Single Audit Report, 2015-16

COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2016 COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2016 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 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance .................................................................................................. 3 Schedule of Expenditures of Federal Awards .................................................................................... 5 Notes to Schedule of Expenditures of Federal Awards ..................................................................... 11 Schedule of Findings and Questioned Costs ..................................................................................... 13 Supplementary Schedule of Grant Expenditures Schedule of the Governor’s Office of Emergency Services and the Board of State and Community Corrections Grant Expenditures .................................................... 17 Aviation Passenger Facility Charge Program Independent Auditor’s Report on Schedule of Passenger Facility Charge Revenues and Expenses ........................................................................................ 18 Independent Auditor’s Report on Compliance with Requirements Applicable to the Passenger Facility Charge Program and on Internal Control Over Compliance ............................. 20 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Schedule of Passenger Facility Charge Revenues and Expenses Performed in Accordance with Government Auditing Standards .............................................................................................. 22 Schedule of Passenger Facility Charge Revenues and Expenses ................................................... 24 Schedule of Current Year Findings and Questioned Costs – Airport Passenger Facility Charge Program .................................................................................... 25 Status of Prior Year Findings and Questioned Costs – Airport Passenger Facility Charge Program .................................................................................... 26 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 (the County), as of and for the year ended June 30, 2016, 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 21, 2016. Our report includes a reference to other auditors who audited the financial statements of 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. 1 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. 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 County’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California December 21, 2016 2 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE 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 (the County) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) 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, 2016. 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 federal statutes, regulations, and the terms and conditions of its federal awards 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 the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 of the Major Federal Programs 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, 2016. 3 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 the Uniform Guidance, 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 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, 2016, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements. We issued our report thereon dated December 21, 2016, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic 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 basic 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 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 schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California March 22, 2017 4 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 ` FEDERAL 2015-16 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2015-16 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF AGRICULTURE Direct Programs: Water and Waste Disposal Program CA-WW-40-00-14 10.781 $ 1,044,011 $ 1,044,011 $ - Subtotal Water and Waste Disposal Program Cluster 1,044,011 1,044,011 - Emergency Community Water Assistance ECWAG-CSA23 Intertie 10.763 187,896 187,896 - Emergency Community Water Assistance - Prior Year Adjustment ECWAG-CSA23 Intertie 10.763 104,304 104,304 - Subtotal Direct CFDA 10.763 292,200 292,200 - Passed through State Department of Health Care Services: Women Infant Children Nutrition Program 15-10074 10.557 1,325,838 1,325,838 - Women Infant Children Nutrition Program - Prior Year Adjustment 15-10074 10.557 832 832 - Subtotal Pass-Through CFDA 10.557 1,326,670 1,326,670 - Passed through State Department of Food and Agriculture: Glassy-Winged Sharpshooter 14-0360-SF 10.025 317,023 317,023 Glassy-Winged Sharpshooter - Prior Year Adjustment 14-0360-SF 10.025 1,119 1,119 Asian Citrus Psyllid Detection 14-0528-SF, 15-0557-SF 10.025 266,191 266,191 Asian Citrus Psyllid Detection - Prior Year Adjustment 14-0528-SF, 15-0557-SF 10.025 32 32 European Grape Vine Moth 14-0565-SF, 15-0582-SF 10.025 7,907 7,907 Light Brown Apple Moth Detection 14-0471-SF, 15-0513-SF 10.025 8,011 8,011 Light Brown Apple Moth Detection - Prior Year Adjustment 14-0471-SF, 15-0513-SF 10.025 1 1 Light Brown Apple Moth Regulatory - Prior Year Adjustment 14-0500-SF, 15-0475-SF, 15-0565-SF 10.025 81 81 Light Brown Apple Moth Regulatory 14-0500-SF, 15-0475-SF, 15-0565-SF 10.025 110,040 110,040 Pest Detection Trapping 15-0234 10.025 175,456 175,456 Subtotal Pass-Through CFDA 10.025 885,862 885,861 Passed through State Department of Public Health: Supplemental Nutrition Assistance Program Education (SNAP-ED) 13-20492 10.561 546,497 546,497 85,560 CalFresh & CalFresh Employment Training - Prior Year Adjustment Not Applicable 10.561 (18,294) (18,294) - CalFresh & CalFresh Employment Training Not Applicable 10.561 3,853,749 3,853,749 - Subtotal Pass-Through CFDA 10.561 4,381,952 4,381,952 85,560 Total U.S. Department of Agriculture 7,930,695 7,930,694 85,560 U.S. DEPARTMENT OF DEFENSE Direct Program: Comm. Econ. Adj. Plan. Asst Joint Land Use -- Prior Year Adjustment EN1003-15-02 12.610 765 765 - Comm. Econ. Adj. Plan. Asst Joint Land Use Studies EN1003-15-02 12.610 37,421 37,421 - Total U.S. Department of Defense 38,186 38,186 - U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT Direct Programs: Low Income Housing Assistance Community Development Block Grants Community Development Block Grants B-06-UC-06-0508 14.218 1,522 1,522 - Community Development Block Grants B-09-UC-06-0508 14.218 2,759 2,759 - Community Development Block Grants B-11-UC-06-0508 14.218 - 174,695 174,695 Community Development Block Grants B-11-UC-06-0508 14.218 198,825 24,130 24,130 Community Development Block Grants B-12-UC-06-0508 14.218 54,624 54,624 - Community Development Block Grants B-13-UC-06-0508 14.218 77,575 77,575 - Community Development Block Grants B-14_UC-06-0508 14.218 525,683 525,683 525,683 Community Development Block Grants B-15_UC-06-0508 14.218 1,190,132 1,190,132 1,067,109 Subtotal CFDA 14.218 2,051,120 2,051,120 1,791,617 Emergency Solutions Grant Program E-14-UC-06-0508 14.231 15,775 15,775 15,775 Emergency Solutions Grant Program E-15-UC-06-0508 14.231 107,465 107,465 105,260 Subtotal CFDA 14.231 123,240 123,240 121,035 (Continued) See accompanying notes to schedule of expenditures of federal awards and independent auditor’s report on compliance for each major program and on internal control over compliance required by the Uniform Guidance. 5 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) FOR THE YEAR ENDED JUNE 30, 2016 FEDERAL 2015-16 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2015-16 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT (Continued) Home Partnership Investment Program M-09-UC-05-0545 14.239 65,049 65,049 10,000 Home Partnership Investment Program M-11-UC-05-0545 14.239 500 500 - Home Partnership Investment Program M-13-UC-06-0545 14.239 119,960 119,960 119,960 Home Partnership Investment Program M-14-UC-05-0545 14.239 877 877 - Home Partnership Investment Program M-15-UC-05-0545 14.239 280,413 280,413 273,062 Home Partnership Investment Program - 3rd Party Loans 14.239 - 4,927,060 - Subtotal CFDA 14.239 466,799 5,393,859 403,022 Continuum of Care Program 2014 Various 14.267 762,643 762,643 762,643 Continuum of Care Program 2013 Various 14.267 308,700 308,700 261,127 Subtotal CFDA 14.267 1,071,343 1,071,343 1,023,770 Total U.S. Department of Housing & Urban Development 3,712,502 8,639,562 3,339,444 U.S. DEPARTMENT OF THE INTERIOR Direct Programs: Coastal Impact Assistance Program F12AF70233-001,F12AF70176 15.668 32,827 32,827 - Subtotal Direct CFDA 15.668 32,827 32,827 - Passed through California Bureau of Land Management: Taylor Grazing Act Not Applicable 15.227 1,889 1,889 - Subtotal Pass-Through CFDA 15.227 1,889 1,889 - Total U.S. Department of Interior 34,716 34,716 - U.S. DEPARTMENT OF JUSTICE Direct Programs: Bureau of Immigration & Customs Enforcement Not Applicable 16.710 51,000 51,000 - State Criminal Alien Assistance Program Not Applicable 16.606 128,078 128,078 - Federal Asset Forfeiture Not Applicable 16.000 55,446 55,446 - DEA Domestic Cannabis Eradication & Suppression 2015-10 16.111 54,996 54,996 - DEA Domestic Cannabis Eradication & Suppression 2016-45 16.111 10,985 10,985 - Subtotal Direct CFDA 16.111 65,981 65,981 - Justice Assistance Grant 2015-DJ-BX-0671 16.738 16,114 16,114 - Passed through California Emergency Management Agency: Victim Witness Assistance VW14330400 16.575 165,142 165,142 - Unserved/Underserved Victim Advocacy and Outreach XV15A10400 16.575 11,837 11,837 - Unserved/Underserved Victim Advocacy and Outreach XV15A10400 16.575 15,097 15,097 - Subtotal Pass-Through CFDA 16.575 192,076 192,076 - Unserved/Underserved Victim Advocacy and Outreach UV14050400 16.582 98,027 98,027 - Total U.S. Department of Justice 606,722 606,722 - U.S. DEPARTMENT OF LABOR Passed through California Employment Development Department: Workforce Investment Act - Adult K594794 & K698395 17.258 613,766 613,766 386,437 Workforce Investment Act - Youth K594794 & K698395 17.259 852,084 852,084 706,610 Workforce Investment Act - Dislocated Worker & Rapid Response K594794 & K698395 17.278 650,793 650,793 414,081 Subtotal Pass-Through Workforce Investment Act Cluster 2,116,643 2,116,643 1,507,128 Total U.S. Department of Labor 2,116,643 2,116,643 1,507,128 (Continued) See accompanying notes to schedule of expenditures of federal awards and independent auditor’s report on compliance for each major program and on internal control over compliance required by the Uniform Guidance. 6 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) FOR THE YEAR ENDED JUNE 30, 2016 FEDERAL 2015-16 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2015-16 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF TRANSPORTATION Direct programs: Airport Improvement Program 3-06-0228-041 20.106 1,361 1,361 - Airport Improvement Program - Prior Year Adjustment 3-06-0228-041 20.106 (37,607) (37,607) - Airport Improvement Program 3-06-0228-043-2015 20.106 5,432,521 5,432,521 - Airport Improvement Program 3-06-0228-044-2015 20.106 9,350 9,350 - Airport Improvement Program 3-06-0228-045-2015 20.106 1,626,145 1,626,145 - Subtotal Direct CFDA 20.106 7,031,770 7,031,770 - Passed through State Department of Transportation: Public Ways and Facilities BPMP-5949(151) 20.205 16,489 16,489 - Public Ways and Facilities BHLS-5949(136) 20.205 184,610 184,610 - Public Ways and Facilities BHLS-5949(137) 20.205 213,684 213,684 - Public Ways and Facilities HSIPL-5949(148) 20.205 468,512 468,512 - Public Ways and Facilities HSIPL-5949(149) 20.205 792,912 792,912 - Public Ways and Facilities - Prior year adjustment HSIPL-5949(149) 20.205 (4,967) (4,967) - Public Ways and Facilities HSIPL-5949(154) 20.205 685,201 685,201 - Public Ways and Facilities BRLO-5949(019) 20.205 4,457 4,457 - Public Ways and Facilities - Prior year adjustment BRLO-5949(019) 20.205 (1,046) (1,046) - Public Ways and Facilities BRLO-5949(009) 20.205 8,190 8,190 - Public Ways and Facilities BRLO-5949(065) 20.205 144,394 144,394 - Public Ways and Facilities - Prior year adjustment BRLO-5949(065) 20.205 (114,728) (114,728) - Public Ways and Facilities BRLO-5949(116) 20.205 2,048,776 2,048,776 - Public Ways and Facilities - Prior year adjustment BRLO-5949(116) 20.205 (74,141) (74,141) - Public Ways and Facilities BRLO-5949(119) 20.205 167,367 167,367 - Public Ways and Facilities BRLO-5949(120) 20.205 82,033 82,033 - Public Ways and Facilities BRLO-5949(127) 20.205 130,295 130,295 - Public Ways and Facilities BRLO-5949(152) 20.205 11,406 11,406 - Public Ways and Facilities BRLO-5949(156) 20.205 8,895 8,895 - Public Ways and Facilities BRLO-5949(157) 20.205 12,397 12,397 - Public Ways and Facilities BRLS-5949(129) 20.205 131,014 131,014 - Public Ways and Facilities BRLS-5949(131) 20.205 209,938 209,938 - Public Ways and Facilities BRLS-5949(135) 20.205 49,524 49,524 - Public Ways and Facilities - Prior year adjustment BRLS-5949(135) 20.205 34,941 34,941 - Safe Acctble, Flex, Effic Transp Eq Act (SAFETEA-LU) HPLU-5949 (132) 20.205 11,760 11,760 - Public Ways and Facilities STPL-5949(139) 20.205 340,619 340,619 - Federal Transportation Improvement Program RPSTPLE-5949 (140) 20.205 107,258 107,258 - Public Ways and Facilities RPSTPLE 5949(144) 20.205 66 66 - Public Ways and Facilities RPLCML-5949(074) 20.205 79,404 79,404 - Subtotal Pass-Through CFDA 20.205 5,749,258 5,749,260 - Office Of Traffic Safety PS1605 20.600 90,930 90,930 - Office Of Traffic Safety OP1502 20.600 18,707 18,707 - Office Of Traffic Safety - Prior Year Adjustment OP1502 20.600 276 276 - Office Of Traffic Safety PS 1605 20.616 70,580 70,580 - Office Of Traffic Safety OP1502 20.616 17,802 17,802 - Office Of Traffic Safety - Prior Year Adjustment OP1502 20.616 1,963 1,963 - Subtotal Pass-Through Highway Safety Cluster 200,258 200,258 - Safe States Alliance Ped Project 14-10769 20.614 3,779 3,779 - Safe States Alliance Ped Project - Prior Year Adjustment 14-10769 20.614 63 63 - Subtotal Pass-Through CFDA 20.614 3,842 3,842 - Total U.S. Department of Transportation 12,985,128 12,985,130 - ENVIRONMENTAL PROTECTION AGENCY Passed through State Water Resource Control Board: Public Beach Safety Grant - Prior Year Adjustment 12-046-250 66.472 (14,036) (14,036) - Total Enviromental Protection Agency (14,036) (14,036) - (Continued) See accompanying notes to schedule of expenditures of federal awards and independent auditor’s report on compliance for each major program and on internal control over compliance required by the Uniform Guidance. 7 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) FOR THE YEAR ENDED JUNE 30, 2016 FEDERAL 2015-16 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2015-16 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES Direct Programs: Safe and Drug Free Communities - Sober Truth on Preventing Underage Drinking h79sp020904-06 93.276 66,307 66,307 - Behavioral Health Treatment Court Collaborative 5H79SM061698-02 93.243 401,174 401,174 - Family Drug Court 5H79T1024206-03 93.243 76,530 76,530 - Subtotal CFDA 93.243 477,704 477,704 - Passed through State Department of Alcohol & Drug Programs: Substance Abuse Prevention & Treatment Block Grant- Discret Funds 14-90098 93.959 992,379 992,379 - Substance Abuse Prevention & Treatment Block Grant - PrevSet-aside 14-90098 93.959 313,072 313,072 - Substance Abuse Prevention & Treatment Block Grant - Friday Night/Club 14-90098 93.959 30,000 30,000 - Substance Abuse Prevention & Treatment Block Grant - HIV Set-aside 14-90098 93.959 7,854 7,854 - Substance Abuse Prevention & Treatment Block Grant - Adolescent and Youth Treatment 14-90098 93.959 177,123 177,123 - Substance Abuse Prevention & Treatment Block Grant - Perinatal 14-90098 93.959 72,569 72,569 - Subtotal CFDA 93.959 1,592,997 1,592,997 - Passed through State Department of Child Support Services: Child Support Enforcement: Child Support Administration Not Applicable 93.563 2,656,617 2,656,617 - Child Support EDP Not Applicable 93.563 141,022 141,022 - Subtotal CFDA 93.563 2,797,639 2,797,639 - Passed Through National Association of County & City Health Officials: Medical Reserve Corps Small Grant Program MRC 14-1633 93.008 110 110 - Passed Through California Family Health Council: Title X - 2015 88000-5320-71209-15 93.217 66,901 66,901 - Title X - 2015 - Prior Year Adjustment 88000-5320-71209-15 93.217 7,127 7,127 - Title X - 2016 88000-5320-71209-16 93.217 70,608 70,608 - Subtotal CFDA 93.217 144,636 144,636 - Health Resources Services Administration HPP Not Applicable 93.074 144,836 144,836 - Health Resources Services Admin - Prior Year Adjustment Not Applicable 93.074 2,262 2,262 - Ebola Not Applicable 93.074 51,867 51,867 - CDC Base PH Emergency Preparedness Not Applicable 93.074 457,931 457,931 - CDC Base PH Emergency Preparedness - Prior Year Adjustment Not Applicable 93.074 52,511 52,511 - Subtotal CFDA 93.074 709,407 709,407 - TB Control Branch/Real Time Allotment 5U52PS900515-31 93.116 13,736 13,736 - CALBRACE 15-10703 93.070 9,990 9,990 - Lead Program 14-10051 93.197 12,355 12,355 - Immunization Action Plan 13-20343 93.268 107,283 107,283 - Immunization Information Syst - Prior Year Adjustment 13-20343 93.268 (599) (599) - Subtotal CFDA 93.268 106,684 106,684 - Maternal Child Health (MCH) 2014-40 93.994 125,194 125,194 - Passed through State Department of Health Care Services: Medical Assistance Program: Medi-Cal Administration 14-90041 93.778 285,638 285,638 - Medi-Cal Administration - Prior Year Adjustment 14-90041 93.778 (6,152) (6,152) - School Based Medi-Cal Administration 14-90007 93.778 302,418 302,418 - Maternal Child Health Not Applicable 93.778 340,742 340,742 - Maternal Child Health - Prior Year Adjustment Not Applicable 93.778 566 566 - Medi-Cal Admin -Targeted Case Mgt - Prior Year Adjustment 40-1318A 93.778 2,825 2,825 - Administration: Medi-Cal 14-90041 93.778 28,919 28,919 - Medical Outreach and Enrollment Not Applicable 93.778 8,127 8,127 - Medi-Cal Renewal Assistance Grant Not Applicable 93.778 26,847 26,847 - Administration: Medi-Cal - Prior Year Adjustment 09-86011 A01 93.778 67,417 67,417 - Foster Care SLO 40 93.778 97,030 97,030 - Child Hlth & Disability Prevention Not Applicable 93.778 192,769 192,769 - Children Services SLOCO/MTP 93.778 816,787 816,787 - Administration: Medi-Cal - IHSS Not Applicable 93.778 7,543,609 7,543,609 - Medi-Cal Administration Not Applicable 93.778 196,668 196,668 - Medi-Cal Administration - Prior Year Adjustment Not Applicable 93.778 10 10 - Subtotal CFDA 93.778 9,904,220 9,904,220 - (Continued) See accompanying notes to schedule of expenditures of federal awards and independent auditor’s report on compliance for each major program and on internal control over compliance required by the Uniform Guidance. 8 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) FOR THE YEAR ENDED JUNE 30, 2016 FEDERAL 2015-16 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2015-16 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES (Continued) Mental Health-Substance Abuse (SAMHSA) Not Applicable 93.958 351,444 351,444 - Mental Health-Substance Abuse (SAMHSA) Not Applicable 93.958 175,274 175,274 - Subtotal CFDA 93.958 526,718 526,718 - Passed through State Department of Mental Health: Mental Health-McKinney Assist in Transition from Homeless Not Applicable 93.150 58,160 58,160 58,160 Passed through State Department of Social Services: KinGap - Kingship Guardian Assistance Program Not Applicable 93.090 230,281 230,281 - KinGap - Kingship Guardian Assistance Program - Prior Year Adjustment Not Applicable 93.090 (9) (9) - Subtotal CFDA 93.090 230,272 230,272 - Promoting Safe and Stable Families Not Applicable 93.556 147,587 147,587 - Refugee Cash Assistance Not Applicable 93.566 1,795 1,795 - Temporary Assistance for Needy Families: Assistance: CALWORKS Not Applicable 93.558 3,956,630 3,956,630 - Administration: CalWORKS, SAWS-CalWIN, TANF Not Applicable 93.558 13,052,741 13,052,741 - Administration: CalWORKS, SAWS-CalWIN, TANF - Prior Year Adjustment Not Applicable 93.558 (48,052) (48,052) - Subtotal CFDA 93.558 16,961,319 16,961,319 - Foster Care - Title IV-E: Administration: Probation - Title IV E Not Applicable 93.658 336,843 336,843 - Child Welfare Services - Title IV E Not Applicable 93.658 3,960,534 3,960,534 - Child Welfare Services - Title IV E - Prior Year Adjustment Not Applicable 93.658 (14,247) (14,247) - Assistance: Foster Care Not Applicable 93.658 2,287,245 2,287,245 - Subtotal CFDA 93.658 6,570,375 6,570,375 - Child Welfare Services Title IV-B Not Applicable 93.645 186,947 186,947 - Child Welfare Services Title IV-B - Prior Year Adjustment Not Applicable 93.645 46 46 - Subtotal CFDA 93.645 186,993 186,993 - Administration: Adoption Not Applicable 93.659 679,413 679,413 - Administration: Adoption - Prior Year Adjustment Not Applicable 93.659 (2,940) (2,940) - Assistance: Adoption Not Applicable 93.659 3,792,834 3,792,834 - Subtotal CFDA 93.659 4,469,307 4,469,307 - Foster Care Assistance -Title XX Not Applicable 93.667 144,175 144,175 - Child Welfare Services - Title XX Not Applicable 93.667 680,922 680,922 - Subtotal CFDA 93.667 825,097 825,097 - Independent Living Program Not Applicable 93.674 119,191 119,191 - Independent Living Program - Prior Year Adjustment Not Applicable 93.674 528 528 - Subtotal CFDA 93.674 119,719 119,719 - Total U.S. Department of Health & Human Services 46,058,321 46,058,321 58,160 DEPARTMENT OF HOMELAND SECURITY Passed through-Ca Department of Boating & Waterways: Non Motorized Boating Access Development Grant 11-204-780 97.012 114,430 114,430 - Passed through California Emergency Management Agency: Disaster Grants - Public Assistance - Prior Year Adjustment FEMA DSR 1952-2010/11 97.036 60,711 60,711 - Disaster Grants - Public Assistance - Prior Year Adjustment FEMA-1628-DR-CA 97.036 9,553 9,553 - Subtotal CFDA 97.036 70,264 70,264 - Emergency Management Performance Grants: Emergency Management Performance 2015 079-00000 97.042 - 10,500 - Emergency Management Performance 2015 2015-0049 97.042 11,400 900 - Emergency Management Performance 2014 - Prior Year Adjustment 2014-0070 97.042 (3) (3) - Emergency Management Performance 2015 2015-0049 97.042 123,472 123,472 - Subtotal CFDA 97.042 134,869 134,869 - (Continued) See accompanying notes to schedule of expenditures of federal awards and independent auditor’s report on compliance for each major program and on internal control over compliance required by the Uniform Guidance. 9 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued) FOR THE YEAR ENDED JUNE 30, 2016 FEDERAL 2015-16 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2015-16 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS DEPARTMENT OF HOMELAND SECURITY (Continued) Homeland Security - Prior Year Adjustment 2011-0002 97.047 1,687 1,687 - Homeland Security Stonegarden Grant 2014-0093 97.067 270,648 270,648 - Homeland Security 2014-0093 97.067 52,050 52,050 - Homeland Security - Prior Year Adjustment 2014-0093 97.067 (860) (860) - Homeland Security - Prior Year Adjustment 2013-00110 97.067 (1) (1) - Homeland Security 2014-0093 97.067 21,234 21,234 - Homeland Security 2014-0093 97.067 8,989 8,989 - Homeland Security 2015-0049 97.067 369 369 - Homeland Security 2014-0093 97.067 60,169 60,169 - Homeland Security 2015-0078 97.067 103,414 103,414 - Subtotal CFDA 97.067 516,012 516,012 - Total Department of Homeland Security 837,262 837,262 - TOTAL FEDERAL FINANCIAL AWARDS EXCLUDING LOANS CARRIED FORWARD FROM PRIOR YEAR $ 74,306,139 $ 79,233,200 $ 4,990,292 Federal Loan Balances With a Continuing Compliance Requirement U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT Direct Programs: Community Development Block Grants - 3rd Party Loans 14.218 2,466,617 Home Partnership Investment Program - 3rd Party Loans 14.239 14,064,983 FEDERAL LOAN BALANCES CARRIED FORWARD FROM PRIOR YEAR 16,531,600 TOTAL FEDERAL FINANCIAL AWARDS INCLUDING LOANS $ 95,764,800 See accompanying notes to schedule of expenditures of federal awards and independent auditor’s report on compliance for each major program and on internal control over compliance required by the Uniform Guidance. 10 COUNTY OF SAN LUIS OBISPO NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2016 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. 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: CFDA Number Program Title Amount 10.561 Supplemental Nutrition Assistance $ 85,560 93.150 Steward McKinny Projects (PATH Grant) 58,160 14.218 Community Development Block Grant/Entitlement Grants 1,791,617 14.231 Emergency Solutions Grant Program 121,035 14.239 Home Investment Partnerships Program 403,022 14.267 Continuum of Care 1,023,770 17.258 Workforce Investment Act - Adult 386,437 17.259 Workforce Investment Act - Youth 706,610 17.278 Workforce Investment Act - Dislocated Worker/Rapid Response 414,081 Total $ 4,990,292 11 NOTE 5 – LOANS WITH CONTINUING COMPLIANCE REQUIREMENT Outstanding federally-funded program loans with a continuing compliance requirement had the following balances during the year: Amount Outstanding CFDA Number Program Title July 1, 2015 New Loans Loan Payments June 30, 2016 14.218 Community Development Block Grant/Entitlement Grants $ 2,466,617 $ - $ - $ 2,466,617 14.239 Home Investment Partnerships Program 14,144,983 4,927,060 (80,000) 18,992,043 NOTE 6 – OTHER LOANS Outstanding federally-funded program loans without continuing compliance requirements had the following balances during the year: Amount Outstanding CFDA Number Program Title June 30, 2016 10.760, 10.781 Water and Waste Program Cluster $ 79,396,000 66.458 State Revolving Fund 65,166,492 * 10.760 Water and Waste Program Cluster 1,438,323 * This amount includes federal and state funds. NOTE 7 – PASS-THROUGH ENTITIES’ IDENTIFYING NUMBERS 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. 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 SEFA, but instead is provided below: Total Federal CFDA Number Expenditures 10.760 $ 214,902 10.781 1,882,087 20.600 109,913 20.616 90,345 NOTE 9 – INDIRECT COST RATE The County has elected not to use the 10 percent de minimus indirect cost rate allowed under the Uniform Guidance. 12 COUNTY OF SAN LUIS OBISPO SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2016 SECTION I – SUMMARY OF AUDITOR’S RESULTS Financial Statements Type of auditor’s report issued: Unmodified Internal control over financial reporting: Material weakness identified? Yes X No Significant deficiencies identified that are not considered to be material weaknesses? Yes X None Reported Noncompliance material to financial statements noted? Yes X No Federal Awards Type of auditor’s report issued on compliance for major programs: Unmodified Internal control over major federal programs: Material weakness identified? Yes X No Significant deficiencies identified that are not considered to be material weaknesses? Yes X None reported Any audit findings disclosed that are required to be reported in accordance with the Uniform Guidance? Yes X No Identification of major programs: CFDA #(s) Name of Federal Program or Cluster State Administrative Matching Grants for the Supplemental Nutrition 10.561 Assistance Program 93.558 Temporary Assistance for Needy Families 20.106 Airport Improvement Program 14.267 Continuum of Care Program 14.218 Community Development Block Grants The threshold for distinguishing type A and B programs was $2,376,996. Auditee qualified as low-risk auditee? X Yes No 13 SECTION II – FINANCIAL STATEMENT FINDINGS There were no findings identified in fiscal year ending June 30, 2016, that require reporting in accordance with Government Auditing Standards. 14 SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None noted. 15 SECTION IV – STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS 2015-01: Debt Accretion Criteria: In accordance with Government Auditing Standards, internal controls should be designed to provide reasonable assurance of achieving effective and efficient operations, reliable financial and performance reporting, or compliance with applicable laws and regulations in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Condition: During our audit procedures over long-term debt, it was noted the County of San Luis Obispo (the County) did not include the accreted value of the 2003 Capital Appreciation Bonds through June 30, 2015. The 2003 Series C Bonds will begin to mature on September 1, 2018, and each year thereafter until 2030. Each bond should accrete (increase) in value from the date of issuance until maturity. In accordance with the “Table of Accreted Values” in the official bond statement of the 2003 Capital Appreciation Bonds, we noted the County did not report $35,486,164 in prior year accretion and $4,528,978 in current year accretion. Cause of Condition: Per discussion with the client, the County had not previously issued debt instruments where interest is not paid until maturity and was therefore not familiar with unique accounting procedures necessary to record the accreted value component of these bonds. The County management has been aware of the accretion in value and has identified the full obligation of the bonds in debt presentations before the Board of Supervisors in a public setting. The County also has reported the full amount of debt service to maturity in the notes to the financial statements each year since inception of the bonds. However, due to the lack of familiarity with this unique type of bond, the County applied the same accounting procedures to them as used for conventional debt instruments with interest payable each year, which would have resulted in the accreted value being reporting in the Statement of Net Position in the year payable rather than as it accretes over time as required under U.S. GAAP. Effect: Failing to record the accreted value of long-term debt could misrepresent the financial state of the County in any given year and could result in the financial statements being materially misstated, thus not being in compliance with U.S. GAAP reporting requirements. Recommendation: We recommend the County adjust the outstanding balance for the 2003 Series C Capital Appreciation Bonds to include the accumulated accretion for all bonds as of June 30, 2015. In addition, we recommend the County implement the proper internal control procedures to record the full balance of outstanding debt, including accretion, for future years. Management Response/Corrective Action Plan: The County agrees with the finding and has recorded the correct accreted values through June 30, 2015, and has calculated the amounts to record for each fiscal year thereafter through maturity. Current Year Status: Implemented. 16 SUPPLEMENTARY SCHEDULE OF GRANT EXPENDITURES COUNTY OF SAN LUIS OBISPO SCHEDULE OF THE GOVERNOR’S OFFICE OF EMERGENCY SERVICES AND THE BOARD OF STATE AND COMMUNITY CORRECTIONS GRANT EXPENDITURES FOR THE YEAR ENDED JUNE 30, 2016 Share of Expenditures Expenditures Claimed Current Year For the Period For the Year Cumulative Through Ended As of Federal State County Program June 30, 2015 June 30, 2016 June 30, 2016 Share Share Share Victim Witness Assistance - VW14330400 Personnel Services $ 270,365 $ 269,246 $ 539,611 $ 165,142 $ 104,546 $ (442) Totals $ 270,365 $ 269,246 $ 539,611 $ 165,142 $ 104,546 $ (442) Unserved/Underserved Victim Advocacy and Outreach - UV14050400 Personnel Services $ 164,150 $ 122,057 $ 286,207 $ 98,027 $ - $ 24,030 Totals $ 164,150 $ 122,057 $ 286,207 $ 98,027 $ - $ 24,030 Unserved/Underserved CVWD - XV15A10400 Personnel Services $ - $ 21,183 $ 21,183 $ 11,837 $ - $ 9,346 Totals $ - $ 21,183 $ 21,183 $ 11,837 $ - $ 9,346 Unserved/Underserved Elder - XV150100400 Operating Expenses $ - $ 24,443 $ 24,443 $ 15,097 $ - $ 9,346 Totals $ - $ 24,443 $ 24,443 $ 15,097 $ - $ 9,346 2013 Stonegarden Grant - 2014-0093 Personnel Services $ 18,083 $ 185,244 $ 203,327 $ - $ - $ - Operating Expenses - 11,092 11,092 - - - Equipment - 58,953 58,953 - - - Totals $ 18,083 $ 255,289 $ 273,372 $ - $ - $ - 17 AVIATION PASSENGER FACILITY CHARGE PROGRAM INDEPENDENT AUDITOR’S REPORT ON SCHEDULE OF PASSENGER FACILITY CHARGE 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 Charge Revenues and Expenses (Schedule) of the County of San Luis Obispo (County), for the annual period and each quarterly period from July 1, 2015 to June 30, 2016. Management’s Responsibility Management is responsible for the preparation and fair presentation of the Schedule in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial schedule that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on this financial schedule 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 financial schedule is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts in the Schedule. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Schedule, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County’s preparation and fair presentation of the Schedule in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Schedule. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion 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 annual period and each quarterly period from July 1, 2015 to June 30, 2016, as defined by the Federal Aviation Administration of the United States of America Department of Transportation. 18 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 22, 2017, on our consideration of the County’s internal control over financial reporting relating to the Schedule and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance relating to the Schedule. This report is intended solely for the information and use of the Board of Supervisors and the County of San Luis Obispo and is not intended to be, and should not be, used by anyone other than those specified parties. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California March 22, 2017 19 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO THE PASSENGER FACILITY CHARGE 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 annual period and each quarterly period from July 1, 2015 to June 30, 2016. 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 annual period and each quarterly period from July 1, 2015 to June 30, 2016. Internal Control Over Compliance 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. 20 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. 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. However, material weaknesses may exist that have not been identified. 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. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California March 22, 2017 21 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF THE SCHEDULE OF PASSENGER FACILITY CHARGE 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 Charge Revenues and Expenses (Schedule) of the County of San Luis Obispo (County), for the annual period and each quarterly period from July 1, 2015 to June 30, 2016, and have issued our report thereon dated March 22, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the Schedule, we considered the County’s internal control over financial reporting (internal control) relating to the Schedule to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the Schedule, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control relating to the Schedule. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control relating to the Schedule. 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 schedule 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. 22 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Schedule is free from material misstatement, we performed tests of the County’s 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 schedule 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 relating to the Schedule. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control and compliance relating to the Schedule. Accordingly, this communication is not suitable for any other purpose. BROWN ARMSTRONG ACCOUNTANCY CORPORATION Bakersfield, California March 22, 2017 23 COUNTY OF SAN LUIS OBISPO SCHEDULE OF PASSENGER FACILITY CHARGE REVENUES AND EXPENSES FOR THE YEAR ENDED JUNE 30, 2016 Current Year Project to Date Approved Prior Receipts Receipts Unliquidated Approved Federal Application Number/ Project Period or Revenues Interest or Revenues Interest Balance Project Description Allocation Adjustment Recognized Earned Expenditures Recognized Earned Expenditures PFC Trust 1997-04-I and 2000-06-U Revenues $ - $ 2,464,620 $ - $ - $ - $ 6,370,839 $ 449,991 $ - $ 6,820,830 Expenditures: Approved Application #4/6: $6,820,830 Terminal development and construction 6,820,830 - - - 1,660,928 - - 4,990,186 (4,990,186) Total 4/6: 1997-04-I and 2000-06-U 6,820,830 2,464,620 - - 1,660,928 6,370,839 449,991 4,990,186 1,830,644 2002-07-C Revenues - (970,533) 381,765 - - 1,730,271 - - 1,730,271 Expenditures: Approved Application #7: $1,730,271 1,730,271 - - - - - - 1,730,271 (1,730,271) Total 7: 1997-04-I and 2000-06-U 1,730,271 (970,533) 381,765 - - 1,730,271 - 1,730,271 - 2007-08-C Revenues - (1,494,087) 213,713 9,634 - 213,713 9,634 - 223,347 Expenditures: Approved Application #8: $2,028,190 2,028,190 - - - - - - 1,328,771 (1,328,771) Total 8: 1997-04-I and 2000-06-U 2,028,190 (1,494,087) 213,713 9,634 - 213,713 9,634 1,328,771 (1,105,424) Total Passenger Facility Charges $ 10,579,291 $ - $ 595,478 $ 9,634 $ 1,660,928 $ 8,314,823 $ 459,625 $ 8,049,228 $ 725,220 24 COUNTY OF SAN LUIS OBISPO SCHEDULE OF CURRENT YEAR FINDINGS AND QUESTIONED COSTS – AIRPORT PASSENGER FACILITY CHARGE PROGRAM There were no findings identified in the fiscal year ending June 30, 2016, that require reporting in accordance with Government Auditing Standards related to the Airport Passenger Facility Charge Program. 25 COUNTY OF SAN LUIS OBISPO STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS – PASSENGER FACILITY CHARGE PROGRAM 2015-02: Criteria: Passenger Facility Charge Audit Guide For Public Agencies Section 158.63 requires that the public agency provide quarterly reports to carriers collecting Airport Passenger Facility Charge (PFC) revenues for the public agency, with a copy to the appropriate Federal Aviation Administration (FAA) Airports office. Condition: During our review of the County of San Luis Obispo (the County) June 30, 2015 PFC Quarterly Report to the FAA, we noted that the report was submitted on October 3, 2015, which is after the one month deadline. All PFC Quarterly Reports are to be submitted on or before the last day of the calendar month following the calendar quarter or other period agreed to by the public agency and collecting carrier. Cause: The report was not submitted timely. Effect: Failure to meet the Passenger Facility Charge Audit Guide requirements could lead the County to be out of compliance with the FAA and potentially receive fines or other penalties. Recommendation: We recommend the County submit all required PFC Quarterly Reports in a timely manner. Management Response/Corrective Action Plan: Management agrees with the recommendation and corrective action was taken to ensure this does not happen in the future. Current Year Status: Implemented. 26