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2009 Schedule of Federal Expenditures and Reports ... — CITY OF FRIDLEY, MINNESOTA SCHEDULE OF FEDERAL EXPENDITURES _ AND REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT For The Year Ended December 31, 2009 ._ ... CITY OF FRIDLEY,MINNESOTA TABLE OF CONTENTS — Pa_eg No. 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 — Report on Compliance with Requirements Applicable to each Major Program and 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 7 1 � Tautges Redpath, Ltd. Certified Pubtic Accountants and Consultants REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF — FINANCIAL STATEMENTS PERFORMED 1N ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS To the Honorable Mayor and Members of the City Council .-. City of Fridley, Minnesota — We have audited the financial statements of the governmental activities, the business-type activities, each major fund, the aggregate discretely presented component ur�it, and the aggregate remaining fund information of the City of Fridley, Minnesota as of and for the year — ended December 31, 2009, which collectively comprise the City of Fridley, Minnesota's basic financial statements and have issued our report thereon dated June 9, 2010. 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 In planning and performing our audit, we considered the City of Fridley, Minnesota'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 of Fridley, Minnesota's internal control over financial reporting. Accordingly,we do not express an opinion of the '- effectiveness of the City of Fridley, Minnesota'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 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 entity'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. _ However, we identified a certain deficiency in internal control over financial reporting, — 4810 White Bear Parkway White Bear Lake, Minnesota 55110 I 651 426 7000 651 426 5004 Fax I www.hlbtr.com HLB Tautges fledpath,Ltd.is a member o(�International,a world-wide organization of accounting firms and business advisors. I Equal Opportunity Employer City of Fridley, Minnesota Report on Internal Control over Financial Reporting and on Compliance and Other Matters Page 2 described in the accompanying schedule of findings and responses as item 2009-1 that we consider to be a significant deficiency in internal control over financial reporting. A _ significant deficiency is a deficiency,-0r 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Fridley, Minnesota'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 that are required to be reported under _ Government Auditing Standards. We noted certain matters that we reported to management of the City of Fridley, Minnesota _ in a separate letter dated June 9, 2010. The City of Fridley, Minnesota's responses to the findings identified in our audit are _. described in the accompanying schedule of findings and responses. We did not audit the City of Fridley, Minnesota's responses and, accordingly, we express no opinion on them. — 'This report is intended solely for the information and use of the City of Fridley, Minnesota's City Council and management and is not intended to be, and should not be,used by anyone other than these specified parties. �'��.�4 ����� / f G� — HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota — June 9, 2010 1 � Tautges Redpath, Ltd. Certified Public Accountants and Consultants -- REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Honorable Mayor and '–' Members of the City Council City of Fridley, Minnesota Compliance _ We have audited the compliance of the City of Fridley, Minnesota, with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 2009. _ The City of Fridley, Minnesota's major federal programs are identified in the summary of auditor's 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 of Fridley, Minnesota's management. Our responsibility is to express an opinion on the City of Fridley, Minnesota'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 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 City of Fridley,Minnesota'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 of Fridley, Minnesota's compliance with those requirements. " In our opinion, the City of Fridley, Minnesota, 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 December 31, 2009. — 4810 White Bear Parkway White Bear Lake, Minnesota 5511� I 651 426 7000 651 426 5004 Fax I www.hlbtr.com � HLB Tau[ges Redpath,Ltd.is a member of�Intemational,a world-wide organization of accounting firms and business advisors. I Equal Opportunity Employer ._ Report on Compliance with Requirements Applicable to each Major Program and on Internal Control over — Compliance in Accordance with OMB Circular A-133 Internal Control Over Compliance — Management of the City of Fridley, Minnesota 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 of Fridley, Minnesota'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,but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Fridley, Minnesota'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 r 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 deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over _, compliance that we consider to be material weaknesses, as defined above. � 4 .` Report on Compliance with Requirements Applicable _ to each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 — Schedule of Expenditures of Federal Awards We have audited the financial statements of the City of Fridley, Minnesota as of and for the year ended December 31, 2009, and have issued our report thereon dated September_, — �010. Our audit was performed for the purpose of forming opinions on the basic 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 basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial " statements taken as a whole. This report is intended solely for the information and use of management, the City Council "' and Audit and Investment Advisory Committee of the City of Fridley,Minnesota and 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. l�r� � �- HLB TAUTGES REDPATH, LTD. White Bear Lake, Minnesota September 15, 2010 '— 5 CITY OF FRIDLEY,MINNESOTA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS " For The Year Ended December 31, 2009 — Pass Through Federal Funding Source/ Federal Entity PassThrough Agency/ CFDA Identifying Federal Program Title Number Number Expenditures � U.S.Department of Transportation: Passed through Minnesota Department of Natural Resources: Recreational Trails Program 20.219 0037-07-3B $5,909 Passed through Minnesota Department of Transportation: Highway Planning and Construction 20.205 127-050-12 638,183 Passed through Minnesota Department of Public Saftey: State and Community Highway Safety 20.600 unknown 4,831 ` Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 2009-300-P07-531 20,115 Total U.S.Department of Transportaion 669,038 .... U.S.Department of Justice: Direct: Bulletproof Vest Partnership Program 16.607 N/A 640 � State and Local Task Force Agreement 16.unknown N/A 39,314 Passed through Anoka County,Minnesota: Enforcing Underage Drinking Laws Program 16.727 9100-1064 1,200 Passed through Anoka County,Minnesota: "" ARRA Edward Byrne Memorial Justice Assistance Grant 16.804 unknoHm 21,586 Total U.S.Department of Justice 62,740 � U.S.Department of Health and Human Services: Passed through Metropolitan Area Agency on Aging: Special Programs for the Aging Titie lll,Part B.Grants for Supportive Services and Senior Centers. 93.044 311-10-�03B-223 45,600 U.S.Department of Homeland Security: Passed through Anoka County,Minnesota: ... Emergency Management Performance Grants 97.042 unknown 3,541 Homeland Security Grant Program 97.067 2008-CCP-00646 1,795 Total U.S.Deparlment of Homeland Security 5,336 Total Expenditures of Federal Awards $782,714 Note to Schedule of Expenditures of Federal Awards ... Note 1. Basis ofPresentation The schedule of expenditures of federal awards is presented on the modified accrual basis of accounting. ... Expenditures are rec•ognized when incurred. 6 — CITY OF FRIDLEY,MINNESOTA SCHEDULE OF FINDINGS AND QUESTIONED COSTS "" For The Year Ended December 31, 2009 SECTION I - SUMMARY OF AUDIT RESULTS Financial Statements — A. Type of auditors' report issued: Unqualified B. Internal control over financial reporting: — • Material weakness(es) identified? Yes X No • Significant deficiencies identified that are not X Yes None considered to be material weaknesses? reported C. Noncompliance material to financial statements Yes X No noted? — Federal Awards D. Internal control over major programs: _ • Material weakness(es) identified? Yes X No • Significant deficiencies identified that are not Yes X None considered to be material weaknesses? reported — E. Type of auditors' report issued on compliance for Unqualified major programs: _ F. Any audit findings disclosed that are required to be Yes X None reported in accordance with section 510(a) of reported Circular A-133? — G. Identification of major programs: Name of Federal Program CFDA Number " Highway Planning and Construction 20.205 H. Dollar threshold used to distinguish between Type A $300,000 — and Type B programs: I. Auditee qualified as a low-risk auditee Yes X No 7 — CITY OF FRIDLEY,MINNESOTA SCHEDULE OF F1NDiNGS AND QUESTIONED COSTS " For The Year Ended December 31, 2009 SECTION II—FINANCIAL STATEMENT FINDINGS 2009-1 Financial Statement Corrections-HRA financial statements Criteria: Auditing standards specify that a correction of any magnitude that could occur and not be detected by the City's controls be considered a significant deficiency in internal � control. Condition: Audit staff identified adjustments relating to property taxes receivable, interest _ revenue recognition and cash balance. None of these adjustments were material to the financial statements. _ Cause: Due to Staff turnover and a vacant position for six months in 2009, the City was unable to perform certain financial review procedures related to the above adjustments. .- Effect: There is an increased risk that financial statements misstatements may occur if year end balances are not reviewed or approved. — Recommendation: We recommend the City strengthen controls in this area to ensure financial statement reporting elements are reviewed for accuracy. — Views of Responsible Officials and Corrective Action Plan: The City will add an additional level of review and reconciliation procedures for the final trial balance for future audits. SECTION III—FEDERAL AWARD FINDINGS AND QUESTIONED COSTS � There are no federal awards findings. _ IV—PRIOR YEAR FINDINGS No findings or questioned costs were noted in the prior year involving federal programs. 8