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2014 Single Audit Report CITY OF WICHITA FALLS, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 CITY OF WICHITA FALLS, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 TABLE OF CONTENTS Page Independent Auditor's Report on Compliance For Each Major Program And on Internal Control Over Compliance Required By OMB Circular A-133 and the State of Texas Single Audit Circular, and Schedule of Expenditures of Federal and State Awards 1-2 Schedule of Expenditures of Federal and State Awards 3-5 Notes to Schedule of Expenditures of Federal and State Awards 6 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 7-8 Schedule of Findings and Questioned Costs 9 Corrective Action Plan 10 Summary Schedule of Prior Audit Findings 11 lis EDGIN, PARKMAN, FLEMING & FLEMING, PC CERTIFIED PUBLIC ACCOUNTANTS WI MICHAEL D.EDGIN,CPA 4110 KELL BLVD.,SECOND FLOOR • P.O. Box 750 DAVID L.PARKMAN,CPA,CFE WICHITA FALLS,TEXAS 76307-0750 A.PAUL FLEMING,CPA J PH.(940)766-5550 • Fax(940)766-5778 J.MARK FLEMING,CPA Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by OMB Circular A-133 and the State of Texas Single Audit Circular, and Schedule of Expenditures of Federal and State Awards The Honorable Mayor and Members of the City Council City of Wichita Falls, Texas Report on Compliance for Each Major Program We have audited the City of Wichita Falls, Texas' compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement and the State of Texas Single Audit Circular that could have a direct and material effect on each of the City's major federal and state programs for the year ended September 30, 2014. The City of Wichita Falls, Texas' major federal and state 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 and state programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the City of Wichita Falls, Texas' major federal and state 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 for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the State of Texas Single Audit Circular. Those standards, OMB Circular A-133, and the State of Texas Single Audit Circular 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 or state program occurred. An audit includes examining, on a test basis, evidence about the City of Wichita Falls, Texas' 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 and state program. However, our audit does not provide a legal determination on the City of Wichita Falls, Texas' compliance. Opinion on Each Major Federal and State Program In our opinion, the City of Wichita Falls, Texas 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 and state programs for the year ended September 30, 2014. 1 Report on Internal Control Over Compliance Management of the City of Wichita Falls, Texas 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, we considered the City of Wichita Falls, Texas internal control over compliance with the types of requirements that could have a direct and material effect on each major federal and state 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 and state program and to test and report on internal control over compliance in accordance with OMB Circular A-133 and the State of Texas Single Audit Circular, 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 Wichita Falls, Texas' 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 or state 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 or state 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 or state 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 considered to be material weaknesses. However, material weaknesses may exist that may not have been identified. 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 and the State of Texas Single Audit Circular. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal and State Awards We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Wichita Falls, Texas as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise the City of Wichita Falls, Texas' basic financial statements. We have issued our report thereon dated March 23, 2015, which contained unmodified opinions 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 and state awards is presented for purposes of additional analysis as required by OMB Circular A-133 and the State of Texas Single Audit Circular, 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 financial 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 financial statements or to the 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 and state awards is fairly stated in all material respects in relation to the financial statements as a whole. EDGIN, PARKMAN, FLEMING & FLEMING, PC Wichita Falls, Texas March 23, 2015 2 CITY OF WICHITA FALLS, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Amount Federal Expenditures Relating to Federal Grantor/Pass-Through Contract CFDA and Pass-Through Grantor/Program Title Number Number Indirect Costs to Subrecipients FEDERAL AWARDS: U.S.Department of Agriculture Passed Through Texas Department of State Health Services: Special Supplemental Food Program for Women, Infants and Children 2013-042603 10.557 $ 801,529 $ - Total U.S Department of Agriculture 801,529 - U.S.Department of Defense Passed Through Office of Economic Adjustment: SAFB Joint Land Use Study HQ00051210023 12.610 74,293 - Total U.S.Department of Defense 74,293 - U.S.Department of Housing and Urban Development Direct Programs: Community Development Block Grant/ Entitlement Grant B-12-MC-48-0030 14.218 637,489 203,356 Community Development Block Grant/ Entitlement Grant B-13-MC-48-0030 14.218 536,714 - Section 8 Rental Voucher/Certificate Program TX498V0 14 871 3,445,970 HOME Investment Partnership Program M-09-MC-48-0214 14.239 1,137 HOME Investment Partnership Program M-10-MC-48-0214 14.239 42,900 HOME Investment Partnership Program M-11-MC-48-0214 14.239 226,159 - HOME Investment Partnership Program M-12-MC-48-0214 14.239 128.915 Total Direct Programs 5,019,284 203,356 Passed Through Tarrant County: Housing Opportunity for Persons with AIDS 2013-041148-010 14.241 1,308 Total Tarrant County 1,308 - Total U.S.Department of Housing and Urban Development 5,020,592 203,356 U.S. Department of Justice Direct Programs: Bureau of Justice Assistance: Local Law Enforcement Block Grant 2011-DJ-BX-2686 16.592 25,206 - Local Law Enforcement Block Grant 2013-DJ-BX-0670 16.592 36,518 Total Bureau of Justice Assistance 61.724 Total U S.Department of Justice 61.724 - 3 CITY OF WICHITA FALLS, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS (CONT'D.) FOR THE YEAR ENDED SEPTEMBER 30, 2014 Amount Federal Expenditures Relating to Federal Grantor/Pass-Through Contract CFDA and Pass-Through Grantor/Program Title Number Number Indirect Costs to Subrecipients FEDERAL AWARDS(CONT'D) U.S.Department of Transportation Direct Programs: Federal Aviation Administration: Airport Improvement Grant 3-48-0227-010-2012 20.106 1,491,231 Airport Improvement Grant 3-48-0227-011-2013 20.106 4,286,279 Airport Improvement Grant 3-48-0227-012-2014 20.106 3,681,765 Airport Improvement Grant 3-48-0227-013-2014 20.106 1,171,203 - Total Federal Aviation Administration 10,630,478 - Direct Programs: Federal Transit Administration: Federal Transit Capital and Operating Assistance Formula Grants N/A 20.507 1,492,163 - Total Federal Transit Administration 1,492,163 - Passed Through Texas Department of Transportation: Highway Planning and Construction PL0012(28) 20.205 261,643 - Total Texas Department of Transportation 261,643 - Total U.S.Department of Transportation 12,384,284 U.S.Department of Health and Human Services Passed Through Texas Department of State Health Services Tuberculosis Prevention and Control 2014-001404-00 93.116 29,135 - Tuberculosis Prevention and Control 2015-001404-00 93 116 3,028 - Healthy Community Project 2014-001395-00 93.531 273,737 - HIV Prevention Activities-CTRPN 2014-001340-00 93.940 83,378 HIV Prevention Activities-CTRPN 2015-001340-00 93.940 27,069 - Preventive Health and Health Services Grant- Community and Rural Health 2014-001087-00 93.991 127,387 Preventive Health and Health Services Grant- Community and Rural Health 2015-001087-00 93.991 50,563 - Total Texas Department of State Health Services 594,297 - Passed Through Tarrant County: HIV Formula Grant-Care Consortium-Ryan White III H76HA00123-22-00 93.917 19,408 - HIV Formula Grant-Care Consortium-Ryan White II 2014-001453-00 93.918 33,509 - Total Tarrant County 52,917 - Total U.S.Department of Health and Human Services 647,214 - 4 CITY OF WICHITA FALLS, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS (CONT'D.) FOR THE YEAR ENDED SEPTEMBER 30, 2014 Amount Federal Expenditures Relating to Federal Grantor/Pass-Through Contract CFDA and Pass-Through Grantor/Program Title Number Number Indirect Costs to Subrecipients FEDERAL AWARDS(CONT'D.): U.S.Department of Homeland Security Passed Through Texas Department of Public Safety- Division of Emergency Management: Emergency Management Assistance Fire Grant 83.534 97.042 37,205 - Homeland Security SHSP LETPA-2SHSP031 97.073 4,546 Total U.S.Department of Homeland Security 41.751 Total Expenditures of Federal Awards 19,031,387 203,356 STATE AWARDS: Texas Department of State Health Services Direct Programs: Tuberculosis-Prevention and Control 2014-001442-00 N/A 71,060 - Tuberculosis-Prevention and Control 2015-001442-00 N/A 13,724 - Immunizations-Epidemiology 2014-000035-00 N/A 198,713 - Immunizations-Epidemiology 2015-000035-00 N/A 23,694 Bioterrorism 2014-001104-00 N/A 90,506 - Bioterrorism 2015-001104-00 N/A 26,158 - Bioterrorism Discretionary Project 2014-045567 N/A 7,803 - Tobacco Prevention and Control 2014-045345 N/A 144,031 - Tobacco Prevention and Control 2015-046681 N/A 83.176 - Total Direct Programs 658,865 - Passed Through Tarrant County: HIV-Health and Social Services 2014-001453-00 N/A 15,430 - Total Tarrant County 15,430 - Total Texas Department of State Health Services 674,295 - Texas Department of Transportation Direct Programs: Transit Planning,Capital and Operating Formula Grant 512XXF7147 N/A 338,171 - RAMP Grant-Municipal Airport M1403WFAL N/A 46,994 - RAMP Grant-Kickapoo Airport M1403KICK N/A 49,602 - Police Traffic Enforcement 2014-WichitaP-S-RFR N/A 27,489 Total Texas Department of Transportation 462,256 - Total Expenditures of State Awards 1,136,551 - Total Expenditures of Federal and State Awards $ 20,167,938 $ 203,356 5 CITY OF WICHITA FALLS, TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Note 1 - GENERAL The accompanying Schedule of Expenditures of Federal and State Awards presents the activity of all federal and state awards of the City of Wichita Falls, Texas (City). The City reporting entity is defined in Note 1 to the City's financial statements. All financial assistance received directly from federal or state agencies, as well as federal or state financial assistance passed through other government agencies, is included on these schedules. Note 2 - BASIS OF ACCOUNTING The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. The Governmental Fund types are accounted for using a current financial resources measurement focus. Most federal and state grant funds were accounted for in the Special Revenue Funds, a component of the Governmental Fund types. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current position. The modified accrual basis of accounting is used for the Governmental Fund types. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e., both measurable and available, and expenditures in the accounting period in which the fund liability is incurred, if measurable. Federal and state grant funds are ordinarily considered to be earned to the extent of expenditures made under the provisions of the grant and, accordingly, when such funds are received, they are recorded as deferred revenues until earned. Note 3 - CONTINGENCIES The City participates in numerous federal and state programs, on both a direct and state pass- through basis, as well as on a service-provider basis. Principal among these are Community Development Block Grants, Section 8 Housing Assistance, the Home Investment Partnership Agreement Program, and the Airport Improvement Grant. In connection with these programs, the City is required to comply with specific terms and agreements as well as applicable federal and state laws and regulations. Such compliance is subject to review and audit by the grantors and their representatives. Since such programs are subject to audit or review, the possibility of disallowed expenditures exists. In the event of any disallowance of claimed expenditures, the City expects the resulting liability to be immaterial. 6 iii a 1 EDGIN, PARKMAN, FLEMING & FLEMING, PC CERTIFIED PUBLIC ACCOUNTANTS oji MICHAEL D. EDGIN,CPA 4110 KELL BLVD., SECOND FLOOR • P.O. Box 750 DAVID L.PARKMAN,CPA,CFE WICHITA FALLS,TEXAS 76307 0750 A.PAUL FLEMING,CPA PH.(940)766-5550 • FAX(940)766-5778 J.MARK FLEMING,CPA 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 The Honorable Mayor and Members of the City Council City of Wichita Falls, Texas 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Wichita Falls, Texas as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise the City of Wichita Falls, Texas' basic financial statements, and have issued our report thereon dated March 23, 2015. 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. 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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be provided, 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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 7 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Wichita Falls, Texas' 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 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. 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 of Wichita Falls, Texas' 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 of Wichita Falls, Texas' internal control and compliance. Accordingly, this communication is not suitable for any other purpose. EDGIN, PARKMAN, FLEMING & FLEMING, PC Wichita Falls, Texas March 23, 2015 8 CITY OF WICHITA FALLS, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2014 A. Summary of Auditors Results An unmodified opinion was issued on the financial statements. The audit disclosed no significant deficiencies relating to the audit of the financial statements in the 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 audit disclosed no noncompliance that is material to the financial statements. The audit disclosed no significant deficiencies relating to the audit of the major federal and state award programs in the Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 and the State of Texas Single Audit Circular. An unmodified opinion was issued on compliance for major programs. The audit disclosed no audit findings that are required to be reported in this schedule under OMB Circular A-133. Major programs are as follows: Federal: 10.557 Women, Infants and Children 20.106 Airport Improvement Grant 20.500/20.507 Federal Transit Cluster State: Immunizations - Epidemiology Transit Planning, Capital and Operating Formula Grant RAMP Grant The threshold used to distinguish between Type A and Type B programs was $570,942 for federal programs and $300,000 for state programs. The City was not classified as a low-risk auditee in the context of OMB Circular A-133 or the State of Texas Single Audit Circular. B. Findings Relating to the Financial Statements which are Required to be Reported in Accordance with Generally Accepted Government Auditing Standards None C. Findings and Questioned Costs for Federal and State Awards None 9 CITY OF WICHITA FALLS, TEXAS CORRECTIVE ACTION PLAN FOR THE YEAR ENDED SEPTEMBER 30, 2014 There were no findings in the current year. 10 CITY OF WICHITA FALLS, TEXAS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED SEPTEMBER 30, 2014 Findings 2013-001 /2013-002 Status In the prior year there were findings for the City failing to correctly Implemented report grant expenditures related to the Airport Improvement Grant. The City emphasized proper grant reporting to all departments during the year. This communication was successful and no such errors were noted in the current year. 11