Loading...
HomeMy WebLinkAbout2011 Special Purpose Audit Reports - MMKR CITY OF BROOKLYN CENTER HENNEPIN COUNTY, MINNESOTA Special Purpose Audit Reports on Single Audit, Internal Controls,and Compliance With Laws and Regulations Year Ended December 31, 2011 CITY OF BROOKLYN CENTER HENNEPIN COUNTY,MINNESOTA Table of Contents Page Independent Auditor's Report on Schedule of Expenditures of Federal Awards 1 Schedule of Expenditures of Federal Awards 2 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 3-4 Independent Auditor's 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 5-6 Independent Auditor's Report on Compliance With Minnesota State Laws and Regulations 7 Schedule of Findings and Questioned Costs 8-11 PRINCIPALS Thomas M_Montague,CPA MMKR Thomas A. Karnowski,CPA Paul A.Radosevich,CPA William J.Lauer,CPA C E R T IF I E D PUBLIC James H.Eichren,CPA A C C O lJ N I' A N T S Aaron J.Nielsen,CPA Victoria L. Holinka,CPA INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS City Council and Management City of Brooklyn Center,Minnesota 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 Brooklyn Center(the City) as of and for the year ended December 31, 2011, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 1, 2012. These basic financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these basic financial statements based on our audit. 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 Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A-133,Audits of States, Local Governments, and Nonprofit 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 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 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 information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. /1/�w(�oyr /✓(ont'a.q�a.r I�arnowslG;r Ka.�psQJ!!�(�t � Cp � P/-�_ May 1, 2012 ��JJ -1- Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 5353 Wayr.2ta B0UICV2rd • Suitt 410• Minnripolis, MN 55416•Tclephunc.952-545.0424 -Tcicfax:952.545.0569•www.mmkr.com CITY OF BROOKLYN CENTER Schedule of Expenditures of Federal Awards Year Ended December 31,2011 Federal Federal Grantor/Pass-Through Grantor/Program Title CFDA No. Federal Expenditures U.S.Department of Housing and Urban Development Passed through Hennepin County Community Development Block Grants—Entitlement Grants 14.218 $ 383,820 Community Development Block Grants—State's Program and Non-Entitlement Grants in Hawaii 14.228 220,483 U.S. Department of Justice Direct program Bulletproof Vest Partnership Program 16.607 2,625 Public Safety Partnership and Community Policing Grant cluster ARRA—Public Safety Partnership and Community Policing Grants 16.710 74,245 Public Safety Partnership and Community Policing Grants 16.710 35,796 Total Public Safety Partnership and Community Policing Grant cluster 110,041 Passed through Hennepin County Edward Byrne Memorial Justice Assistance Grant cluster Edward Byrne Memorial Justice Assistance Grant Program 16.738 30,765 ARRA—Edward Byrne Memorial Justice Assistance Grant Program— Grants to Units of Local Government 16.804 67,830 Total Edward Byrne Memorial Justice Assistance Grant cluster 98,595 U.S.Department of Transportation Passed through the Minnesota Department of Public Safety State and Community Highway Safety 20.600 4,486 Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 5,186 U.S.Department of Energy Passed through Minnesota Department of Commerce ARRA—Energy Efficiency and Conservation Block Grant Program 81.128 54,320 Total federal awards $ 879,556 Note 1: The Schedule of Expenditures of Federal Awards is prepared on the accrual basis of accounting in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations. Therefore, the amounts presented in this schedule may differ from the amounts presented in, or used in the preparation of,the City's basic financial statements. Note 2: All pass-through entities listed above use the same CFDA numbers as the federal grantors to identify these grants, and have not assigned any additional identifying numbers. Note 3: The City provided federal awards to subrecipients as follows: Federal Amount Program Title CFDA No. Provided Public Safety Partnership and Community Policing Grants 16.710 $ 35,796 -2- PRINCIPALS Thomas M_Montague,CPA MMKR `1"homas A. Karnowski,CPA Paul A.Radosevich,CPA William J.Lauer,CPA C E R T IF I E P PUBLIC James H.Eichren,CPA ACCOUNTANTS Aaron J.Nielsen,CPA Victoria L. Holinka,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 City Council and Management City of Brooklyn Center,Minnesota 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 Brooklyn Center(the City) as of and for the year ended December 31, 2011, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 1, 2012. 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 Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the City is responsible for establishing and maintaining effective 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 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 prevented, or detected and corrected,on a timely basis. Our consideration of internal control over financial reporting 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 financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. (continued) -3- Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 5353 Wayr.2ta B0U1CV2rd • Suitt 410• Minnripolis, MN 55416•Tclephunc.952-545.0424 -Tcicfax:952.545.0569•www.mmkr.com Compliance and Other Matters As part of obtaining reasonable assurance about whether the City'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 disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City in a separate letter dated May 1, 2012. This report is intended solely for the information and use of management, City Council, others within the City, 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. /4190(04, /'1 C)A t Q& kar/�o�s kit �a�aS Q,��r�•ei, Co,,�i4. J May 1, 2012 -4- PRINCIPALS Thomas M_Montague,CPA MMKR Thomas A. Karnowski,CPA Paul A.Radosevich,CPA William J.Lauer,CPA C E R T IF I E D PUBLIC James H.Eichren,CPA A C C O U N I' A N T S Aaron J.Nielsen,CPA Victoria L. Holinka,CPA INDEPENDENT AUDITOR'S 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 City Council and Management City of Brooklyn Center,Minnesota Compliance We have audited the City of Brooklyn Center'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 its major federal programs for the year ended December 31, 2011. The City's major federal programs are identified in the summary of audit 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 is 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 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 Nonprofit 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. As described in items 2011-1 and 2011-2 in the accompanying Schedule of Findings and Questioned Costs, the City did not comply with requirements regarding cash management and reporting that are applicable to its Public Safety Partnership and Community Policing Grants. Compliance with such requirements is necessary, in our opinion, for the City to comply with the requirements applicable to those programs. In our opinion, except for the noncompliance described in the preceding paragraph, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2011. (continued) -5- Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 5353 Wayr.2ta B0UICV2rd • Suitt 410• Minnripoiis, MN 55416•Tclephunc.952-545.0424 -Tcicfax:952.545.0569•www.mmkr.com Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with 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 requirements that could have a direct and material effect on a major federal program 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 significant deficiencies or material weaknesses and, therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified two deficiencies in internal control over compliance that we consider to be significant deficiencies. 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. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items 2011-1 and 2011-2 to be significant deficiencies. The City's responses to the findings in our audit are described in the accompanying Schedule of Findings and Questioned Costs. We did not audit the City's responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the City Council, management of the City, others within the City, 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. May 1, 2012 -6- PRINCIPALS Thomas M_Montague,CPA MMKR Thomas A. Karnowski,CPA Paul A.Radosevich,CPA William J.Lauer,CPA C E R T IF I E D PUBLIC James H.Eichren,CPA A C C O lJ N I' A N T S Aaron J.Nielsen,CPA Victoria L. Holinka,CPA INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH MINNESOTA STATE LAWS AND REGULATIONS City Council and Management City of Brooklyn Center, Minnesota We have audited the basic financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Brooklyn Center(the City) as of and for the year ended December 31, 2011, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 1,2012. We conducted our audit 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 the provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the Office of the State Auditor pursuant to Minnesota Statute § 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our study included all of the listed categories. The results of our tests indicate that, for the items tested, the City complied with the material terms and conditions of applicable legal provisions, except as noted in the Schedule of Findings and Questioned Costs. The City's responses to the findings in our audit are described in the accompanying Schedule of Findings and Questioned Costs. We did not audit the City's responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of management, the City Council, others within the City, and the state of Minnesota and is not intended to be, and should not be, used by anyone other than those specified parties. /✓f aMoy1 /�Prl vQ� iIO�SIC.% ICQdoSP.c/�rc tip �/� May 1, 2012 J -7- Malloy, Montague, Karnowski, Radosevich, & Co., P.A. 5353 Wayr.2ta B0UICV2rd • Suitt 410• Minnripoiis, MN 55416•Tclephunc.952-545.0424 -Tcicfax:952.545.0569•www.mmkr.com CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs Year Ended December 31,2011 A. SUMMARY OF AUDIT RESULTS This summary is formatted to provide federal granting agencies and pass-through agencies answers to specific questions regarding the audit of federal awards. Financial Statements What type of auditor's report is issued? X Unqualified Qualified Adverse Disclaimer Internal control over financial reporting: Material weakness(es)identified? Yes X No Significant deficiencies identified? Yes X None reported Noncompliance material to the financial statements noted? Yes X No Federal Awards Internal controls over major federal award programs: Material weakness(es)identified? Yes X No Significant deficiencies identified? X Yes None reported Major federal award program compliance: What type of auditor's report is issued? Unqualified X Qualified Adverse Disclaimer Any audit findings disclosed that are required to be reported in accordance with Section 510(a)of OMB Circular A-133? X Yes No Programs tested as major programs: Program or Cluster CFDA No. U.S.Department of Housing and Urban Development Community Development Block Grants—Entitlement Grants 14.218 U.S.Department of Justice Public Safety Partnership and Community Policing Grant cluster consisting of: ARRA—Public Safety Partnership and Community Policing Grants 16.710 Public Safety Partnership and Community Policing Grants 16.710 Threshold for distinguishing between type A and B programs: $ 300,000 Does the auditee qualify as a low-risk auditee? Yes X No -8- CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2011 B. FINDINGS—FINANCIAL STATEMENT AUDIT None. C. FINDINGS—MAJOR FEDERAL AWARD PROGRAMS AUDIT SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND REPORTABLE INSTANCES OF NONCOMPLIANCE-PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANT CLUSTER(PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS- CFDA No. 16.710) 2011-1 Internal Control and Compliance With Cash Management Requirements Criteria—Management is responsible for establishing and maintaining effective internal control over compliance with requirements applicable to federal programs, including cash management requirements. Condition—During our audit, we noted that the City of Brooklyn Center (the City) did not have sufficient controls in place to assure compliance with this requirement for the major program noted above, which resulted in noncompliance with a type of federal compliance requirement that could have a direct and material effect on this program. As noted in the grant agreement,the City can receive cash advances up to 10 days prior to the funds being disbursed. During our audit testing, it was noted that the City received advances but did not properly disburse these funds within the 10-day period allowed. Questioned Costs—Not applicable. Context—This is a current year finding. Cause—This was an oversight by city personnel. Effect—Noncompliance with the cash management requirements could be viewed as a violation of the award agreement. Recommendation — We recommend that the City review their procedures relating to federal grants to ensure future compliance with the grant requirements. Management's Response — There is no disagreement with the audit finding. The City will review their procedures relating to federal grants and verify that funds are disbursed prior to requesting reimbursement or within the allowable period as noted in the grant agreement. -9- CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs(continued) Year Ended December 31,2011 C. FINDINGS—MAJOR FEDERAL AWARD PROGRAMS AUDIT(CONTINUED) SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND REPORTABLE INSTANCES OF NONCOMPLIANCE-PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANT CLUSTER(PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS- CFDA No. 16.710) 2011-2 Internal Control and Compliance With Federal Reporting Requirements Criteria—Management is responsible for establishing and maintaining effective internal control over compliance with requirements applicable to federal programs, including reporting. Condition —During our audit, we noted that the City did not have sufficient controls in place to assure compliance with this requirement for the major program noted above, which resulted in noncompliance with a type of federal compliance requirement that could have a direct and material effect on this program. The City did not properly submit three of the four required financial reports for this program. Questioned Costs—Not applicable. Context—This is a current year finding. Cause—This was an oversight by city personnel. Effect — Noncompliance with the reporting requirements could be viewed as a violation of the award agreement. Recommendation — We recommend that the City review their procedures relating to federal grants to ensure future compliance with the grant requirements. Management's Response — There is no disagreement with the audit finding. The City will review their procedures relating to federal grants and verify that the quarterly financial reporting is being completed as noted in the grant agreement. D. FINDINGS—MINNESOTA LEGAL COMPLIANCE AUDIT 2011-3 CLAIMS AND DISBURSEMENTS Criteria—Minnesota Statute § 471.425, Subd. 2. Condition — Minnesota Statutes require cities to pay each vendor obligation according to the terms of each contract or within 35 days after the receipt of the goods or services or the invoice for the goods or services. If such obligations are not paid within the appropriate time period, the City must pay interest on the unpaid obligations at the rate of 1.5 percent per month or part of a month. For one disbursement selected for testing, the City did not pay the obligation within the required time period, and did not pay interest on the unpaid obligation. -10- CITY OF BROOKLYN CENTER Schedule of Findings and Questioned Costs(continued) Year Ended December 31,2011 D. FINDINGS—MINNESOTA LEGAL COMPLIANCE AUDIT (CONTINUED) 2011-3 CLAIMS AND DISBURSEMENTS(CONTINUED) Context—One out of twenty-five disbursements tested were not in compliance. This is a current year finding. Cause—This was an oversight by city personnel. Effect— One payment made to a vendor was not paid within the timeframe as required by state statute, and the vendor was not paid interest to which they were entitled. Recommendation — We recommend that the City review claims and disbursement payment procedures in place to ensure future compliance with this statute. Management's Response — There is no disagreement with the audit finding. The City will review claims and disbursement payment procedures to ensure future compliance with this statute. E. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS—MAJOR FEDERAL AWARD PROGRAMS AUDIT None. -11-