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ACCEPT THE SINGLE AUDIT AND INDEPENDENT AUDITORS’ REPORTS AND THE REPORT ON INTERNAL CONTROLS FOR THE YEAR ENDED JUNE 30, 2019
recommended action
RECOMMENDATION
It is recommended that the City Council accept by motion the Single Audit and Independent Auditors’ Reports and the Report on Internal Control Related Matters Identified in the Audit for the year ended June 30, 2019.
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Summary
Presented for the City Council’s review is the City of Stockton’s Single Audit and Independent Auditors’ Reports (Attachment A) for the year ended June 30, 2019. On March 9, 2020, the Audit Committee received, reviewed, and accepted these audit reports. The Single Audit report identifies two cleared findings from the prior year and no new findings or questioned costs. The auditors identified and cleared two prior findings in the Report on Internal Control for the year ended June 30, 2019, and no new findings for the current year. Staff recommends that Council adopt the motion as proposed.
DISCUSSION
Background
Single Audit
The Single Audit and Independent Auditors’ Reports (Attachment A) is an annual audit of federal awards or pass-through of federal awards to the City. The City’s expenditures of federal awards in Fiscal Year 2018-19 totaled $16.4 million. The Single Audit report identifies no new findings or questioned costs.
Internal Control Related Matters
The Report on Internal Controls provides a review of the City’s financial reporting systems and procedures that are used to ensure accurate financial statements. An internal control is designed to provide reasonable assurance that the City meets its objectives regarding the reliability of financial reporting, effectiveness, and efficiency of operations and compliance with applicable laws and regulations. The auditor considers the City’s internal control over financial reporting during the design of audit procedures for financial statements. The auditors do not express any opinion on the effectiveness of the City’s internal controls.
The auditors had no new findings in the report for the year ended June 30, 2019.
The auditors cleared two (2) findings from last year’s report:
• 2018-01 (Internal Controls) was related to the City’s multi-year effort to select, procure, and implement a new financial system that will support modern, best practices for local government business processes. Council awarded a software vendor contract at its April 2, 2019 meeting, and implementation will begin this summer.
• 2018-02 (Internal Controls) was related to the need to have improvements in communication between Public Works and Administrative Services. Public Works management will coordinate with Administrative Services to establish procedures that ensure all its expenditures of federal grants are reported accurately in the Schedule of Expenditures of Federal Awards. Public Works will also dedicate resources to make available all grant-related documents to Administrative Services.
FINANCIAL SUMMARY
There is no financial impact associated with accepting this item.
Attachment A - 2019 Single Audit and Independent Auditors’ Reports