HomeMy WebLinkAbout2012 Special Purpose Report 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 31,2012
CITY OF BROOKLYN CENTER
HENNEPIN COUNTY, MINNESOTA
Table of Contents
Page
Independent Auditor's Report on the Schedule of Expenditures of Federal Awards
Required by OMB Circular A-133 1-2
Schedule of Expenditures of Federal Awards 3
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 4-5
Independent Auditor's Report on Compliance for Each Major Federal Program
and Report on Internal Control Over Compliance Required by OMB Circular A-133 6-7
Independent Auditor's Report on Minnesota Legal Compliance 8
Schedule of Findings and Questioned Costs 9-11
PRINCIPALS
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INDEPENDENT AUDITOR'S REPORT ON THE SCHEDULE OF EXPENDITURES
OF FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133
To the 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, Minnesota(the
City) as of and for the year ended December 31, 2012, and the related notes to the financial statements,
which collectively comprise the City's basic financial statements. We issued our report thereon dated
April 29, 2013,which contained unmodified opinions on those financial statements.
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 financial statements are free of material
misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
City's preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the City's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit 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 (OMB) Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations,
and is not a required part of the basic financial statements of the City. The Schedule of Expenditures of
Federal Awards 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 Schedule of Expenditures of
Federal Awards is fairly stated, in all material respects, in relation to the basic financial statements as a
whole.
(continued)
-1-
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The purpose of this report on the Schedule of Expenditures of Federal Awards Required by OMB
Circular A-133 is solely to describe the scope of our testing of the Schedule of Expenditures of Federal
Awards and the results of that testing based on our audit. Accordingly, this report is not suitable for any
other purpose.
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April 29, 2013
-2-
CITY OF BROOKLYN CENTER
Schedule of Expenditures of Federal Awards
Year Ended December 31,2012
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 $348,885
Community Development Block Grants—State's Program and
Non-Entitlement Grants in Hawaii 14.228 265,292
U.S.Department of Justice
Direct program
Bulletproof Vest Partnership Program 16.607 5,107
ARRA—Public Safety Partnership and Community Policing Grants 16.710 66,930
Passed through Hennepin County
Edward Byrne Memorial Justice Assistance Grant cluster
Edward Byrne Memorial Justice Assistance Grant Program 16.738 26,872
ARRA—Edward Byrne Memorial Justice Assistance Grant Program—
Grants to Units of Local Government 16.804 54,977
Total Edward Byrne Memorial Justice Assistance Grant cluster 81,849
U.S.Department of Transportation
Passed through the Minnesota Department of Public Safety
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 11,186
Safety Belt Performance Grants 20.609 7,290
Total federal awards $786,539
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
Community Development Block Grants—Entitlement Grants 14.218 $ 17,103
-3-
PRINCIPALS
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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
To the City Council and Management
City of Brooklyn Center,Minnesota
We have audited, 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, 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, Minnesota (the City) as of and for the year ended December 31, 2012, and
the related notes to the financial statements, which collectively comprise the City's basic financial
statements,and have issued our report thereon dated April 29,2013.
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 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.
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.
(continued)
-4-
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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
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.
In addition, we noted certain other matters that we have reported to management of the City in a separate
letter dated April 29,2013.
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.
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Minneapolis, Minnesota J
April 29,2013
-5-
PRINCIPALS
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INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR
EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL
CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133
To the City Council and Management
City of Brooklyn Center,Minnesota
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM
We have audited the City of Brooklyn Center, Minnesota (the City) compliance with the types of
compliance requirements described in the U.S. Office of Management and Budget(OMB) Circular A-133
Compliance Supplement that could have a direct and material effect on each of the City's major federal
programs for the year ended December 31, 2012. The City's major federal programs are identified in the
summary of audit 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 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 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 December 31,2012.
(continued)
-6-
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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.
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.
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April 29, 2013
-7-
PRINCIPALS
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INDEPENDENT AUDITOR'S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the 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,Minnesota(the
City) as of and for the year ended December 31, 2012, and the related notes to the financial statements,
which collectively comprise the City's basic financial statements, and have issued our report thereon
dated April 29, 2013.
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 response to the finding in our audit is described in the accompanying Schedule of Findings and
Questioned Costs. We did not audit the City's response and, accordingly,we express no opinion on it.
The purpose of this report on Minnesota legal compliance is solely to describe the scope of our testing of
compliance and the results of that testing based on 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,this report is not suitable for any other purpose.
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April 29, 2013
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CITY OF BROOKLYN CENTER
Schedule of Findings and Questioned Costs
Year Ended December 31,2012
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? Yes X None reported
Major federal award program compliance:
What type of auditor's report is issued? X Unqualified
Qualified
Adverse
Disclaimer
Any audit findings disclosed that are required to be reported
in accordance with Section 510(a)of OMB Circular A-133? Yes X 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
Threshold for distinguishing between type A and B programs: $ 300,000
Does the auditee qualify as a low-risk auditee? X Yes No
-9-
CITY OF BROOKLYN CENTER
Schedule of Findings and Questioned Costs(continued)
Year Ended December 31,2012
B. FINDINGS—FINANCIAL STATEMENT AUDIT
None.
C. FINDINGS—MAJOR FEDERAL AWARD PROGRAMS AUDIT
None.
D. FINDINGS—MINNESOTA LEGAL COMPLIANCE AUDIT
2012-1 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 three disbursements selected for testing,the City did not pay the obligation within the
required time period, and did not pay interest on the unpaid obligation.
Context—Three out of forty disbursements tested were not in compliance. This is a current year
and prior year finding.
Cause—This was an oversight by city personnel.
Effect—Three payments made to vendors were not paid within the timeframe as required by state
statute, and the vendors were 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.
-10-
CITY OF BROOKLYN CENTER
Schedule of Findings and Questioned Costs(continued)
Year Ended December 31,2012
E. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS—MAJOR FEDERAL AWARD
PROGRAMS AUDIT
2011-1 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANT CLUSTER(PUBLIC
SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS,CFDA No. 16.710)
Condition —During our audit for the year ended December 31, 2011, we noted that the City did
not have sufficient controls in place to assure compliance with cash management requirements 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.
Recommendation — We recommend that the City review their procedures relating to federal
grants to ensure future compliance with the grant requirements.
Current Status—The recommendation was adopted and no similar findings were reported in the
audit for the year ended December 31, 2012.
2011-2 PUBLIC SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANT CLUSTER(PUBLIC
SAFETY PARTNERSHIP AND COMMUNITY POLICING GRANTS,CFDA No. 16.710)
Condition —During our audit for the year ended December 31, 2011, we noted that the City did
not have sufficient controls in place to assure compliance with federal reporting requirements 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.
Recommendation — We recommend that the City review their procedures relating to federal
grants to ensure future compliance with the grant requirements.
Current Status—The recommendation was adopted and no similar findings were reported in the
audit for the year ended December 31, 2012.
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