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Home My WebLink AboutStaff Report 12108 City of Palo Alto (ID # 12108) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/10/2021 City of Palo Alto Page 1 Summary Title: Approval of FY 2020 Single Audit Report Title: Finance Committee Recommends the City Council Approve the Macias Gini & O’Connell’s Single Audit Report for the Year Ended June 30, 2020 From: City Manager Lead Department: City Auditor RECOMMENDATION The Finance Committee, Office of the City Auditor, and Staff recommend that the City Council approve the following audit reports for the fiscal year ended June 30, 2020 prepared by Macias Gini & O’Connell (“MGO”). These reports are collectively referred to as the Single Audit. 1. Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements in Accordance With Government Auditing Standards. 2. Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Federal Awards Required by the Uniform Guidance. SUMMARY At the January 11, 2021 City Council Meeting, the City Council approved the following audit reports prepared by MGO: a) Report to the City Council (the “Management Letter”) b) Cable TV Franchise, Independent Auditor’s Report and Statements of Franchise Revenues and Expenses for the years ended December 31, 2019 and 2018 c) Palo Alto Public Improvement Corporation (a component unit of the City of Palo Alto) Annual Financial Report for the year ended June 30, 2020 d) Regional Water Quality Control Plant, Independent Auditor’s Report and Financial Statements for the year ended June 30, 2020 e) Independent Accountant’s Report on Applying Agreed-Upon Procedures related to the Article XIII-B Appropriations (GANN) Limit for the year ended June 30, 2020 f) The Fiscal Year (FY) 2020 Comprehensive Annual Financial Report (Annual Report) included in CMR #1171 that is available here. City of Palo Alto Page 2 At that time, guidance necessary for the completion of the Single Audit had not yet been released by Federal Office of Management and Budget. The Single Audit report has since been completed, thus the recommended action within this report. MGO reports the following within the Single Audit Report: - Unmodified opinions as it pertains to both the Financial Statements and to Federal Awards - No material weaknesses or significant deficiencies in internal controls over financial reporting or over major programs - No findings or questioned costs The Office of the City Auditor and Staff presented this recommendation to the Finance Committee on April 6, 2021, and the motion was unanimously approved after a presentation by MGO. Stakeholder Engagement This report has been prepared by the Administrative Service Department Accounting division and coordinated with the Office of the City Auditor and the Office of Management and Budget. Environmental Review This is not a project for purposes of the California Environmental Quality Act (CEQA). Attachments: • City of Palo Alto - Single Audit Report FY2020 • MGO Presentation to Palo Alto - Single Audit FY2020 /dzK&W>K>dK ^ŝŶŐůĞƵĚŝƚZĞƉŽƌƚƐ zĞĂƌŶĚĞĚ:ƵŶĞϯϬ͕ϮϬϮϬ /dzK&W>K>dK ^ŝŶŐůĞƵĚŝƚZĞƉŽƌƚƐ zĞĂƌŶĚĞĚ:ƵŶĞϯϬ͕ϮϬϮϬ dĂďůĞŽĨŽŶƚĞŶƚƐ WĂŐĞ /ŶĚĞƉĞŶĚĞŶƚƵĚŝƚŽƌ͛ƐZĞƉŽƌƚŽŶ/ŶƚĞƌŶĂůŽŶƚƌŽůKǀĞƌ&ŝŶĂŶĐŝĂůZĞƉŽƌƚŝŶŐĂŶĚŽŶ ŽŵƉůŝĂŶĐĞĂŶĚKƚŚĞƌDĂƚƚĞƌƐĂƐĞĚŽŶĂŶƵĚŝƚŽĨ&ŝŶĂŶĐŝĂů^ƚĂƚĞŵĞŶƚƐ WĞƌĨŽƌŵĞĚŝŶĐĐŽƌĚĂŶĐĞtŝƚŚ'ŽǀĞƌŶŵĞŶƚƵĚŝƚŝŶŐ^ƚĂŶĚĂƌĚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϭ /ŶĚĞƉĞŶĚĞŶƚƵĚŝƚŽƌ͛ƐZĞƉŽƌƚŽŶŽŵƉůŝĂŶĐĞĨŽƌĂĐŚDĂũŽƌ&ĞĚĞƌĂůWƌŽŐƌĂŵ͖ ZĞƉŽƌƚŽŶ/ŶƚĞƌŶĂůŽŶƚƌŽůKǀĞƌŽŵƉůŝĂŶĐĞ͖ĂŶĚZĞƉŽƌƚŽŶƚŚĞ^ĐŚĞĚƵůĞŽĨ ǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐZĞƋƵŝƌĞĚďǇƚŚĞhŶŝĨŽƌŵ'ƵŝĚĂŶĐĞ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϯ ^ĐŚĞĚƵůĞŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϱ EŽƚĞƐƚŽƚŚĞ^ĐŚĞĚƵůĞŽĨǆƉĞŶĚŝƚƵƌĞƐŽĨ&ĞĚĞƌĂůǁĂƌĚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϲ ^ĐŚĞĚƵůĞŽĨ&ŝŶĚŝŶŐƐĂŶĚYƵĞƐƚŝŽŶĞĚŽƐƚƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϳ ^ƵŵŵĂƌǇ^ĐŚĞĚƵůĞŽĨWƌŝŽƌƵĚŝƚ&ŝŶĚŝŶŐƐ͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘͘ϴ www.mgocpa.com Macias Gini & O’Connell LLP 2121 N. 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&ĞĚĞƌĂůĂǁĂƌĚƐŵĂǇďĞŐƌĂŶƚĞĚĚŝƌĞĐƚůǇƚŽƚŚĞŝƚǇďǇĂĨĞĚĞƌĂůŐƌĂŶƚŝŶŐĂŐĞŶĐǇŽƌŵĂǇďĞŐƌĂŶƚĞĚƚŽ ŽƚŚĞƌŐŽǀĞƌŶŵĞŶƚĂŐĞŶĐŝĞƐǁŚŝĐŚƉĂƐƐͲƚŚƌŽƵŐŚĨĞĚĞƌĂůĂǁĂƌĚƐƚŽƚŚĞŝƚǇ͘dŚĞ^ĐŚĞĚƵůĞŝŶĐůƵĚĞƐďŽƚŚ ŽĨƚŚĞƐĞƚǇƉĞƐŽĨĨĞĚĞƌĂůĂǁĂƌĚƉƌŽŐƌĂŵƐǁŚĞŶƚŚĞǇŽĐĐƵƌ͘ EKdϰʹZ>d/KE^,/WdK&Z>&/EE/>ZWKZd^ ŵŽƵŶƚƐƌĞƉŽƌƚĞĚŝŶƚŚĞ ^ĐŚĞĚƵůĞĂŐƌĞĞƚŽŽƌĐĂŶďĞƌĞĐŽŶĐŝůĞĚǁŝƚŚ ƚŚĞĂŵŽƵŶƚƐƌĞƉŽƌƚĞĚŝŶ ƚŚĞ ƌĞůĂƚĞĚĨĞĚĞƌĂůĨŝŶĂŶĐŝĂůƌĞƉŽƌƚƐ͘ EKdϱʹZ>d/KE^,/WdK^/&/EE/>^ddDEd^ &ĞĚĞƌĂůĂǁĂƌĚƐĂŶĚĞǆƉĞŶĚŝƚƵƌĞƐĂŐƌĞĞƚŽŽƌĐĂŶďĞƌĞĐŽŶĐŝůĞĚǁŝƚŚƚŚĞĂŵŽƵŶƚƐƌĞƉŽƌƚĞĚŝŶƚŚĞŝƚǇ͛Ɛ ďĂƐŝĐĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐ͘ /dzK&W>K>dK ^ĐŚĞĚƵůĞŽĨ&ŝŶĚŝŶŐƐĂŶĚYƵĞƐƚŝŽŶĞĚŽƐƚƐ zĞĂƌŶĚĞĚ:ƵŶĞϯϬ͕ϮϬϮϬ ^ĞĐƚŝŽŶ/ ^ƵŵŵĂƌǇŽĨƵĚŝƚŽƌ͛ƐZĞƐƵůƚƐ &ŝŶĂŶĐŝĂů^ƚĂƚĞŵĞŶƚƐ͗ dǇƉĞŽĨĂƵĚŝƚŽƌ͛ƐƌĞƉŽƌƚŝƐƐƵĞĚ͗ hŶŵŽĚŝĨŝĞĚ /ŶƚĞƌŶĂůĐŽŶƚƌŽůŽǀĞƌĨŝŶĂŶĐŝĂůƌĞƉŽƌƚŝŶŐ͗ xDĂƚĞƌŝĂůǁĞĂŬŶĞƐƐĞƐŝĚĞŶƚŝĨŝĞĚ͍ EŽ x^ŝŐŶŝĨŝĐĂŶƚĚĞĨŝĐŝĞŶĐŝĞƐŝĚĞŶƚŝĨŝĞĚƚŚĂƚĂƌĞ ŶŽƚĐŽŶƐŝĚĞƌĞĚƚŽďĞŵĂƚĞƌŝĂůǁĞĂŬŶĞƐƐĞƐ͍ EŽŶĞƌĞƉŽƌƚĞĚ EŽŶĐŽŵƉůŝĂŶĐĞŵĂƚĞƌŝĂůƚŽƚŚĞĨŝŶĂŶĐŝĂůƐƚĂƚĞŵĞŶƚƐŶŽƚĞĚ͍ EŽ &ĞĚĞƌĂůǁĂƌĚƐ͗ /ŶƚĞƌŶĂůĐŽŶƚƌŽůŽǀĞƌŵĂũŽƌƉƌŽŐƌĂŵƐ͗ xDĂƚĞƌŝĂůǁĞĂŬŶĞƐƐĞƐŝĚĞŶƚŝĨŝĞĚ͍ EŽ x^ŝŐŶŝĨŝĐĂŶƚĚĞĨŝĐŝĞŶĐŝĞƐŝĚĞŶƚŝĨŝĞĚƚŚĂƚĂƌĞ ŶŽƚĐŽŶƐŝĚĞƌĞĚƚŽďĞŵĂƚĞƌŝĂůǁĞĂŬŶĞƐƐĞƐ͍ EŽŶĞƌĞƉŽƌƚĞĚ dǇƉĞŽĨĂƵĚŝƚŽƌ͛ƐƌĞƉŽƌƚŝƐƐƵĞĚŽŶĐŽŵƉůŝĂŶĐĞǁŝƚŚŵĂũŽƌ ƉƌŽŐƌĂŵƐ͗ hŶŵŽĚŝĨŝĞĚ ŶǇĂƵĚŝƚĨŝŶĚŝŶŐƐƌĞƋƵŝƌĞĚƚŽďĞƌĞƉŽƌƚĞĚŝŶĂĐĐŽƌĚĂŶĐĞ ǁŝƚŚϮ&ZϮϬϬ͘ϱϭϲ;ĂͿ͍ EŽ DĂũŽƌƉƌŽŐƌĂŵ͗ &EƵŵďĞƌ EĂŵĞŽĨ&ĞĚĞƌĂůWƌŽŐƌĂŵŽƌůƵƐƚĞƌ ϮϬ͘ϭϬϲ ŝƌƉŽƌƚ/ŵƉƌŽǀĞŵĞŶƚWƌŽŐƌĂŵ ϮϬ͘ϱϭϰ WƵďůŝĐdƌĂŶƐƉŽƌƚĂƚŝŽŶZĞƐĞĂƌĐŚ͕dĞĐŚŶŝĐĂůƐƐŝƐƚĂŶĐĞ͕ĂŶĚ dƌĂŝŶŝŶŐ ŽůůĂƌƚŚƌĞƐŚŽůĚƵƐĞĚƚŽĚŝƐƚŝŶŐƵŝƐŚďĞƚǁĞĞŶ dǇƉĞĂŶĚdǇƉĞƉƌŽŐƌĂŵƐ ΨϳϱϬ͕ϬϬϬ ƵĚŝƚĞĞƋƵĂůŝĨŝĞƐĂƐĂůŽǁͲƌŝƐŬĂƵĚŝƚĞĞ͍ zĞƐ ^ĞĐƚŝŽŶ// &ŝŶĂŶĐŝĂů^ƚĂƚĞŵĞŶƚ&ŝŶĚŝŶŐƐ EŽŶĞƌĞƉŽƌƚĞĚ͘ ^ĞĐƚŝŽŶ/// &ĞĚĞƌĂůǁĂƌĚƐ&ŝŶĚŝŶŐƐĂŶĚYƵĞƐƚŝŽŶĞĚŽƐƚƐ EŽŶĞƌĞƉŽƌƚĞĚ͘ /dzK&W>K>dK ^ƵŵŵĂƌǇ^ĐŚĞĚƵůĞŽĨWƌŝŽƌƵĚŝƚ&ŝŶĚŝŶŐƐ zĞĂƌŶĚĞĚ:ƵŶĞϯϬ͕ϮϬϮϬ WƌŝŽƌĂƵĚŝƚĨŝŶĚŝŶŐƐǁĞƌĞŶŽƚƌĞƉŽƌƚĞĚ͘ The following presentation was prepared as part of our audit of the City of Palo Alto (the “City”) for the year ended June 30, 2020, is limited in its overall information, and is intended solely for the information and use by those charged with governance, management and as necessary, those charged with financial reporting oversight role of the City. This communication is not intended and should not be used by any other party, committee or person other than these specified parties. 2 MGO Presentation to the City of Palo Alto Deliverable Repor ts •Independent Auditor ’s Repor t on Internal Control Over Financial Repor ting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards •Independent Auditor ’s Repor t on Compliance for Each Major Federal Program; Repor t on Internal Control Over Compliance and Repor t on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Reports Issued 3 MGO Presentation to the City of Palo Alto Schedule of Expenditures of Federal Awards (SEFA) •Total FY 2020 SEFA Expenditure: $7.6 million for 7 federal programs •2 Major federal programs totaled to $6.1 million (80% coverage) –CFDA No. 20.106 Airpor t Improvement Program –CFDA No. 20.514 Public Transpor tation Research, Technical Assistance, and Training Summary of Audit Results 4 MGO Presentation to the City of Palo Alto Financial Statements •Unmodified opinion •No repor ted significant deficiencies or material weaknesses over financial repor ting •No noncompliance significant to the financial statements Federal Awards •Unmodified opinion on each major federal program •No repor ted significant deficiencies or material weaknesses over compliance •No repor ted instances of noncompliance or other matters •SEFA is fairly stated in relation to the basic financial statements Summary of Audit Results Government Audit & Oversight Committee Questions? w w w . m g o c p a . c o m The presentation was prepared as part of our audit of the City of Palo Alto (the “City”) for the year ended June 30, 2020, is limited in its overall information, and is intended solely for the information and use by those charged with governance, management and as necessary, those charged with financial reporting oversight role of the City. This communication is not intended and should not be used by any other party, committee or person other than these specified parties.