Santa Cruz County single audit reporting package: year ended June 30,...

              Single Audit
A REPORT
TO THE
ARIZONA LEGISLATURE
Santa Cruz County
June 30, 2002
Financial Audit Division
Debra K. Davenport
Auditor General
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
Santa Cruz County, Arizona
Single Audit Reporting Package
June 30, 2002
Table of Contents Page
Comprehensive Annual Financial Report
Issued separately
Reports on Compliance and Internal Control
Report on Compliance and on Internal Control over Financial Reporting
Based on an Audit of General Purpose Financial Statements Performed in
Accordance with Government Auditing Standards 1
Report on Compliance with Requirements Applicable to Each Major Program and
on Internal Control over Compliance in Accordance with OMB Circular A-133 3
Schedule of Expenditures of Federal Awards 6
Schedule of Findings and Questioned Costs
Summary of Auditors’ Results 10
Federal Award Findings and Questioned Costs 11
County Responses
Corrective Action Plan 13
Summary Schedule of Prior Audit Findings 15
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Compliance and on Internal Control over
Financial Reporting Based on an Audit of General Purpose Financial Statements
Performed in Accordance with Government Auditing Standards
Members of the Arizona State Legislature
The Board of Supervisors of
Santa Cruz County, Arizona
We have audited the general purpose financial statements of Santa Cruz County as of and for the year
ended June 30, 2002, and have issued our report thereon dated October 18, 2002. We conducted our
audit in accordance with U.S. generally accepted auditing standards and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States.
Compliance
As part of obtaining reasonable assurance about whether the County’s general purpose financial
statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material
effect on the determination of general purpose 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 that are
required to be reported under Government Auditing Standards. However, we noted certain immaterial
instances of noncompliance that we will report to the County’s management in a separate letter.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the County’s internal control over financial reporting
in order to determine our auditing procedures for the purpose of expressing our opinion on the general
purpose financial statements and not to provide assurance on internal control over financial reporting. Our
consideration of internal control over financial reporting would not necessarily disclose all such internal
control matters that might be material weaknesses. A material weakness is a condition in which the design
or operation of one or more of the internal control components does not reduce to a relatively low level the
risk that misstatements in amounts that would be material in relation to the general purpose financial
statements being audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. We noted no matters involving control over financial
reporting and its operation that we consider to be material weaknesses. However, we noted other matters
involving internal control over financial reporting that we will report to the County’s management in a
separate letter.
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This report is intended solely for the information and use of the members of the Arizona State Legislature,
the Board of Supervisors, 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. However, this report is a matter of
public record, and its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
October 18, 2002
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553 -0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
Independent Auditors’ Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control over Compliance in
Accordance with OMB Circular A-133
Members of the Arizona State Legislature
The Board of Supervisors of
Santa Cruz County, Arizona
Compliance
We have audited the compliance of Santa Cruz County with the types of compliance requirements
described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement
that are applicable to each of its major federal programs for the year ended June 30, 2002. The County’s
major federal programs are identified in the Summary of Auditors’ Results section of the accompanying
Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations,
contracts, and grants applicable to each of its major federal programs is the responsibility of the County’s
management. Our responsibility is to express an opinion on the County’s compliance based on our audit.
We conducted our audit of compliance in accordance with U.S. generally accepted auditing standards;
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 County’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 County’s compliance with those requirements.
As described in item 02-102 in the accompanying Schedule of Findings and Questioned Costs, the
County did not comply with the requirements regarding matching that are applicable to its Gaining Early
Awareness and Readiness for Undergraduate Program. Compliance with such requirements is necessary,
in our opinion, for the County to comply with requirements applicable to that program.
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In our opinion, except for the noncompliance described in the preceding paragraph, Santa Cruz County
complied, in all material respects, with the requirements referred to above that are applicable to each of its
major federal programs for the year ended June 30, 2002. The results of our auditing procedures also
disclosed other instances of noncompliance with those requirements that are required to be reported in
accordance with OMB Circular A-133 and are described in the accompanying Schedule of Findings and
Questioned Costs as items 02-101 and 02-103.
Internal Control over Compliance
The County’s management 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 County’s internal control over compliance with
requirements that could have a direct and material effect on a major federal program in order to determine
our auditing procedures for the purpose of expressing our opinion on compliance and to test and report
on internal control over compliance in accordance with OMB Circular A-133.
We noted certain matters involving internal control over compliance and its operation that we consider to
be reportable conditions. Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of internal control over compliance that, in our judgment,
could adversely affect the County’s ability to administer a major federal program in accordance with
applicable requirements of laws, regulations, contracts, and grants. Reportable conditions are described
in the accompanying Schedule of Findings and Questioned Costs as items 02-102 and 02-103.
A material weakness is a condition in which the design or operation of one or more internal control
components does not reduce to a relatively low level the risk that noncompliance with applicable
requirements of laws, regulations, contracts, and grants that would be material in relation to a major
federal program being audited may occur, and not be detected within a timely period by employees in the
normal course of performing their assigned functions. Our consideration of internal control over
compliance would not necessarily disclose all such internal control matters that might be reportable
conditions and, accordingly, would not necessarily disclose all reportable conditions that are also
considered to be material weaknesses. However, of the reportable conditions described above, we
consider item 02-102 to be a material weakness.
Schedule of Expenditures of Federal Awards
We have audited the County’s general purpose financial statements as of and for the year ended June 30,
2002, and have issued our report thereon dated October 18, 2002. Our audit was made for the purpose of
forming an opinion on the general purpose financial statements taken as a whole. The accompanying
Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required
by OMB Circular A-133, and is not a required part of the general purpose financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the general purpose
financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general
purpose financial statements taken as a whole.
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This report is intended solely for the information and use of the members of the Arizona State Legislature,
the Board of Supervisors, 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. However, this report is a matter of
public record, and its distribution is not limited.
Dennis L. Mattheisen, CPA
Financial Audit Director
January 17, 2003, except for the
Schedule of Expenditures of Federal
Awards, for which the date is October 18, 2002
Santa Cruz County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
CFDA Pass-Through
Federal Grantor / Program Title / Number Grantor's
Pass-Through Grantor (Note 2) Number Expenditures
U.S. Office of National Drug Control Policy
High Intensity Drug Trafficking Area,
passed through Pima County 07.I0PSAP549 01-11-O-127263-1099
01-11-O-127265-1099 $ 383,485
High Intensity Drug Trafficking Area,
passed through Pima County 07.I1PSAP549 01-11-S-128861-1000
01-11-O-128877-1000 222,419
Total U.S. Office of National Drug
Control Policy 605,904
U.S. Department of Agriculture
Schools and Roads—Grants to States,
passed through the Arizona State Treasurer 10.665 None 47,482
U.S. Department of Housing and Urban Development
Community Development Block Grants/State's Program,
passed through the Arizona Department of Commerce 14.228 125-00 251,667
U.S. Department of the Interior
Payments in Lieu of Taxes 15.226 475,255
U.S. Department of Justice
Byrne Formula Grant Program, passed through
the Arizona Criminal Justice Commission 16.579 CRI-02-050
PC-150-02
AC-200-02 320,922
Edward Byrne Memorial State and Local Law Enforcement
Assistance Discretionary Grants Program 16.580 80,399
Rural Domestic Violence and Child Victimization
Enforcement Grant Program, passed through the
Governor's Office for Domestic Violence Prevention 16.589 CCRT 2001-13 27,791
Local Law Enforcement Block Grants Program 16.592 24,122
State Criminal Alien Assistance Program 16.606 93,764
Bulletproof Vest Partnership Program 16.607 8,177
Federal Equitable Sharing Program 16.unknown 20,420
Total U.S. Department of Justice 575,595
(Continued)
See accompanying notes to schedule.
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Santa Cruz County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
(Continued)
CFDA Pass-Through
Federal Grantor / Program Title / Number Grantor's
Pass-Through Grantor (Note 2) Number Expenditures
U.S. Department of Labor
Welfare-to-Work Grants to States and Localities,
passed through the Arizona Department of
Economic Security 17.253 E5709066 $ 20,256
WIA Cluster
WIA Adult Program, passed through the Arizona
Department of Economic Security 17.258 E5702012
E5701029 1,043,990
WIA Youth Activities, passed through the Arizona
Department of Economic Security 17.259 E5701029
E5702012
E5703012 362,370
WIA Dislocated Workers, passed through Pima County 17.260 E5701029
E5702012 958
Total WIA Cluster 1,407,318
Total U.S. Department of Labor 1,427,574
U.S. Department of Transportation
Highway Planning and Construction, passed
through the Arizona Department of Transportation 20.205 ER-SSC-0(011)P 92,559
State and Community Highway Safety, passed
through the Governor's Office of Highway Safety 20.600 2002-AL-004 28,082
Total U.S. Department of Transportation 120,641
U.S. Federal Emergency Management Agency
Hazard Mitigation Grant, passed through the Arizona
Department of Emergency and Military Affairs 83.548 58-0104-0-1-453
0977-0031-0034 2,004,007
Emergency Management Performance Grants, passed
through the Arizona Department of Emergency
and Military Affairs 83.552 58-0101-0-1-999 13,796
Total U.S. Federal Emergency
Management Agency 2,017,803
(Continued)
See accompanying notes to schedule.
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Santa Cruz County
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
(Concluded)
CFDA Pass-Through
Federal Grantor / Program Title / Number Grantor's
Pass-Through Grantor (Note 2) Number Expenditures
U.S. Department of Education
Adult Education—State Grant Program, passed
through the Arizona Department of Education 84.002 V002A00003 $ 58,516
Title I Grants to Local Educational Agencies, passed
through the Arizona Department of Education 84.010 24419 75,582
Special Education—Grants to States, passed
through the Arizona Department of Education 84.027 None 2,709
Gaining Early Awareness and Readiness for
Undergraduate Programs 84.334 486,840
Class Size Reduction, passed through the
Arizona Department of Education 84.340 None 1,465
Total U.S. Department of Education 625,112
U.S. Department of Health and Human Services
Acquired Immunodeficiency Syndrome (AIDS)
Activity, passed through the Arizona Department
of Health Services 93.118 152018 37,127
Social Services Block Grant, passed through the
Southeastern Arizona Governments Organization 93.667 02-07 58,590
Preventive Health Services—Sexually Transmitted
Diseases Control Grants, passed through the
Arizona Department of Health Services 93.977 05-2008 3,100
Maternal and Child Health Services Block Grant to
the States, passed through the Arizona
Department of Health Services 93.994 961095 35,376
Total U.S. Department of Health and
Human Services 134,193
Total Expenditures of Federal Awards $ 6,281,226
See accompanying notes to schedule.
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Santa Cruz County
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2002
Note 1 - Basis of Accounting
The accompanying schedule of expenditures of federal awards includes the federal grant
activity of Santa Cruz County and is presented on the modified accrual basis of accounting.
The information in this schedule is presented in accordance with the requirements of OMB
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore,
some amounts presented in this schedule may differ from amounts presented in, or used in
the preparation of, the financial statements.
Note 2 - Catalog of Federal Domestic Assistance (CFDA) Number
The program titles and CFDA numbers were obtained from the federal or pass-through grantor
or the 2002 Catalog of Federal Domestic Assistance. When no CFDA number had been
assigned to a program, the two-digit federal agency number, a period, and the federal contract
number were used. When there was no federal contract number, the two-digit federal agency
number, a period, and the word “unknown” were used.
Note 3 - Subrecipients
The County did not provide any federal awards to subrecipients during the year ended
June 30, 2002.
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Santa Cruz County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2002
Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued: Unqualified
YES NO
Material weakness identified in internal control over financial reporting? X
Reportable conditions identified not considered to be material weaknesses? X
(None
reported)
Noncompliance material to the financial statements noted? X
Federal Awards
Material weakness identified in internal control over major programs? X
Reportable conditions identified not considered to be material weaknesses? X
Type of auditors’ report issued on compliance for major programs: Qualified
Any audit findings disclosed that are required to be reported in accordance with
Circular A-133 (section .510[a])? X
Identification of major programs:
CFDA Number Name of Federal Program or Cluster
07.I0PSAP549/07.I1PSAP549 High-Intensity Drug Trafficking Area
15.226 Payments in Lieu of Taxes
16.579 Byrne Formula Grant Program
83.548 Hazard Mitigation Grant
84.334 Gaining Early Awareness and Readiness for
Undergraduate Programs
Workforce Investment Act Cluster of Programs
17.258 WIA Adult Program
17.259 WIA Youth Activities
17.260 WIA Dislocated Workers
Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000
Auditee qualified as low-risk auditee? X
Other Matters
Auditee’s Summary Schedule of Prior Audit Findings required to be reported in
accordance with Circular A-133 (section .315[b])?
X
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Santa Cruz County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2002
Federal Award Findings and Questioned Costs
02-101
CFDA No.: 17.258 WIA Adult Program, 17.259 WIA Youth Activities
U.S. Department of Labor, passed through the Arizona Department of Economic Security
Award Year: September 15, 2001 through September 15, 2002
Award Number: E5701029, E5702012
Reporting
Questioned Cost: CFDA 17.258—$11,546
CFDA 17.259—$58,563
For its July 2001 Contractor Accrued Expenditure Report, the County reported $70,109 more of
expenditures than were recorded in its general ledger. Further, we were unable to determine whether the
County was reimbursed for the $70,109 of expenditures since the County did not maintain adequate
documentation for its reimbursement request.
To help ensure compliance with its reporting requirements, the County should report only expenditures
that are supported by its underlying accounting records in its Contractor Accrued Expenditure Reports as
required by 29 Code of Federal Regulations (CFR), Part 95, Subpart C, §95.21.
02-102
CFDA No.: 84.334 Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP)
U.S. Department of Education
Award Year: September 15, 2001 through September 15, 2002
Award Number: P334A000262
Matching, Level of Effort, and Earmarking
Questioned Cost: $85,115
The Santa Cruz County Superintendent of Schools Office did not establish adequate policies and
procedures to comply with the matching requirements for the GEAR UP program. The Office had
documented only $60,937 of amounts claimed for matching or about 12 percent of actual program
expenditures. As a result, the Office did not meet the program’s 30 percent matching requirement of
$146,052 by $85,115, as required by the grant agreement and 34 CFR, Part 80, Subpart C, §80.24. This
finding is considered both material noncompliance and a material internal control weakness with respect
to the program’s matching requirement and is similar to a prior year finding.
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Santa Cruz County
Schedule of Findings and Questioned Costs
Year Ended June 30, 2002
To help ensure compliance with the program’s matching requirement, the Office should obtain the proper
amount of nonfederal contributions from either third-party in-kind sources or allowable costs made from
local monies for the GEAR UP program annually. Also, the Office should implement internal control
procedures to ensure matching amounts are sufficient to meet the program’s required matching
percentage.
02-103
CFDA No.: 84.334 Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP)
U.S. Department of Education (USDOE)
Award Year: September 15, 2001 through September 15, 2002
Award Number: P334A000262
Procurement and Suspension and Debarment
Questioned Cost: $37,504
The Santa Cruz County Superintendent of Schools Office did not establish adequate policies and
procedures to comply with the County’s purchasing policy as required by 34 CFR, Part 80, Subpart C,
§80.20, until April 2002. Prior to implementing the policies and procedures, the Office failed to maintain
documentation supporting sole source determination for two purchases of $31,650 and $5,854 that were
from vendors who were identified as sole source providers.
The County’s purchasing policy requires that written documentation for the basis of sole source purchases
be included in the contract file. As a result, the Office did not comply with the County’s procurement
requirements for the two purchases and as a result, they are reported as questioned costs. This finding is
similar to a prior year finding.
BOARD OF SUPERVISORS
SANTA CRUZ COUNTY
Manuel Ruiz
District 1
Robert Damon
District 2
John Maynard
District 3 2150 N. Congress Drive, Suite 119
Nogales, Arizona 85621
February 25, 2003
Ms. Debbie Davenport, Auditor General
State of Arizona, Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport:
The accompanying Corrective Action Plan has been prepared as required by the U. S. Office of Management
and Budget Circular A-133. Specifically, we are providing you with the names of the contact persons
responsible for corrective action, the corrective action planned, and the anticipated completion date for each
audit finding included in the current year’s Schedule of Findings and Questioned Costs.
Sincerely,
Jennifer K. St. John, CPA
Director of Administrative Services
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SANTA CRUZ COUNTY, ARIZONA
Corrective Action Plan
Year Ended June 30, 2002
Federal Award Findings and Questioned Costs
02-101
CFDA No. 17.258 / 17.259 WIA Adult Program / WIA Youth Activities
Contact Person: Jennifer St. John, Finance Director
Anticipated Completion Date: April 1, 2003
The Contractor Accrued Expenditure Reports are cumulative financial reports for a period of up to three
years. The County believes that one of two things happened: either one of the cumulative reports is
missing or when transferring monies between programs, the expenditures were included to the correct
program, but not removed from the incorrect program. If the latter scenario occurred, the error could be
doubled to the program’s cumulative reporting. After numerous hours of research with the Auditor
General’s Office to reconcile the reports to the General Ledger, the County has been unable to
reconcile the difference.
The County submits approximately fifteen reports monthly to our grantor and with the exception of these
two reports, for one month, every other report tied to the General Ledger. As such, we do not believe
that we have an internal control weakness related to this issue. Further, we do not think we drew down
the excess monies; rather we agree with the audit finding that we may not have kept adequate
documentation to support the amounts reported in the Expenditure Report. We will take greater care in
the future to ensure that all supporting documentation is maintained with the Expenditure Reports.
We have been in contact with our pass-through grantor, Arizona Department of Economic Security, and
will resolve any outstanding issues related to this finding with them by April 1, 2003.
02-102
CFDA No. 84.334 Gaining Early Awareness and Readiness for Undergraduate Programs
(Gear Up)
Contact Person: Robert Canchola, School Superintendent
Anticipated Completion Date: June 30, 2003
The School Superintendent’s Office began developing and implementing internal control procedures to
help ensure compliance with the programs matching requirements in September 2001, as a result of the
Auditor General’s Single Audit. We have been met with resistance at the local level and have been
trying to overcome the resistance and strengthen our policies and procedures. We expect to have this
finding resolved by June 30, 2003.
02-103
CFDA No. 84.334 Gaining Early Awareness and Readiness for Undergraduate Programs
(Gear Up)
Contact Person: Robert Canchola, School Superintendent
Anticipated Completion Date: Completed as of April 1, 2002
The School Superintendent’s Office reported to the Auditor General’s Office last year that they would
implement adequate policies and procedures and retain adequate supporting documentation to comply
with the County and the Federal programs requirements by April 1, 2002. As stated in this report, that
has been accomplished.
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BOARD OF SUPERVISORS
SANTA CRUZ COUNTY
Manuel Ruiz
District 1
Robert Damon
District 2
John Maynard
District 3 2150 N. Congress Drive, Suite 119
Nogales, Arizona 85621
January 17, 2003
Ms. Debbie Davenport, Auditor General
State of Arizona, Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport:
The accompanying Summary Schedule of Prior Audit Findings has been prepared as required by U.S. Office of
Management and Budget Circular A-133. Specifically, we are reporting the status of audit findings included in
the prior audit’s Schedule of Findings and Questioned Costs related to federal awards.
Sincerely,
Jennifer K. St. John, CPA
Director of Administrative Services
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SANTA CRUZ COUNTY, ARIZONA
Summary Schedule of Prior Audit Findings
Year Ended June 30, 2002
Status of Federal Award Findings and Questioned Costs
CFDA Number 84.334 - Gaining Early Awareness and Readiness for Undergraduate Programs
(Gear Up)
Finding Number 01-101
Status Partially Corrected – Adequate supporting documentation is being maintained
by the School Superintendent’s Office to support the matching requirements.
Further, this documentation can be verified and shows the funding source from
which the match is received. We did fall short of the matching percentage – we
could support 12% of expenditures while the federal program requires a 30%
match. With time and repetition, we will meet the 30% requirement. Our
estimated completion date is June 30, 2003.
CFDA Number 84.334 - Gaining Early Awareness and Readiness for Undergraduate Programs
(Gear Up)
Finding Number 01-102
Status Corrected as of April 1, 2002
CFDA Number 84.334 - Gaining Early Awareness and Readiness for Undergraduate Programs
(Gear Up)
Finding Number 01-103
Status Corrected as of September 1, 2002
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