness. We consider the deficiencies described in
the accompanying schedule of findings and questioned costs as items 2015-001 through 2015-004 to be
material weaknesses and 2015-005 through 2015-007 to be significant deficiencies.
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 compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
203 N. Brea Blvd., Suite 203 Brea, CA 92821 Phone: 714.672.0022
An Association of Independent Accounting Firms
To the Honorable Mayor and Members of the City Council
City of Azusa, California
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 or other matters that are required to be
reported under Government Auditing Standards.
City’s Response to Findings
The City’s response to the findings identified in our audit was not subjected to the auditing procedures
applied in the audit of the financial statements and, accordingly, we express no opinion on it. Refer to
Appendix A for a copy of the City’s Corrective Action Plan for the year ended June 30, 2015
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control
or on compliance. This report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City’s internal control and compliance. Accordingly, this
communication is not suitable for any other purpose.
Brea, California
February 9, 2016
2
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND
ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES
OF FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133
To the Honorable Mayor and Members of the City Council
City of Azusa, California
Report on Compliance for Each Major Federal Program
We have audited the compliance with the types of compliance requirements described in the
OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the
major federal programs of the City of Azusa, California (the City), for the year ended June 30, 2015. 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 the requirements of laws, regulations, contracts, and
grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal programs
based on our audit of the types of compliance requirements 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; 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 on compliance for each major
federal program. However, our audit does not provide a legal determination of the City’s compliance.
Opinion on Each Major Federal Program
In our opinion, the City complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
year ended June 30, 2015.
203 N. Brea Blvd., Suite 203 Brea, CA 92821 Phone: 714.672.0022
An Association of Independent Accounting Firms
To the Honorable Mayor and Members of the City Council
City of Azusa, California
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 internal control over compliance with the types of
requirements that could have a direct and material effect on each major federal program to determine the
auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on
compliance for each major federal program 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. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
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 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.
Report on the Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
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 Azusa, California, as of and for
the year ended June 30, 2015, and the related notes to the financial statements, which collectively
comprise the City’s basic financial statements. We issued our report thereon dated January 29, 2016,
which contained a qualified opinion on those financial statements. 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 the purposes
of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
The information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or
to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the schedule of
expenditures of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
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To the Honorable Mayor and Members of the City Council
City of Azusa, California
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.
Brea, California
February 9, 2016
5
CITY OF AZUSA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2015
Catalog of Federal
Domestic Assistance Grantor's Federal
Federal Grantor/Pass-Through Grantor/Program Title (CFDA) Number Number Expenditures
U.S. Department of Housing and Urban Development
Passed through the County of Los Angeles:
Community Development Block Grant / Entitlement Grants 14.218 Contract# 70713 324,369$
Total U.S. Department of Housing
and Urban Development 324,369
U.S. Department of Justice
Passed through the City of Los Angeles:
Edward Byrnes Memorial Justice Assistance Grant 16.738 2014-DJ-BX-0277 11,673
Direct Program:
Bureau of Justice Assistance:
Equitable Sharing Program*16.922 CA0190500 497,929
Total U.S. Department of Justice 509,602
U.S. Department of Transportation
Passed through the State of California,
Department of Transportation:
Highway Planning and Construction*20.205 SRTSLNI-5112(015)92,162
Highway Planning and Construction*20.205 HPLUL-5112(013)505,078
Subtotal Highway Planning and Construction 597,240
Passed through the State of California,
Office of Traffic Safety:
State and Community Highway Safety 20.600 SC14 026 4,521
State and Community Highway Safety 20.600 PT1449 18,527
State and Community Highway Safety 20.600 SC13 026 28,657
Subtotal State and Community Highway Safety 51,705
Total U.S. Department of Transportation 648,945
Institute of Museum and Library Services
Passed through the State of California:
Grants to States 45.310 40-8418 50,699
Grants to States 45.310 40-8576 543
Total Institute of Museum and Library Services 51,242
U.S. Department of Education
Passed through the State of California,
Department of Education:
Adult Education - Basic Grants to States 84.002 V002A140005 33,818
Total U.S. Department of Education 33,818
U.S. Department of Health and Human Services
Passed through the County of Los Angeles:
Department of Community and Senior Services
Special Programs for Aging-Title III, Part C-Nutrition Services 93.045 AAA-ENP-1216-002 167,453
Total U.S. Department of Health and Human Services 167,453
Total Federal Expenditures 1,735,429$
*Major Program
Note A:Refer to Note 1 to the schedule of expenditures of federal awards for a description of
significant accounting policies used in preparing this schedule.
Note B:There were no federal awards expended in the form of noncash assistance and insurance in effect
during the year.
Note C:Total amount provided to subrecipients during the year was $19,996.
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CITY OF AZUSA
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR FISCAL YEAR ENDED JUNE 30, 2015
Note 1: Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of
Federal Awards
a. Scope of Presentation
The accompanying schedule presents only the expenditures incurred by the City of Azusa,
California, that are reimbursable under federal programs of federal financial assistance. For
the purposes of this schedule, federal awards include both federal financial assistance
received directly from a federal agency, as well as federal funds received indirectly by the
City from a non-federal agency or other organization. Only the portion of program
expenditures reimbursable with such federal funds is reported in the accompanying schedule.
Program expenditures in excess of the maximum federal reimbursement authorized or the
portion of the program expenditures that were funded with state, local or other non-federal
funds are excluded from the accompanying schedule.
b. Basis of Accounting
The expenditures included in the accompanying schedule were reported on the modified
accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are
incurred when the City becomes obligated for payment as a result of the receipt of the related
goods and services. Expenditures reported included any property or equipment acquisitions
incurred under the federal program.
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CITY OF AZUSA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR FISCAL YEAR ENDED JUNE 30, 2015
SECTION I - SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of auditors' report issued: Qualified Opinion
Internal control over financial reporting:
Significant deficiencies identified? X yes no
Material weaknesses identified? X yes none reported
Noncompliance material to financial
statements noted? yes X no
Federal Awards
Internal control over major programs:
Significant deficiencies identified? yes X no
Material weaknesses identified? yes X none reported
Type of auditors' report issued on compliance for major programs: Unmodified Opinion
Any audit findings disclosed that are required to be
reported in accordance with Section 510(a) of
Circular A-133? yes X no
Identification of major programs:
CFDA Number(s) Name of Federal Program or Cluster
16.922 Equitable Sharing Program
20.205 Highway Planning and Construction
Dollar threshold used to distinguish
between type A and type B program $300,000
Auditee qualified as low-risk auditee? yes X no
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CITY OF AZUSA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR FISCAL YEAR ENDED JUNE 30, 2015
SECTION II - FINANCIAL STATEMENT FINDINGS
Finding 2015-001: LA County Cities Excess Funding Grant
Material Weakness
In performing our audit procedures, it was noted that the LA County Cities Excess Funding Grant is a
cost-reimbursement grant, however, there have not been any reimbursement requests sent from the
Recreation Center. The Finance Department has not received the request nor the support to book the
entry. There have been expenditures of $263,359 incurred but no request for reimbursement has
been submitted nor accrued for in the financial statements.
Recommendation: We recommend the City develop and implement a comprehensive policy and
procedures to create list of grants to track all expenditures and revenues and account for each
appropriately in the general ledger, and timely submit reimbursement requests.
Management’s Response:
We agree that a reimbursement was not requested by the Recreation and Family Services
Department nor was an accrual recorded. The Los Angeles County Regional Parks and Open Space
District’s Cities and Specified Excess Funds Grant Program requires a Youth Employment Plan to be
adopted before the District reimburses any costs incurred by the Grantee. On December 7, 2015, the
City Council adopted Resolution 2015-C64 approving the adoption of a Youth Employment Plan. The
Recreation Department is compiling the respective costs for each of the four projects covered under
the Grant and will submit to the County. Copies of respective billings were not presented to Finance
thus an entry was not prepared. Finance staff will ensure that departments provide a reconciliation of
the grant program expenditures by year-end.
Finding 2015-002: Capital Asset Reconciliation
Material Weakness
In performing our audit procedures, it was noted that the City recorded additions in the amount of
$353,738 to the Water Fund Infrastructure and also double recorded these same additions as
Construction in progress in the capital assets reconciliation. Additionally, there was a correction to
capital asset classification from internal service funds to the City’s capital assets in the amount of
$992,955 shown as a restatement in the internal service fund.
Recommendation: We recommend the City reconcile general ledger fixed asset accounts to the
detailed records on a monthly basis.
Management’s Response:
We agree with the auditors that the general ledger fixed asset accounts need to be reconciled with the
detailed records on a monthly basis. However, due to staffing reduction, such reconciliation is done
semi-annually. With large number capital asset transactions from the Utility and Public Works
departments, maintaining the City’s fixed asset subledger is a huge task involving Bitech and multiple
spreadsheets. However, an analysis of the department staffing needs is being developed to determine
whether a reorganization of personnel responsibilities is required or if additional personnel resources
are needed.
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CITY OF AZUSA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR FISCAL YEAR ENDED JUNE 30, 2015
SECTION II - FINANCIAL STATEMENT FINDINGS (Continued)
Finding 2015-003: Long-Term Debt Reconciliation
Material Weakness
It was noted that the City did not record all necessary entries to record all payments on principal for
the 2003 PFA COP Bond, discounts/premiums or the unamortized loss on defeasance for the
Business-Type bonds.
Recommendation: We recommend the City review debt transactions and properly track and record in
the general ledger at least semi-annually.
Management’s Response:
We agree with the finding. The 2003 PFA COP bond principal and interest installment due
August 2014 was inadvertently paid by the Successor Agency directly to the Trustee. The City should
have paid the installment and the Successor Agency reimburses the City for this outflow. The City has
setup a schedule to define where and when payments are due to the respective parties. Entries to
record the defeasance of business-type bonds will be recorded timely into the City’s general ledger.
This includes the amortization of bond discounts and premiums associated with business-type bond
installment payments.
Finding 2015-004: GASB 68 Reports
Material Weakness
During the year-end audit fieldwork, it was noted that the City had not ordered the proper valuation
reports for GASB 68 for PERS or PARS net pension liability.
Recommendation: We recommend the City staff attend training for new accounting pronouncements
that affect the City reporting to be more properly prepared for new guidance implementation.
Management’s Response:
We agree with the finding that the reports were not ordered in a timely manner. The Finance
Department will provide training for appropriate staff to determine what new pronouncements will
affect City reporting. We will utilize resources such as the Government Finance Officers Association
to be better informed.
Finding 2015-005: Cash and Investments Reconciliation
Significant Deficiency
In performing our audit procedures, it was noted that the City’s cash and investments were not
properly balanced to the general ledger in a timely manner. The City made adjustments of $109,683
in order to properly reconcile. The design of internal control should be improved upon to include a
formalized procedure to properly balance and reconcile all of the City’s cash and investments as
reported in the City’s financial statements.
Recommendation: We recommend that the City ensure all items included on the bank statements
also be included in the cash balance and maintain the appropriate oversight of the bank reconciliation
and journal entry processes. While the city may have certain accounts reconciled, the reconciliation
should include all accounts.
Management’s Response:
We agree with the finding. The entries made were due to market value adjustments and not due to
10
CITY OF AZUSA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR FISCAL YEAR ENDED JUNE 30, 2015
SECTION II - FINANCIAL STATEMENT FINDINGS (Continued)
unrecognized cash and investments. Because of staff reductions, only the City’s general account is
reconciled monthly. Transactions on all other trustee accounts are recorded quarterly or
semi-annually. In years past with adequate staffing, we have been able to reconcile monthly.
Nevertheless, an analysis of the department staffing needs is being developed to determine whether a
reorganization of personnel responsibilities is required or if additional personnel resources are
needed.
Finding 2015-006: Journal Entry Posting
Significant Deficiency
During our internal control review, it was noted that the computer system does not prohibit a preparer
to be different from the employee who posts or reviews the entry. Management has the capability of
preparing and posting journal entries to override existing transactions. Journal entries is an area most
susceptible to management override of controls and manipulation of financial measures.
Recommendation: We recommend the design of internal control be improved upon to include a
formalized segregation of duties and correlating computer controls.
Management’s Response:
We agree with the finding. We have been working with the Information Technology department to
restrict the same staff from preparing and posting a journal entry. The duties have been segregated
so that staff is not able of prepare and post transactions.
Finding 2015-007: Insurance Claims and Judgment
Significant Deficiency
In performing our audit procedures, there were adjusting entries recorded by the auditing staff to
report account balances accurately for the insurance liability. Additionally, entries were not posted to
adjust the liability from the prior year so the general ledger was adjusted materially to reconcile the
insurance liability.
Recommendation: We recommend quarterly and annually reconciliations of complex accounting
areas such as insurance reserves to the supporting documentation and general ledger prior to the
audit.
Management’s Response:
We agree with the finding. The Finance department will work quarterly with the Human Resources
department to account for the insurance liability to ensure timely entries.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters noted.
11
CITY OF AZUSA
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
FOR FISCAL YEAR ENDED JUNE 30, 2014
SECTION II - FINANCIAL STATEMENT FINDINGS
Finding 2014-001: Excessive Post Audit Entries
Material Weakness
In the prior year it was brought to your attention that many account balances required extensive
reconciliation to finalize financial information. During our audit in the current year this weakness still
existed. In performing our audit procedures, there were adjusting entries recorded by the auditing
staff to report account balances accurately. Material journal entries were recommended and
adjustments were made relating to capitalized construction projects, insurance liability, restatements,
and debt in the Successor Agency.
Recommendation: We recommend quarterly and annually reconciliations of complex accounting
areas, such as capital assets, insurance reserves and debt reporting to the supporting documentation
and general ledger prior to the audit.
Management’s Response:
Reassignment of duties and responsibilities have been revised to provide efficiency. Management will
continue to closely monitor that entries are recorded timely.
2015 Update:
There were several adjustments made in specific audit areas as of and for the year ended June 30,
2015. The City is in agreement and will be working quarterly to reconcile accounting activities noted
as findings.
Finding 2014-002: Cash and Investments
Material Weakness
In the prior year it was brought to your attention that cash required extensive reconciliation to finalize
financial information. During our audit in the current year, this weakness still existed. During our test
work it was noted that the City’s cash and investment were not properly balanced to the general
ledger in a timely manner. The design of internal control should be improved upon to include a
formalized procedure to properly balance and reconcile all of the City’s cash and investments as
reported in the City’s financial statements.
Recommendation: We recommend that the City ensure all items included on the bank statements
also be included in the cash balance and maintain the appropriate oversight of the bank reconciliation
and journal entry processes. While the city may have certain accounts reconciled, the reconciliation
should include all accounts.
Management’s Response:
Internal control procedures are in the process of being developed formally which should contribute to
timely reconciliations. In addition, we have new staff who are being trained to assist in the
reconciliations.
2015 Update:
The finding was repeated for the fiscal year ended June 30, 2015 as Finding 2015-005 significant
deficiency. The City is in agreement and an analysis of the department staffing needs is being
developed to determine whether a reorganization of personnel responsibilities is required or if
additional personnel resources are needed.
12
CITY OF AZUSA
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR FISCAL YEAR ENDED JUNE 30, 2014
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding 2014-003
Federal Program Title: Equitable Sharing Program
Federal Catalog Number: 16.922
Federal Agency: U.S. Department of Justice
Pass-Through Entity: N/A
Federal Award Number and Year: CA0190500; 2013
Name of Department: Police Department
Category of Finding: Equipment and Real Property Management
Criteria
The March 2014 Office of Management and Budget (OMB) Circular A-133 Compliance Supplement requires
that physical inventory be taken of property and equipment acquired under Federal awards at least every
two (2) years. Equipment obtained under federal awards are required to be added to the property records of
the recipient including the following information: description, source, who holds title, acquisition date and cost,
percentage of federal participation in the cost, location, condition, disposition data, the date of disposal, and
method used to determine current fair market value.
Condition
Instance of Non-Compliance - The Police Department is required to take physical inventory of federal award
purchases and ensure any differences between physical inventory and equipment records are resolved.
No physical inventory has been taken for equipment purchases of federal asset seizure funds.
Effect
Failure to not take physical inventory of property and equipment obtained under federal awards can result in
federal agency disallowing equipment purchases and noncompliance with agreement. Not properly including
all purchased and donated equipment and real property including all the required information in the property
records can result in the noncompliance with federal regulations regarding federal property and equipment.
Questioned Costs
We identified no questioned costs in our tests of compliance with this requirement.
Context
As a result of our testwork, it was noted that no physical inventory has taken place for equipment purchases of
federal asset seizure funds.
Recommendation
We recommend that the Police Department adhere to equipment and real property management policies and
procedures set by Department of Justice and take physical inventory of assets every 2 years.
Management Response and Corrective Action
1. Person responsible: Ericka Ceccia, Administrative Analyst; Police Department
2. Corrective action plan: Physical Inventory purchased with Federal Asset Seizure Funds will be
conducted every 2 years.
3. Anticipated implementation date: March 25, 2015 (Immediately after learning that it was most likely
required by DOJ; We began taking Physical Inventory) Confirmed by DOJ 3/27/15
13
CITY OF AZUSA
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR FISCAL YEAR ENDED JUNE 30, 2014
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued)
2015 Update
The City took inventory March 2015 and has maintained appropriate records. This is no longer a finding
for the audit year ended June 30, 2015.
Finding 2014-004
Federal Program Title: Equitable Sharing Program
Federal Catalog Number: 16.922
Federal Agency: U.S. Department of Justice
Pass-Through Entity: N/A
Federal Award Number and Year: CA0190500; 2013
Name of Department: Police Department
Category of Finding: Reporting
Criteria
The Equitable Sharing Agreement between the City of Azusa and U.S. Department of Justice states that the
Equitable Sharing Certification report “must be submitted to aca.submit@usdoj.gov within 60 days of the end
of the [City’s] fiscal year. This Document must be submitted electronically with the Affidavit/Signature
submitted by fax. This will constitute submission to the Department of Justice and the Department of
Treasury.”
Condition
Instance of Non-Compliance - The Police Department is required to submit the Equitable Sharing Certification
report within 60 days after the City’s fiscal year end. During our review, it was noted that the Equitable Sharing
Certification report was submitted after 60 days of the fiscal year end June 30, 2014. The report was submitted
December 22, 2014, 115 days after the deadline.
Effect
Failure to submit the Equitable Sharing Certification report within 60 days of fiscal year end can result in
federal agency disallowing participation and funds and/or noncompliance with agreement.
Questioned Costs
We identified no questioned costs in our tests of compliance with this requirement.
Context
The City of Azusa’s Police Department failed to submit the Equitable Sharing Certification report timely within
60 days of year end as stipulated in the grant agreement.
Recommendation
We recommend that the Police Department adhere to grant agreement reporting submission deadline set by
Department of Justice and submit the Equitable Sharing Certification report timely within 60 days after year
end.
Management Response and Corrective Action
1. Person responsible: Ericka Ceccia, Administrative Analyst; Police Department
2. Corrective action plan: Future Reports to be submitted within 60 days of fiscal year end date or written
proof of additional time granted by DOJ staff to submit report (per "Guide to Equitable Sharing"
pg. 29) (Unfortunately, additional time to comply was granted verbally for fiscal year end 2014, but no
proof could be provided)
3. Anticipated implementation date: March 25, 2015
14
CITY OF AZUSA
SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR FISCAL YEAR ENDED JUNE 30, 2014
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued)
2015 Update
The City has complied with reporting for the Equitable Sharing Program and has filed in a timely manner for
the year ended June 30, 2015.
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