Single Audit Report, 2013-14

COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT YEAR ENDED JUNE 30, 2014 THIS PAGE INTENTIONALLY LEFT BLANK COUNTY OF SAN LUIS OBISPO Single Audit Report For the Year Ended June 30, 2014 Table of Contents 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 ......................................................................................................................................... 1-2 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 ................................................ 3-5 Schedule of Expenditures of Federal Awards .................................................................................... 7-12 Notes to Schedule of Expenditures of Federal Awards ..................................................................... 13-15 Schedule of Findings and Questioned Costs ..................................................................................... 17-18 Summary Schedule of Prior Audit Findings ....................................................................................... 19 Supplementary Schedule of Grant Expenditures ............................................................................... 21 Aviation Passenger Facilities Charges Independent Auditor’s Report on Schedule of Passenger Facility Charges, Revenues, and Expenses .................................................................................... 23 Report on Compliance with Requirements Applicable to the Passenger Facility Charges Program on Internal Control Over Compliance ..................................................... 25-26 Report on Compliance and on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Schedule of Passenger Facility Charges, Revenues, and Expenses Performed in Accordance with Government Auditing Standards .......................................................................... 27-28 Schedule of Passenger Facility Charges (PFC), Revenues, and Expenses……………………………………………………………………………………………………. 29 THIS PAGE INTENTIONALLY LEFT BLANK 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 Board of Supervisors County of San Luis Obispo San Luis Obispo, California 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, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County of San Luis Obispo (County), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements, and have issued our report thereon dated December 16, 2014. Our report includes a reference to other auditors who audited the financial statements of the San Luis Obispo County Pension Trust Fund and the First 5 San Luis Obispo County, a discretely presented component unit, as described in our report on the County’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County’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 opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses. 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 County’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness. (2014-001) 1 925 Highland Pointe Drive, Suite 450, Roseville, CA 95678-5418 tel: 916.784.7800 fax: 916.784.7850 www.gallina.com Board of Supervisors County of San Luis Obispo San Luis Obispo, California Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’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. County's Response to Finding The County’s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The County’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. 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 County'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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Roseville, California December 16, 2014 2 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY OMB CIRCULAR A-133 Board of Supervisors County of San Luis Obispo San Luis Obispo, California Report on Compliance for Each Major Federal Program We have audited the County of San Luis Obispo’s (County) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the County’s major federal programs for the year ended June 30, 2014. The County’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 County’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 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 County’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 County’s compliance. Opinion on Each Major Federal Program In our opinion, the County 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 June 30, 2014. 3 925 Highland Pointe Drive, Suite 450, Roseville, CA 95678-5418 tel: 916.784.7800 fax: 916.784.7850 www.gallina.com Board of Supervisors County of San Luis Obispo San Luis Obispo, California Report on Internal Control Over Compliance Management of the County 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 County’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the 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 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 County’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 OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. 4 Board of Supervisors County of San Luis Obispo San Luis Obispo, California Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the County, as of and for the year ended June 30, 2014, and have issued our report thereon dated December 16, 2014, which contained an unmodified opinion on those financial statements. We did not audit the financial statements of the San Luis Obispo County Pension Trust Fund and the First 5 San Luis Obispo County, a discretely presented component unit. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as it relates to the amounts included in the Pension Trust Fund and the discretely presented component unit is based on the reports of the other auditors. Our audit was conducted for the purpose of forming an opinion on the financial statements 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 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 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 financial statements or to the 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 expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. Other Matters The Supplementary Schedule of Grant Expenditures has not been subjected to auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on it. Roseville, California December 16, 2014 5 THIS PAGE INTENTIONALLY LEFT BLANK 6 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Federal CFDA Revenue Federal Grantor/Pass-Through Grantor/Program Title Number Pass-Through Grantor's Number Recognized Expenditures U. S. DEPARTMENT OF AGRICULTURE Direct Programs: Water and Waste Disposal Program - Outstanding Loan Balance 10.760 Contract # 300279,300383 $ 674,242 $ 674,242 Water and Waste Disposal Program - Loan - Prior Yr Adj - Outstanding Loan Balance 10.760 Contract # 300279,300383 387,929 387,929 Water and Waste Disposal Program - Outstanding Loan Balance 10.781 -- 198,541 198,541 Water and Waste Disposal Program - Outstanding Loan Balance 10.781 -- 38,118,881 38,118,881 Subtotal Direct Programs 39,379,593 39,379,593 Passed through State Department of Health Care Services: Women Infant Children Nutrition Program 10.557 11-10453 1,225,058 1,225,058 Women Infant Children Nutrition Program - Pr Yr Adj 10.557 11-10453 2,841 2,841 Subtotal Pass-through 1,227,899 1,227,899 Passed through California Fire Safe Council: Volunteer Fire Assistance Program 10.664 7FG13194 20,000 20,000 Subtotal Pass-through 20,000 20,000 Passed through State Department of Food and Agriculture: Pest Detection Trapping 10.025 13-0126-SF 175,456 175,456 Sudden Oak Death 10.025 13-0301-SF 12,038 12,038 Glassy-Winged Sharpshooter 10.025 12-0100-SF 321,058 321,058 Glassy-Winged Sharpshooter - Prior year adj 10.025 12-0100-SF (1,508) (1,508) Asian Citrus Psyllid Detection 10.025 12-0509-SF, 13-0457-SF 316,614 316,614 Asian Citrus Psyllid Detection - Prior Year Adj 10.025 12-0509-SF, 13-0457-SF 27 27 European Grape Vine Moth 10.025 13-0530-SF 8,057 8,057 Light Brown Apple Moth Detection 10.025 12-0430-SF, 13-0435-SF 19,916 19,916 Light Brown Apple Moth Regulatory 10.025 12-0532-SF, 13-0357-SF, 13-0490-SF 97,738 97,738 Light Brown Apple Moth Regulatory - Prior Year Adj 10.025 12-0532-SF, 13-0357-SF, 13-0490-SF 5 5 Light Brown Apple Moth TASC 10.025 13-0548-SF 6,858 6,858 Subtotal CFDA Number 10.025 956,259 956,259 Passed through State Department of Public Health: Supplemental Nutrition Assistance 10.561 13-20492 422,427 422,427 Supplemental Nutrition Assistance 10.561 13-20492 (52) (52) Supplemental Nutrition Assistance 10.561 -- 3,205,766 3,205,766 Supplemental Nutrition Assistance 10.561 -- (802) (802) Subtotal Pass-through 3,627,339 3,627,339 Total Department of Agriculture $ 45,211,090 $ 45,211,090 U.S. DEPARTMENT OF DEFENSE Direct Program: Community Economic Adjustment Assistance for Compatible Use and Joint Land Use Studies 12.610 HQ00051110021 28,674 28,674 Community Economic Adjustment Assistance for Compatible Use and Joint Land Use - Prior Yr Adj 12.610 HQ00051110021 5,134 5,134 Total Department of Defense $ 33,808 $ 33,808 U. S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT Direct Programs: Low Income Housing Assistance: Community Development Block Grants/Entitlement Grants 14.218 B-06-UC-06-0508 122,001 122,001 Community Development Block Grants/Entitlement Grants 14.218 B-08-UC-06-0508 152,155 152,155 Community Development Block Grants/Entitlement Grants 14.218 B-09-UC-06-0508 164,688 164,688 Community Development Block Grants/Entitlement Grants 14.218 B-10-UC-06-0508 568,007 568,007 Community Development Block Grants/Entitlement Grants 14.218 B-11-UC-06-0508 286,568 189,447 Community Development Block Grants/Entitlement Grants 14.218 B-11-UC-06-0508 - 97,122 Community Development Block Grants/Entitlement Grants 14.218 B-12-UC-06-0508 285,483 239,315 Community Development Block Grants/Entitlement Grants 14.218 B-12-UC-06-0508 - 46,168 Community Development Block Grants/Entitlement Grants 14.218 B-13-UC-06-0508 856,993 856,993 Community Development Block Grants/Entitlement Grants - 3rd Party Loans 14.218 -- - 2,469,117 Emergency Solutions Grant Program 14.231 E-12-UC-06-0508 79,582 79,582 Emergency Solutions Grant Program 14.231 E-11-UC-06-0508 38,556 38,556 Emergency Solutions Grant Program 14.231 E-13-UC-06-0508 76,056 76,056 Supportive Housing Program 14.235 Various 145,654 145,654 Supportive Housing Program 14.235 E-13-UC-06-0508 31,157 31,157 Home Investment Partnerships Program 14.239 M-09-UC-06-0545 29,718 29,718 Home Investment Partnerships Program 14.239 M-10-UC-06-0545 1,273,200 1,273,200 Home Investment Partnerships Program 14.239 M-11-UC-06-0545 46,062 46,062 Home Investment Partnerships Program 14.239 M-12-UC-06-0545 42,767 42,767 Home Investment Partnerships Program 14.239 E-13-UC-06-0545 79,641 79,641 See accompanying Notes to Schedule of Expenditures of Federal Awards 7 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Federal CFDA Revenue Federal Grantor/Pass-Through Grantor/Program Title Number Pass-Through Grantor's Number Recognized Expenditures U. S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT (continued) Direct Programs (continued): Home Investment Partnerships Program 14.239 -- $ 210,817 $ 210,817 Home Investment Partnerships Program - 3rd Party Loans 14.239 -- - 14,221,119 Continuum of Care Program 14.267 Various 741,242 741,242 Subtotal Direct Programs 5,230,347 21,920,584 Total Department of Housing & Urban Development $ 5,230,347 $ 21,920,584 U. S. DEPARTMENT OF THE INTERIOR Direct Program: Coastal Impact Assistance Program 15.668 F12AF70233-001,F12AF70176 38,128 38,128 Subtotal Direct Program 38,128 38,128 Passed through State Department of Fish & Game: Cooperative Endangered Species Conservation Fund - Prior Yr Adj 15.615 P1182017, P1182018 2,382 2,382 Subtotal Pass-through 2,382 2,382 Passed through State Department of Bureau of Land Management: Taylor Grazing Act 15.227 -- - 1,750 Taylor Grazing Act 15.227 -- 2,291 - Subtotal Pass-through 2,291 1,750 Passed through State Department of Parks & Recreation: Outdoor Recreation - Acquisition, Development and Planning - Los Osos Playground - Prior Yr Adj 15.916 06-01704 14 14 Subtotal Pass-through 14 14 Total Department of Interior $ 42,815 $ 42,274 U. S. DEPARTMENT OF JUSTICE Direct Programs: Public Safety Partnership and Community Policing Grants: SS Awards 16.710 -- 82,400 82,400 State Criminal Alien Assistance Program 16.606 -- 158,109 158,109 Bulletproof Vest Partnership Program - Prior Yr Adj 16.607 -- ( 13,489) (13,489) COPS Technology Program 16.710 2008CKWX0267 17,060 17,060 Federal Asset Forfeiture 16.000 -- 239,512 239,512 Law Enforcement Assistance - Narcotics and Dangerous Drugs - Laboratory Analysis 16.001 2013-46 51,299 51,299 Justice Assistance Grant 16.738 2012-DJ-BX-0990 1,508 1,508 Subtotal Direct Programs 536,399 536,399 Passed through Governor's Office of Emergency Services: Victim Witness Assistance 16.575 VW13320400 76,404 76,404 Unserved/Underserved Victim Advocacy and Outreach 16.582 UV13040400 118,477 118,477 Aftercare Treatment Services 16.593 AF11 01 0400 109,414 109,414 Subtotal Pass-through 304,295 304,295 Passed through the Board of State and Community Corrections: Justice Assistance Grant - Anti-Drug Abuse Enforcement Team Program 16.738 BSCC 626-13 121,946 121,946 Subtotal Pass-through 121,946 121,946 Total Department of Justice $ 962,640 $ 962,640 U. S. DEPARTMENT OF LABOR Passed through State Department of Employment Development: Workforce Investment Act - Adult 17.258 K386330 & K491051 509,149 509,149 Workforce Investment Act - Youth 17.259 K386330,K491051 970,500 970,500 Workforce Investment Act - Dislocated Worker & Rapid Response 17.278 K386330 & K491051 634,590 634,590 Workforce Investment Act - Dislocated Workers & Rapid Response - Pr Yr Adj 17.278 K386330 & K491051 1,152 1,152 Subtotal Pass-through 2,115,391 2,115,391 Total Department of Labor $ 2,115,391 $ 2,115,391 See accompanying Notes to Schedule of Expenditures of Federal Awards 8 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Federal CFDA Revenue Federal Grantor/Pass-Through Grantor/Program Title Number Pass-Through Grantor's Number Recognized Expenditures U. S. DEPARTMENT OF TRANSPORTATION Direct Programs: Airport Improvement Program - Prior Yr Adj 20.106 3-06-0228-37 $ 83,606 $ 83,606 Airport Improvement Program 20.106 3-06-0228-38 1,332,887 1,332,887 Airport Improvement Program 20.106 3-06-0228-040 45,879 45,879 Airport Improvement Program 20.106 3-06-0228-042 -2014 133,258 133,258 Airport Improvement Program 20.106 3-06-0228-041 89,081 89,081 Airport Improvement Program 20.106 3-03-0172-007 85,546 85,546 Subtotal Direct Programs 1,770,257 1,770,257 Passed through State Department of Transportation: Public Ways and Facilities 20.205 BPMPL-5949(124) 52,971 52,971 Public Ways and Facilities - Prior Yr Adj 20.205 ER-18DO(011) 621,652 621,652 Public Ways and Facilities 20.205 BHLS-5949(136) 50,884 50,884 Public Ways and Facilities 20.205 BHLS-5949(137) 100,998 100,998 Public Ways and Facilities 20.205 HSIPL-5949(133) 256,831 256,831 Public Ways and Facilities 20.205 HSIPL-5949(148) 95,307 95,307 Public Ways and Facilities 20.205 HSIPL-5949(149) 101,688 101,688 Public Ways and Facilities - Prior Yr Adj 20.205 BHLS-5949(062) (409) (409) Public Ways and Facilities 20.205 BHLS-5949(063) 5,412 5,412 Public Ways and Facilities 20.205 BRLO-5949(019) 7,461 7,461 Public Ways and Facilities - Prior Yr Adj 20.205 BRLO-5949(019) (979) (979) Public Ways and Facilities 20.205 BRLO-5949(009) 7,652 7,652 Public Ways and Facilities - Prior Yr Adj 20.205 BRLO-5949(009) (1,061) (1,061) Public Ways and Facilities 20.205 BRLO-5949(065) 1,978,142 1,978,142 Public Ways and Facilities - Prior Yr Adj 20.205 BRLO-5949(065) 17,666 17,666 Public Ways and Facilities 20.205 BRLO-5949(116) 168,936 168,936 Public Ways and Facilities 20.205 BRLO-5949(119) 59,516 59,516 Public Ways and Facilities 20.205 BRLO-5949(120) 72,937 72,937 Public Ways and Facilities 20.205 BRLO-5949(127) 122,118 122,118 Public Ways and Facilities 20.205 BRLS-5949(129) 159,344 159,344 Public Ways and Facilities 20.205 BRLS-5949(131) 100,962 100,962 Public Ways and Facilities 20.205 BRLS-5949(135) 263,096 263,096 Safe Accountable, Flex, Efficiency Transportation Eq Act (SAFETEA-LU) 20.205 HPLU-5949 (132) 1,717 1,717 Public Ways and Facilities 20.205 HPLU-5949 (138) 112,931 112,931 Highway Planning and Construction 20.205 HRRRL-5949(111) 794,147 794,147 Highway Planning and Construction - Prior Year Adj 20.205 HRRRL-5949(111) ( 40,000) (40,000) Public Ways and Facilities 20.205 STPL-5949(139) 74,811 74,811 Public Ways and Facilities 20.205 RPSTPLE-5949 (140) 472 472 Public Ways and Facilities 20.205 RPSTPLE 5949(144) 29,757 29,757 Subtotal CFDA Number 20.205 5,214,959 5,214,959 Office Of Traffic Safety 20.600 12-20012 7,528 7,528 Office Of Traffic Safety 20.600 OP 1417 69,606 69,606 Office Of Traffic Safety - Prior Year Revenue 20.600 OP 1417 (12) (12) Office Of Traffic Safety 20.613 OP 1417 1,695 1,695 Subtotal Highway Safety Cluster 78,817 78,817 Minimum Penalties for Repeat Offenders for Driving 20.608 AL4118 18,810 18,810 Office Of Traffic Safety 20.608 OP 1417 47,036 47,036 Office Of Traffic Safety 20.616 OP 1417 39,497 39,497 Subtotal 105,343 105,343 Total Department of Transportation $ 7,169,376 $ 7,169,376 INSTITUTE OF MUSEUM AND LIBRARY SERVICES Passed through State Library: Library Services & Technology Act 45.310 40-8180 17,500 17,500 Subtotal Pass-through 17,500 17,500 Total Institute of Museum and Library Services $ 17,500 $ 17,500 ENVIRONMENTAL PROTECTION AGENCY Passed through State Water Resources Control Board: State Revolving Fund Loan - Outstanding Loan Balance 66.458 68-0281986 13,652,545 13,652,545 Small Water Systems Drinking Water Act 66.468 -- 20,188 20,188 Public Beach Safety Grant 66.472 12-046-250 20,310 20,310 Subtotal Pass-through 13,693,043 13,693,043 Total Environmental Protection Agency $ 13,693,043 $ 13,693,043 See accompanying Notes to Schedule of Expenditures of Federal Awards 9 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Federal CFDA Revenue Federal Grantor/Pass-Through Grantor/Program Title Number Pass-Through Grantor's Number Recognized Expenditures U. S. DEPARTMENT OF HEALTH & HUMAN SERVICES Direct Programs: Area Agency on Aging 93.043 49109A $ 3,800 $ 3,800 Grants to States to Support Oral Health Workforce Activities 93.236 11-10206 34,589 34,589 Grants to States to Support Oral Health Workforce Activities - Prior Yr Adj 93.236 11-10206 1,141 1,141 Adult Treatment Drug Court Collaborative 93.243 1H79TI023740-01 406,153 406,153 Adult Treatment Drug Court Collaborative - Prior Yr Adj 93.243 1H79TI023740-01 51 51 Substance Abuse & Mental Health Services - Projects of Regional & National Significance 93.243 1H79T1024206-01 317,516 317,516 Substance Abuse & Mental Health Services - Projects of Regional & National Significance 93.243 1H79TI023367-01 385,693 385,693 Drug-Free Communities Support Program Grants 93.276 H9SP15668A 123,563 123,563 Drug-Free Communities Support Program Grants 93.276 H9SP15668A 1 1 ARRA - Health Information Technology Professionals in Health Care 93.721 None 106,250 106,250 Subtotal Direct 1,378,757 1,378,757 Passed through State Department of Alcohol & Drug Programs: Block Grants for Prevention and Treatment of Substance Abuse - Discretionary Funds 93.959 -- 999,987 999,987 Block Grants for Prevention and Treatment of Substance Abuse - Discretionary Funds - Prior Yr Adj 93.959 -- (4,866) (4,866) Block Grants for Prevention and Treatment of Substance Abuse - Previous set-aside 93.959 -- 313,072 313,072 Block Grants for Prevention and Treatment of Substance Abuse - Adult & Youth TX Discr Treatment 93.959 -- 177,123 177,123 Block Grants for Prevention and Treatment of Substance Abuse - Friday Night/Club 93.959 -- 30,000 30,000 Block Grants for Prevention and Treatment of Substance Abuse - HIV set-aside 93.959 -- 39,453 39,453 Block Grants for Prevention and Treatment of Substance Abuse - Perinatal set-aside 93.959 -- 72,569 72,569 Subtotal CFDA Number 93.959 1,627,338 1,627,338 Passed through State Department of Child Support Services: Child Support Enforcement - Administration 93.563 -- 2,718,477 2,718,477 Child Support Enforcement - EDP 93.563 -- 139,489 139,489 Subtotal Pass-through 2,857,966 2,857,966 Passed through National Association of County and City Health Officials: Medical Reserve Corps Small Grant Program 93.008 MRC 14-1633 688 688 Subtotal Pass-through 688 688 Passed through State Department of Public Health: Hospital Preparedness Program (HPP) and Public Heath Emergency Preparedness (PHEP) 93.074 EPO 13-43 192,149 192,149 Hospital Preparedness Program (HPP) and Public Heath Emergency Preparedness - Prior Yr Adj 93.074 EPO 13-43 27,550 27,550 Hospital Preparedness Program (HPP) and Public Heath Emergency Preparedness (PHEP) 93.074 EPO 13-43 472,851 472,851 Hospital Preparedness Program (HPP) and Public Heath Emergency Preparedness - Prior Yr Adj 93.074 EPO 13-43 3,358 3,358 Subtotal CFDA Number 93.074 695,908 695,908 Project Grants and Cooperative Agreements for Tuberculosis Control Programs 93.116 5U52PS900515-31 10,381 10,381 Project Grants and Cooperative Agreements for Tuberculosis Control Programs - Prior Yr Adj 93.116 5U52PS900515-31 2,108 2,108 Subtotal CFDA Number 93.116 12,489 12,489 Childhood Lead Poisoning Prevention Projects 93.197 11-10624 21,677 21,677 Subtotal CFDA Number 93.197 21,677 21,677 Family Planning Services 93.217 88000-5320-71209-14 115,658 115,658 Family Planning Services - Prior Yr Adj 93.217 88000-5320-71209-14 27 27 Subtotal CFDA Number 93.217 115,685 115,685 Immunization Cooperative Agreements 93.268 13-20343 92,650 92,650 Immunization Cooperative Agreements - Prior Yr Adj 93.268 13-20343 1 1 Subtotal CFDA Number 93.268 92,651 92,651 PPHF - Community Transformation Grants and National Dissemination and Support 93.531 1019892 7,653 7,653 Subtotal CFDA Number 93.531 7,653 7,653 HIV Care Formula Grants - AIDS Surveillance Program 93.917 13-230156 30,325 30,325 HIV Care Formula Grants - AIDS Surveillance Program - Prior Yr Adj 93.917 13-230156 5,523 5,523 Subtotal CFDA Number 93.917 35,848 35,848 Preventive Health Services - Sexually Transmitted Diseases Research 93.977 11-10058-A01 200 200 Maternal and Child Health Services Block Grants to the States 93.994 2013-40 428,812 428,812 Maternal and Child Health Services Block Grants to the States - Prior Yr Adj 93.994 2013-40 396 396 Subtotal CFDA Number 93.994 429,208 429,208 Subtotal Pass-through 1,411,319 1,411,319 See accompanying Notes to Schedule of Expenditures of Federal Awards 10 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Federal CFDA Revenue Federal Grantor/Pass-Through Grantor/Program Title Number Pass-Through Grantor's Number Recognized Expenditures U. S. DEPARTMENT OF HEALTH & HUMAN SERVICES (continued) Passed through State Department of Health Care Services: Medical Assistance Program: Medical Assistance Program - Administration 93.778 09-86011-A02 $ 221,851 $ 221,851 Medical Assistance Program - Administration -Targeted Case Management 93.778 40-1318 14,881 14,881 Medical Assistance Program - Administration 93.778 09-86011 A02 41,162 41,162 Medical Assistance Program - Administration - Prior Yr Adj 93.778 09-86011 A01 241,657 241,657 Medical Assistance Program - Foster Care 93.778 SLO 40 120,398 120,398 Medical Assistance Program - Child Health and Disability Prevention 93.778 SLO 40 186,230 186,230 Medical Assistance Program - Children Services 93.778 SLOCO/MTP 699,383 699,383 Medical Assistance Program - Administration Public Authority for IHSS 93.778 -- 7,075,914 7,075,914 Medical Assistance Program - Administration 93.778 -- 213,732 213,732 Subtotal 8,815,208 8,815,208 Mental Health-Substance Abuse (SAMHSA) 93.958 -- 377,037 351,443 Mental Health-Substance Abuse (SAMHSA) 93.958 -- 96,163 96,163 Subtotal CFDA Number 93.958 473,200 447,606 Subtotal Pass-through 9,288,408 9,262,814 Passed through State Department of Mental Health: Mental Health-McKinney Projects for Assistance in Transition from Homelessness 93.150 -- 46,280 46,280 Mental Health-McKinney Projects for Assistance in Transition from Homelessness - Prior Yr Adj 93.150 -- 122 122 Subtotal CFDA Number 93.150 46,402 46,402 Passed through State Department of Social Services: ARRA - Guardian Assistance 93.090 -- 157,958 157,958 ARRA - Guardian Assistance - Prior Yr Adj 93.090 -- 2,108 2,108 Subtotal CFDA Number 93.090 160,066 160,066 Promoting Safe and Stable Families 93.556 -- 136,468 136,468 Subtotal CFDA Number 93.556 136,468 136,468 Refugee Cash Assistance 93.566 -- 6,339 6,339 Subtotal CFDA Number 93.566 6,339 6,339 Temporary Assistance for Needy Families: Assistance: CALWORKS 93.558 -- 3,499,652 3,499,652 Administration: CalWORKS, SAWS - CalWIN, TANF 93.558 -- 9,380,203 9,380,203 Administration: CalWORKS, SAWS - CalWIN, TANF - Pr Yr Adj 93.558 -- ( 34,574) (34,574) Subtotal CFDA Number 93.558 12,845,281 12,845,281 Foster Care - Title IV-E Administration: Probation - Title IV E 93.658 -- 515,550 515,550 Administration: Probation - Title IV E - Pr Yr Adj 93.658 -- ( 74,694) (74,694) Child Welfare Services - Title IV E 93.658 -- 3,567,706 3,567,706 Child Welfare Services - Title IV E - Pr Yr Adj 93.658 -- 1,271 1,271 Assistance: Foster Care 93.658 -- 2,342,783 2,342,783 Assistance: Foster Care - Pr Yr Adj 93.658 -- 5,599 5,599 Subtotal CFDA Number 93.658 6,358,215 6,358,215 Child Welfare Services Title IV-B 93.645 -- 177,427 177,427 Child Welfare Services Title IV-B - Pr Yr Adj 93.645 -- ( 19,412) (19,412) Administration: Adoption 93.659 -- 893,641 893,641 Administration: Adoption - Pr Yr Adj 93.659 -- 12,168 12,168 Assistance: Adoption 93.659 -- 3,097,072 3,097,072 Assistance: Adoption - Pr Yr Adj 93.659 -- (1,032) (1,032) Foster Care Assistance - Title XX 93.667 -- 126,127 126,127 Child Welfare Services - Title XX 93.667 -- 351,408 351,408 Independent Living Program 93.674 -- 120,671 120,671 Independent Living Program - Pr Yr Adj 93.674 -- 337 337 Subtotal 4,758,407 4,758,407 Subtotal Pass-through 24,264,776 24,264,776 Subtotal Pass-through programs 39,496,897 39,471,303 Total Department of Health & Human Services $ 40,875,654 $ 40,850,060 See accompanying Notes to Schedule of Expenditures of Federal Awards 11 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 Federal CFDA Revenue Federal Grantor/Pass-Through Grantor/Program Title Number Pass-Through Grantor's Number Recognized Expenditures DEPARTMENT OF HOMELAND SECURITY Passed through State Department of Boating & Waterways: Non Motorized Boating Access Development Grant 97.012 10-108-803 $ 41,955 $ 41,955 Non Motorized Boating Access Development Grant 97.012 11-204-780 12,380 12,380 Subtotal CFDA Number 97.012 54,335 54,335 Passed through Governor's Office of Emergency Services: Hazard Mitigation Grants: FY 11 Pre-Disaster Mitigation 97.047 2011-0002 9,229 9,229 FY 11 Pre-Disaster Mitigation - Pr Yr Adj 97.047 2011-0002 (519) (519) Subtotal CFDA Number 97.047 8,710 8,710 Emergency Management Performance Grants: Emergency Management Performance Grants - Pr Yr Adj 97.042 2012-0027 (2,543) (2,543) Emergency Management Performance Grants - 2012 97.042 2013-0047 76,707 76,707 Subtotal CFDA Number 97.042 74,164 74,164 Homeland Security Grant Program - Prior Year Adjustment 97.067 2010-0085 157 - Homeland Security Grant Program - Prior Year Adjustment 97.067 2010-0085 4,365 4,365 Homeland Security Grant Program 97.067 2011-0048 73,106 73,106 Homeland Security Grant Program - Prior Year Adjustment 97.067 2011-0048 5,759 5,759 Homeland Security Grant Program 97.067 -- 19,000 19,000 Homeland Security Grant Program - Prior Year Adjustment 97.067 -- 11,114 11,114 Homeland Security Grant Program 97.067 2011-0077 174,933 174,933 Homeland Security Grant Program 97.067 2011-SS-0077 11,651 11,651 Homeland Security Grant Program - Prior Year Adjustment 97.067 2011-0077 1,759 1,759 Homeland Security Grant Program 97.067 2012-SS-00123 9,672 9,672 Homeland Security Grant Program 97.067 2012-SS-0123 079-0000 146,227 146,227 Homeland Security Grant Program - Prior Year Adjustment 97.067 2012-SS-0123 079-0000 7,449 7,449 Homeland Security Grant Program 97.067 2012-00123 63,898 63,898 Homeland Security Grant Program 97.067 NA 5,000 5,000 Homeland Security Grant Program 97.067 Stonegarden Grant 2012-1123 79,203 79,203 Homeland Security Grant Program 97.067 Stonegarden Grant 2013-1110 149,358 149,358 Homeland Security Grant Program 97.067 -- 38,000 38,000 Subtotal CFDA Number 97.067 800,651 800,494 Subtotal Passed-through 883,525 883,368 SubtotalPass-throughs 937,860 937,703 Total Department of Homeland Security $ 937,860 $ 937,703 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 116,289,524 $ 132,953,469 See accompanying Notes to Schedule of Expenditures of Federal Awards 12 COUNTY OF SAN LUIS OBISPO Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 NOTE 1: REPORTING ENTITY The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all federal awards programs of the County of San Luis Obispo (County). The County’s reporting entity is defined in Note 1 to the County’s basic financial statements. All federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the schedule. Expenditures funded by the American Recovery and Reinvestment Act of 2009 are denoted by the prefix “ARRA” in the federal program title. NOTE 2: BASIS OF ACCOUNTING The accompanying SEFA is presented using the modified accrual basis of accounting for program expenditures accounted for in governmental funds and the accrual basis of accounting for expenditures accounted for in proprietary funds, as described in Note 1 of the County’s basic financial statements. NOTE 3: RELATIONSHIP TO FINANCIAL STATEMENTS The amounts reported in the accompanying SEFA agree, in all material respects, to amounts reported within the County’s financial statements. Federal award revenues are reported principally in the County’s financial statements as intergovernmental revenues in the General and Special Revenue funds. NOTE 4: SUBRECIPIENTS Of the federal expenditures presented in the SEFA, the County provided federal awards to subrecipients as follows: Federal CFDA Program Title Amount 10.561 Supplemental Nutrition Assistance $ 91,472 14.218 Community Development Block Grants/Entitlement Grants 2,289,163 14.231 Emergency Solutions Grant Program 187,669 14.235 Supportive Housing Program 176,811 14.239 Home Investment Partnerships Program 1,411,005 14.267 Continuum of Care Program 741,242 15.227 Taylor Grazing Act 1,750 17.258 Workforce Investment Act - Adult 331,603 17.259 Workforce Investment Act - Youth 853,016 17.278 Workforce Investment Act - Dislocated Worker/Rapid Response 455,036 $ 6,538,767 13 COUNTY OF SAN LUIS OBISPO Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 NOTE 5: LOANS WITH CONTINUING COMPLIANCE REQUIREMENT Outstanding federally-funded program loans with a continuing compliance requirement had the following balances during the year: Federal Amount Outstanding CFDA Program Title July 1, 2013 New Loans Loan Pymnts June 30, 2014 14.218 Community Development Block Grants/Entitlement Grants $ 2,469,117 $ - $ - $ 2,469,117 14.239 HOME Investment Partnerships 14,221,119 210,817 (785,500) 13,646,436 Program NOTE 6: OTHER LOANS Outstanding federally-funded program loans had the following balances during the year: Federal Amount Outstanding CFDA Program Title June 30, 2014 10.760, 10.781 Water and Waste Program Cluster $ 7 5,194,212 66.458 State Revolving Fund 1 9,940,961 * * This amount includes federal and state funds. NOTE 7: PASS-THROUGH ENTITIES’ IDENTIFYING NUMBER When federal awards are received from a pass-through entity, the SEFA shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the County determined that no identifying number is assigned for the program or the County was unable to obtain an identifying number from the pass-through entity. 14 COUNTY OF SAN LUIS OBISPO Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2014 NOTE 8: TOTAL FEDERAL AWARDS EXPENDED BY CFDA NUMBER When there is more than one program under a single CFDA number, the SEFA totals all programs under the one CFDA number. Occasionally, however, this total could not be conveniently displayed because all programs under one CFDA number were not contiguous. When this occurred, this total is not shown in the Schedule, but instead is provided below: Total Federal Total Federal CFDA No Expenditures CFDA No Expenditures 10.760 $ 1,062,171 17.278 $ 635,742 10.781 38,317,422 20.600 77,122 14.218 4,905,013 20.608 65,846 14.231 194,194 93.236 35,730 14.235 176,811 93.243 1,109,413 14.239 15,903,324 93.276 123,564 16.710 99,460 93.645 158,015 93.659 4,001,849 93.667 477,535 93.674 121,008 15 THIS PAGE INTENTIONALLY LEFT BLANK 16 COUNTY OF SAN LUIS OBISPO Schedule of Findings and Questioned Costs For the Year Ended June 30, 2014 Section 1 Financial Statements Summary of Auditor’s Results 1. Type of auditor’s report issued: Unmodified 2. Internal controls over financial reporting: a. Material weaknesses identified? Yes b. Significant deficiencies identified not considered to be material weaknesses? None Reported 3. Noncompliance material to financial statements noted? No Federal Awards 1. Internal control over major programs: a. Material weaknesses identified? No b. Significant deficiencies identified not considered to be material weaknesses? None Reported 2. Type of auditor’s report issued on compliance for major programs: Unmodified 3. Any audit findings disclosed that are required to be reported in accordance with Circular OMB A-133, Section 510(a)? No 4. Identification of major programs: CFDA Number Name of Federal Program 20.205 Highway Planning and Construction 66.458 Capitalization Grants for Clean Water State Revolving Funds 93.558 Temporary Assistance for Needy Families 93.659 Adoption Assistance Program 5. Dollar Threshold used to distinguish between Type A and Type B programs? $ 3,000,000 6. Auditee qualified as a low-risk auditee under OMB Circular A-133, Section 530? Yes Section 2 Financial Statement Findings Receivables Cutoff 2014-001 Section 3 Federal Award Findings and Questioned Costs None Reported 17 COUNTY OF SAN LUIS OBISPO Schedule of Findings and Questioned Costs For the Year Ended June 30, 2014 Finding 2014-001 Receivables Cutoff Criteria County policies and procedures should ensure year-end accruals are properly identified and recorded for all account balances, including revenues and receivables, during the year-end closing process,. Condition During our audit, we noted two significant receipts in the capital projects fund for State aid that were recognized in Fiscal Year 2014-15, but should have been accrued to 2013-14 since they were reimbursements for Fiscal Year 2013-14 project expenditures. The amount of the audit adjustment was $3.3 million. Cause The County has procedures designed to review payments received early in the new fiscal year to determine if accrual to the prior fiscal year is appropriate. One of these procedures was overlooked resulting in failure to recognize a receivable and revenue for the two noted receipts in the correct fiscal year. Effect of Condition Prior to the audit adjustment intergovernmental revenue and committed fund balance was understated by $3.3 million in the capital projects fund at June 30, 2014. The amounts were corrected by audit adjustment. Recommendation To ensure proper revenue recognition, we recommend that the County review all significant deposits received after the June 30 cutoff to ensure revenue is recorded in the proper accounting period. Management Response Management agrees with the recommendation and will more closely monitor the performance of year-end review procedures 18 COUNTY OF SAN LUIS OBISPO Summary Schedule of Prior Audit Findings Federal Awards For the Year Ended June 30, 2014 There were no prior audit findings. 19 THIS PAGE INTENTIONALLY LEFT BLANK 20 SUPPLEMENTARY SCHEDULE OF GRANT EXPENDITURES THIS PAGE INTENTIONALLY LEFT BLANK COUNTY OF SAN LUIS OBISPO Schedule of the Governor's Office of Emergency Services and the Board of State and Community Corrections For the Year Ended June 30, 2014 Share of Expenditures Expenditures Claimed Current Year For the Period For the Year Cumulative Through Ended As of Federal State County Program June 30, 2013 June 30, 2014 June 30, 2014 Share Share Share Victim Witness Assistance - VW13320400 Personal services $ 644,628 $ 264,526 $ 909,154 $ 76,404 $ 104,546 $ 83,576 Totals $ 644,628 $ 264,526 $ 909,154 $ 76,404 $ 104,546 $ 83,576 Unserved/Underserved Victim Advocacy and Outreach - UV13040400 Personal services $ 438,063 $ 156,082 $ 594,145 $ 118,477 $ -- $ 37,605 Totals $ 438,063 $ 156,082 $ 594,145 $ 118,477 $ -- $ 37,605 Aftercare Treatment Services - AF11 01 0400 Operating expenses $ 249,891 $ 109,414 $ 359,305 $ 109,414 $ -- $ -- Totals $ 249,891 $ 109,414 $ 359,305 $ 109,414 $ -- $ -- Justice Assistance Grant - Anti-Drug Abuse Enforcement Team Program - BSCC 626-13 Personal services $ 151,921 $ 57,863 $ 209,784 $ 57,863 $ -- $ -- Operating expenses 24,380 64,083 88,463 64,083 -- -- Totals $ 176,301 $ 121,946 $ 298,247 $ 121,946 $ -- $ -- 2012 Stonegarden Grant - 2012-1123 Personal services $ 22,236 $ 56,967 $ 79,203 $ -- $ 56,967 $ -- Totals $ 22,236 $ 56,967 $ 79,203 $ -- $ 56,967 $ -- 2013 Stonegarden Grant - 2013-1110 Equipment $ -- $ 149,358 $ 149,358 $ -- $ 149,358 $ -- Totals $ -- $ 149,358 $ 149,358 $ -- $ 149,358 $ -- 21 THIS PAGE INTENTIONALLY LEFT BLANK 22 AVIATION PASSENGER FACILITIES CHARGES THIS PAGE INTENTIONALLY LEFT BLANK INDEPENDENT AUDITOR’S REPORT ON SCHEDULE OF PASSENGER FACILITY CHARGES, REVENUES, AND EXPENSES Board of Supervisors County of San Luis Obispo San Luis Obispo, California Report on Schedule for Each Quarterly Period We have audited the accompanying Schedule of Passenger Facility Charges (PFC), Revenues, and Expenses (Schedule) of the County of San Luis Obispo (County), for the annual period and each quarterly period from July 1, 2013 to June 30, 2014. Management’s Responsibility The Schedule is the responsibility of the County’s management. Our responsibility is to express an opinion the Schedule based on our audit. Auditor’s Responsibility 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 Schedule is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Schedule. We believe that our audit provides a reasonable basis for our opinion. Opinion on Schedule of Passenger Facility Charges In our opinion, the Schedule referred to above presents fairly, in all material respects, the passenger facility charges received, held, and used by the County for the period and each quarter during the period from July 1, 2013 to June 30, 2014, as defined by the Federal Aviation Administration of the U.S. Department of Transportation. Report on Internal Control Over Compliance In accordance with Government Auditing Standards we have also issued our report dated December 16, 2014 on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Roseville, California December 16, 2014 23 925 Highland Pointe Drive, Suite 450, Roseville, CA 95678-5418 tel: 916.784.7800 fax: 916.784.7850 www.gallina.com THIS PAGE INTENTIONALLY LEFT BLANK 24 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO THE PASSENGER FACILITY CHARGES PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE Board of Supervisors County of San Luis Obispo San Luis Obispo, California Compliance We have audited the compliance of the County of San Luis Obispo (County) with the compliance requirements described in the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration (Guide), for its Passenger Facility Charge program for the period and each quarter during the period from July 1, 2013 to June 30, 2014. Compliance with the requirements of laws and regulations applicable to its Passenger Facility Charge program is the responsibility of the County’s management. Our responsibility is to express an opinion on the County’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 the Guide. Those standards and the Guide require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material effect on the passenger facility charge program occurred. An audit includes examining, on a test basis, evidence about the County'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 of the County's compliance with those requirements. In our opinion, the County complied, in all material respects, with the requirements referred to above that are applicable to its Passenger Facility Charge program for the period and each quarter during the period from July 1, 2013 to June 30, 2014. Internal Control Over Compliance The management of the County is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws and regulations applicable to the Passenger Facility Charge program. In planning and performing our audit, we considered the County’s internal control over compliance with requirements that could have a direct and material effect on the Passenger Facility Charge 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 County’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 the passenger facility charge program on a timely basis. 25 925 Highland Pointe Drive, Suite 450, Roseville, CA 95678-5418 tel: 916.784.7800 fax: 916.784.7850 www.gallina.com Board of Supervisors County of San Luis Obispo San Luis Obispo, California A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that a material noncompliance with a type of compliance requirement of the passenger facility charge 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 would not necessarily identify all deficiencies in internal control that might be 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. 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 financial statements or to the 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. This report is intended solely for the information of management, the Board of Supervisors, the U.S. Federal Aviation Administration, and the airline parties operating at the Airport and it is not intended to be and should not be used by anyone other than these specified parties. Roseville, California December 16, 2014 26 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE SCHEDULE OF PASSENGER FACILITY CHARGES, REVENUES AND EXPENSES PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Supervisors County of San Luis Obispo San Luis Obispo, California 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 Schedule of Passenger Facility Charges, Revenues and Expenses (Schedule) of the County of San Luis Obispo (County), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements, and have issued our report thereon dated December 16, 2014. Our report includes a reference to other auditors who audited the financial statements of the San Luis Obispo County Pension Trust Fund and the First 5 San Luis Obispo County, a discretely presented component unit, as described in our report on the County’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County’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 opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’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 entity'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. 27 925 Highland Pointe Drive, Suite 450, Roseville, CA 95678-5418 tel: 916.784.7800 fax: 916.784.7850 www.gallina.com Board of Supervisors County of San Luis Obispo San Luis Obispo, California Compliance and Other Matters As part of obtaining reasonable assurance about whether the Schedule is 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 County'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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Roseville, California December 16, 2014 28 Collected and Expended For the Year Ended June 30, 2014 Approved Receipts Receipts Unliquidated Project or Revenues Interest or Revenues Interest Balance in Allocation Recognized Earned Expenditures Recognized Earned Expenditures PFC Trust AWP-97-04-I-00-SBP, 99-06-C-00-SBP Revenues $ - $ 366,804 $ 2,211 $ - $ 4,198,159 $ 158,051 $ - $ - Expenditures: - - - - - - - - Terminal development and construction 6,820,830 - - 43,689 - - 3,168,263 - Airport staff and administration - - - - - - 102,286 - Transfers (to) from other PFCs - - - - - - - - Total passenger facility charges - PFC 04 and 06 6,820,830 366,804 2,211 43,689 4,198,159 158,051 3,270,549 1,085,661 AWP-07-08-C-00-SBP Revenues - - - - 1,427,539 45,537 - - Expenditures: Environmental assessment 110,000 - - - - - 110,000 - Runway extension 908,025 - - - - 21,011 475,663 - Property acquisition 287,028 - - - - - 30,387 - EMAS 605,262 - - - - - 602,120 - Update layout plan 2,875 - - 2,875 - - 2,875 - ARFF mass casualty vehicle 115,000 - - - - - 107,726 - Transfers to other PFCs - - - - - - - - Total passenger facility charges - PFC 08 2,028,190 - - 2,875 1,427,539 66,548 1,328,771 165,316 Total passenger facility charges $ 8,849,020 $ 366,804 $ 2,211 $ 46,564 $ 5,625,698 $ 224,599 $ 4,599,320 $ 1,250,977 29 COUNTY OF SAN LUIS OBISPO, CALIFORNIA Schedule of Passenger Facility Charges Current Year Project to Date Approved Federal Application Number/ Project Description