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2010 Special Purpose Report (not updated)CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Special Purpose Audit Reports on Single Audit, Internal Controls, and Compliance with Laws and Regulations Year Ended December 31, 2010 CITY OF NEW HOPE HENNEPIN COUNTY, MINNESOTA Table of Contents Independent Auditor's Report on Schedule of Expenditures of Federal Awards Schedule of Expenditures of Federal Awards 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 3-4 Independent Auditor's Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Program and Internal Control Over Compliance in Accordance With OMB Circular A -133 5 -6 Independent Auditor's Report on Compliance With Minnesota State Laws and Regulations Schedule of Findings and Questioned Costs 8 -9 MMKR CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS City Council and Residents City of New Hope, Minnesota PRINCIPAIS Thomas M. Montague, CPA Thomas A. Karnowski, CPA Paul A. Rad'osevich, CPA Wiltiam J. Lauer, CPA, James H. Eichren, CPA Aaron J, Nielsen, CPA Victoria L. Holinka, CPA 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 of New Hope, Minnesota (the City) as of and for the year ended December 31, 2010, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 12, 2011. These basic financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these basic financial statements based on our audit. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the U.S. Office of Management and Budget Circular A -133, Audits of States, Local Governments, and Nonprofit Organizations, and is not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards 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 basic 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 information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 7 _111 � $ May 12, 2011 -1- Malloy, Montague, Karnovrslci, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • MinncaPotis, MN 55416 + Telephone: 952- 545 -0424 - Telefax: 952 - 545 -0569 • www.mmkr.com CITY OF NEW HOPE Schedule of Expenditures of Federal Awards Year Ended December 31, 2010 Federal Federal Federal Grantor/Pass- Through Grantor/Program Title CFDA No. Expenditures U.S. Department of Justice Direct Bulletproof Vest Partnership Program 16.607 $ 4,609 U.S. Department of Transportation Passed through Minnesota Department of Transportation Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 7,425 ARRA — Highway Planning and Construction 20.205 556,366 Total federal awards $ 568,400 Note 1: The Schedule of Expenditures of Federal Awards is prepared on the accrual basis of accounting in accordance with the requirements of OMB Circular A -133, Audits of States, Local Governments, and Nonprofit Organizations. Therefore, the amounts presented in this schedule may differ from the amounts presented in, or used in the preparation of, the City's basic financial statements. Note 2: All pass - through entities listed above use the same CFDA numbers as the federal grantors to identify these grants, and have not assigned any additional identifying numbers. -2- PRINCIPALS Thomas M. Montague, CPA MMKR Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William 1. Lauer, CPA C E R T IF i ED PUBLIC James H. Eichten, CPA ACCOUNTANTS Aaron J. Nielsen. CPA Victoria L. Holinka, CPA 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 City Council and Management City of New Hope, Minnesota 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 of New Hope, Minnesota (the City) as of and for the year ended December 31, 2010, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 12, 2011. 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'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's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City'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 and correct, 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 City'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. (continued) -3- Malloy, Montague, Karnovrslci, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MTV 55416 + Telephone: 952- 545 -0424 - Telefax: 952 - 545 -0569 • www.mmkr.com Compliance and Other Matters As part of obtaining reasonable assurance about whether the City'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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City in a separate letter dated May 12, 2011. This report is intended solely for the information and use of the City Council, management of the City, others within the City, 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. May 12, 2011 -4- MMKR CERTIFIEb PUBLIC A C C O U N T A N T S INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A -133 City Council and Management City of New Hope, Minnesota Compliance PRINCIPALS Thomas M. Montague, CPA I homas A. Karnowski, CPA Paul A. Radosevich, CPA William]. Lauer, CPA James H. Eichtcn, CPA Aaron J. Nielsen, CPA Victoria L. H©linka, CPA We have audited the compliance of the City of New Hope, Minnesota (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A -133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2010. The City's major federal programs are identified in the summary of audit 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's management. Our responsibility is to express an opinion on the City'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 Nonprofit 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'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's compliance with those requirements. In our opinion, the City, complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2010. (continued) -5- Malloy, Niontague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Telephone: 952- 545 -0424 - Telefax: 952 - 545 -0569 • www.rnmkr.com Internal Control Over Compliance The management of the City 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'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, 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. 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. This report is intended solely for the information and use of the City Council, management of the City, 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. �'''"' May 12, 2011 in t M KR CERTII']ED PUBLIC A C C 0 U N T A N T S INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH MINNESOTA STATE LAWS AND REGULATIONS City Council and Management City of New Hope, Minnesota PRINCIPALS Thomas M. Montague, CPA Thomas A. Karnowski, CPA Paul A. Radosevich, CPA William J. Lauer, CPA James H. Eichren, CPA Aaron J. Nielsen, CPA Victoria L. Holinka, CPA 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 of New Hope, Minnesota (the City) as of and for the year ended December 31, 2010, which collectively comprise the City's basic financial statements, and have issued our report thereon dated May 12, 2011. We conducted our audit 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 provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the Office of the State Auditor pursuant to Minnesota Statute § 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Political Subdivisions covers seven main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our study included all of the listed categories. The results of our tests indicate that, for the items tested, the City complied with the material terms and conditions of applicable legal provisions. This report is intended solely for the information and use of the City Council, management of the City, and the state of Minnesota and is not intended to be, and should not be, used by anyone other than these specified parties. May 12, 2011 -7- Malloy, Montague, Karnowski, Radosevich & Co., P.A. 5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Tclephone. 952- 545 -0414 • Telefax: 952- 545 -0569 - www,mmkr.com CITY OF NEW HOPE Schedule of Findings and Questioned Costs Year Ended December 31, 2010 A. SUMMARY OF AUDIT RESULTS This summary is formatted to provide federal granting agencies and pass- through agencies answers to specific questions regarding the audit of federal awards. Financial Statements What type of auditor's report is issued? X Unqualified Qualified Adverse Disclaimer Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiencies identified? Yes X None reported Noncompliance material to the financial statements noted? Yes X No Federal Awards Internal controls over major federal award programs: Material weakness(es) identified? Yes X No Significant deficiencies identified? Yes X None reported Type of auditor's report issued on compliance for major programs? X Unqualified Qualified Adverse Disclaimer Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A -133? Yes X No Programs tested as major programs: Program or Cluster CFDA No. U.S. Department of Transportation ARRA — Highway Planning and Construction 20.205 Threshold for distinguishing between type A and B programs: $ 300,000 Does the auditee qualify as a low -risk auditee? Yes X No IF-111 CITY OF NEW HOPE Schedule of Findings and Questioned Costs (continued) Year Ended December 31, 2010 B. FINDINGS —FINANCIAL STATEMENT AUDIT None. C. FINDINGS — MAJOR FEDERAL AWARD PROGRAMS AUDIT None. D. FINDINGS — MINNESOTA LEGAL COMPLIANCE AUDIT None. E. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS — MAJOR FEDERAL AWARD PROGRAMS AUDIT Not applicable. ME