HomeMy WebLinkAboutCity of Euless Single Audit Report FY2016CITY OF EULESS, TEXAS
SINGLE AUDIT REPORT
YEAR ENDED SEPTEMBER 30, 2016
C O N T E N T S
Page
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 ........................................................................................ 1
Independent Auditor’s Report on Compliance for Each Major
Federal Program and Report on Internal Control over Compliance
In Accordance with the Uniform Guidance, and on the Schedule
Of Expenditures of Federal Awards .................................................................................... 3
Schedule of Expenditures of Federal Awards ………………….…………………… .................... 6
Notes to Schedule of Expenditures of Federal Awards ............................................................. 7
Schedule of Findings and Questioned Costs ............................................................................ 8
Schedule of Prior Audit Findings ............................................................................................ 10
AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 2821 WEST SEVENTH STREET, SUITE 700, FORT WORTH, TX 76107 P: 817.332.7905 F: 817.429.5936
1
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 Honorable Mayor, City Council and City Manager
City of Euless, 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, each major fund and the
aggregate remaining fund information of the City of Euless, Texas (the City) as of and for the
year ended September 30, 2016, and the related notes to the financial statements, which
collectively comprise the City’s basic financial statements, and have issued our report thereon
dated February 24, 2017.
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 opinion 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 a 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.
To the Honorable Mayor, City Council and City Manager
City of Euless, Texas
Page 2
2
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.
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.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
February 24, 2017
v
AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL LLP CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 2821 WEST SEVENTH STREET, SUITE 700, FORT WORTH, TX 76107 P: 817.332.7905 F: 817.429.5936
3
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR
EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE, AND ON THE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
To the Honorable Mayor, City Council and City Manager
City of Euless, Texas
Report on Compliance for Each Major Federal Program
We have audited the City of Euless, Texas’ (the City) compliance with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Compliance
Supplement that could have a direct and material effect on each of the City’s major federal
programs for the year ended September 30, 2016. The City’s major federal programs are
identified in the summary of auditor’s results section of the accompanying schedule of findings
and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations,
contracts, and grants applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the City’s major federal
programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States and
the audit requirements of Title 2 U.S. Code of Federal Regulation (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance). Those standards and the Uniform Guidance 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 September 30, 2016.
To the Honorable Mayor, City Council and City Manager
City of Euless, Texas
Page 2
4
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 as a basis for designing 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 the Uniform Guidance,
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 the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose.
To the Honorable Mayor, City Council and City Manager
City of Euless, Texas
Page 3
5
Report on Schedule of Expenditures of Federal Awards Required by the Uniform
Guidance
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 as of
September 30, 2016, and the related notes to the financial statements, which collectively
comprise the City’s basic statements. We issued our report thereon dated February 24, 2017,
which contained an unmodified opinion on those financial statements. Our audit was conducted
for the purpose of forming an opinion on the financial statements.
The accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by the audit requirements of Title 2 U.S. Code of Federal
Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (the Uniform Guidance) and is not a required part of the basic
financial statements. Such information is the responsibility of management and was derived
from and relates directly to the underlying accounting and other records used to prepare the
basic financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the schedule of expenditures of federal
awards is fairly stated, in all material respects, in relation to the basic financial statements as a
whole.
WEAVER AND TIDWELL, L.L.P.
Dallas, Texas
February 24, 2017
6
CITY OF EULESS, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
Federal Pass-Through
CFDA Entity Identifying Federal
Number Number Expenditures
U.S. DEPARTMENT OF JUSTICE
Direct Awards
Bulletproof Vest Partnership Program 16.607 n/a 9,501$
Total U.S. Department of Justice 9,501
U.S. DEPARTMENT OF TRANSPORTATION
Passed through Texas Department of Transportation
Highway Planning and Construction 20.205 GR1603 88,540
Total U.S. Department of Transportation 88,540
ENVIRONMENTAL PROTECTION AGENCY
Passed through Texas Water Development Board
2015 Drinking Water Loan 66.468 73701 3,088,161
2015 Clean Water Loan 66.458 62647 1,403,018
Total Environmental Protection Agency 4,491,179
U.S. DEPARTMENT OF HOMELAND SECURITY
Passed through Texas Department of Public Safety
Homeland Security Grant Program 97.067 EMW-2014-SS-00029 14,796
Passed through Texas Department of Public Safety
Disaster Grants - Public Assistance 97.036 PA-06-TX-4223-PW-01599 84,178
Total U.S. Department of Homeland Security 98,974
TOTAL EXPENDITURES OF FEDERAL AWARDS 4,688,194$
Federal Grantor/
Pass-Through Grantor/
Program Title
7
CITY OF EULESS, TEXAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
NOTE 1 – GENERAL
The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of
the federal award programs of the City of Euless, Texas (the City). The City’s reporting entity is
defined in Note 1 to its basic financial statements. The SEFA includes all federal awards
received directly from federal agencies and federal awards passed-through other governmental
agencies. In addition, the SEFA includes local, state and other expenditures matched along with
the federal award expenditures.
NOTE 2 – BASIS OF PRESENTATION
The accompanying schedule is presented using the modified accrual basis of accounting for
program expenditures accounted for in the governmental funds and the accrual basis of
accounting for program expenditures accounted for in the proprietary funds as described in Note
1 to the City’s basic financial statements.
For reimbursable grants, the City recognizes revenues commencing on the date of grant
approval (provided all eligibility requirements are met) since this is when the City is eligible to
claim expenditures for reimbursements. Pass-through entity identifying numbers are presented
where available.
NOTE 3 – CONTINGENCIES
The City participates in several grant programs, which are governed by various rules and
regulations of the grantor agencies. Costs charged to the respective grant programs are subject
to audit and adjustment by the grantor agencies. Therefore, to the extent that the City has not
complied with the rules and regulations governing the grants, refunds of any money received
may be required, and the collectability of any related receivable at September 30, 2016 may be
impaired. In the opinion of management, there are no significant contingent liabilities relating to
compliance with the rules and regulations governing the respective grants.
NOTE 4 – OUTSTANDING LOANS
The City has an outstanding loan commitment under the Drinking Water State Revolving Loan
Fund from the Texas Water Development Board (TWDB), as a pass-through agency for the
Environmental Protection Agency (CFDA No. 66.468). As of September 30, 2016, the
outstanding loan payable balance was: TWDB Series 2015A $4,465,000.
The City has an outstanding loan commitment under the Clean Water State Revolving Loan
Fund from TWDB, as a pass-through agency for the Environmental Protection Agency (CFDA
No. 66.458). As of September 30, 2016, the outstanding loan payable balance was: TWDB
Series 2015B $2,380,000.
8
CITY OF EULESS, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
SECTION I – SUMMARY OF AUDITORS’ RESULTS
Financial Statements
An unmodified opinion was issued on the financial statements.
Internal control over financial reporting:
• Material weakness(es) identified? Yes X No
• Significant deficiencies identified that are not
considered to be material weakness(es)? Yes X None reported
• Noncompliance material to financial statements noted? Yes X No
Federal Awards
Internal control over major programs:
• Material weakness(es) identified? Yes X No
• Significant deficiencies identified that are not
considered to be material weakness(es)? Yes X None reported
An unmodified opinion was issued on compliance for
major programs.
• Any audit findings disclosed that are required to be
reported in accordance with section 200.516 of the
Uniform Guidance? Yes X No
Identification of major programs:
66.468 Capitalization Grants for Drinking
Water State Revolving Funds
66.458 Capitalization Grants for Clean
Water State Revolving Funds
• Dollar threshold used to distinguish between type
A and type B programs? $750,000
Auditee qualified as low-risk auditee? Yes X No
9
CITY OF EULESS, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS – CONTINUED
FOR THE YEAR ENDED SEPTEMBER 30, 2016
SECTION II – FINANCIAL STATEMENT FINDINGS
NONE
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
NONE
10
CITY OF EULESS, TEXAS
SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED SEPTEMBER 30, 2016
FINANCIAL STATEMENT FINDINGS
NONE