Single Audit Report, 2016-17

COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2017 COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2017 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, 2017, 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 19, 2017. 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 19, 2017 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, 2017. 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, 2017. 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, 2017, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements. We issued our report thereon dated December 19, 2017, 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 December 19, 2017 4 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2017 ` FEDERAL 2016-17 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2016-17 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF AGRICULTURE Direct Programs: Water and Waste Disposal Program-Loan 300279,300383 10.760 $ 67,883 $ 67,883 $ - Water and Waste Disp Prog-Loan Prior Year Adj 300279,300383 10.760 8,231 8,231 Subtotal Water and Waste Disposal Program 76,114 76,114 - USDA Community Food Project Not Applicable 10.225 2,349 2,349 - Subtotal Direct CFDA 10.763 2,349 2,349 - Passed through State Department of Health Care Services: Women Infant Children Nutrition Program 15-10074 10.557 1,279,604 1,279,604 - Women Infant Children Nutrition Program - Prior Year Adjustment 15-10074 10.557 4 4 - Subtotal Pass-Through CFDA 10.557 1,279,608 1,279,608 - Passed through State Department of Food and Agriculture: ACP Bulk Citrus 16-0740-SA 10.025 648 648 - Glassy-Winged Sharpshooter 16-0425-SF 10.025 311,558 311,558 - Asian Citrus Psyllid Detection 15-0557-SF, 16-0594-SF, 16-0594-SF, Amd #1 10.025 277,631 277,631 - European Grape Vine Moth 15-0582-SF, 16-0674-SF 10.025 76,105 76,105 - Khapra Beetle Detection & Admin KB-1617-40 10.025 7,557 7,557 - Light Brown Apple Moth Detection 15-0513-SF, 16-0448-SF 10.025 7,429 7,429 - Light Brown Apple Moth Regulatory 15-0475-SF, 16-0539-SF 10.025 77,435 77,435 - Pest Detection Trapping 16-0099 10.025 175,456 175,456 - Subtotal Pass-Through CFDA 10.025 933,819 933,819 - Passed through State Department of Public Health: Supplemental Nutrition Assistance Program Education (SNAP-ED) 16-10157 10.561 436,882 436,882 62,238 Supplemental Nutrition Assistance Program Education (SNAP-ED) - Prior Year Adjustment 16-10157 10.561 (1,601) (1,601) - CalFresh&CalFresh Employment Training Not Applicable 10.561 4,514,846 4,514,846 - CalFresh&CalFresh Employment Train - Prior year adjustment Not Applicable 10.561 9,823 9,823 - Subtotal Pass-Through CFDA 10.561 4,959,950 4,959,950 62,238 Total U.S. Department of Agriculture 7,251,840 7,251,840 62,238 U.S. DEPARTMENT OF DEFENSE Direct Program: Comm. Econ. Adj. Plan. Asst Joint Land Use Studies FAIN#HQ00051510017; OEA AWARD #EN1003-15-02 12.610 1,535 1,535 - Total U.S. Department of Defense 1,535 1,535 - U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT Direct Programs: Low Income Housing Assistance Community Development Block Grants Community Development Block Grants B-09-UC-06-0508 14.218 3,215 3,215 - Community Development Block Grants B-11-UC-06-0508 14.218 42,686 42,686 - Community Development Block Grants B-12-UC-06-0508 14.218 250 250 - Community Development Block Grants B-14_UC-06-0508 14.218 293,047 293,047 293,047 Community Development Block Grants B-15_UC-06-0508 14.218 370,145 370,145 370,145 Community Development Block Grants B-16_UC-06-0508 14.218 570,719 570,719 354,142 Subtotal CFDA 14.218 1,280,062 1,280,062 1,017,334 Emergency Solutions Grant Program E-15-UC-06-0508 14.231 50,015 50,015 50,015 Emergency Solutions Grant Program E-16-UC-06-0508 14.231 100,932 100,932 95,379 Subtotal CFDA 14.231 150,947 150,947 145,394 (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, 2017 FEDERAL 2016-17 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2016-17 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT (Continued) Home Partnership Investment Program M-11-UC-05-0545 14.239 9,500 9,500 - Home Partnership Investment Program M-14-UC-05-0545 14.239 708,913 708,913 708,913 Home Partnership Investment Program M-15-UC-05-0545 14.239 478,334 478,334 478,334 Home Partnership Investment Program M-16-UC-05-0545 14.239 68,226 68,226 12,500 Subtotal CFDA 14.239 1,264,973 1,264,973 1,199,747 Continuum of Care Program 2014 Various 14.267 298,877 298,877 298,877 Continuum of Care Program 2015 Various 14.267 587,403 587,403 544,901 Subtotal CFDA 14.267 886,280 886,280 843,778 Total U.S. Department of Housing & Urban Development 3,582,262 3,582,262 3,206,253 U.S. DEPARTMENT OF THE INTERIOR Direct Programs: Coastal Impact Assistance Program F12AF70233-001, F12AF70176 15.668 113,567 113,567 - Subtotal Direct CFDA 15.668 113,567 113,567 - Passed through California Bureau of Land Management: Taylor Grazing Act Not Applicable 15.227 4,678 4,678 - Subtotal Pass-Through CFDA 15.227 4,678 4,678 - Total U.S. Department of Interior 118,245 118,245 - U.S. DEPARTMENT OF JUSTICE Direct Programs: Bureau of Immigration & Customs Enforcement Not Applicable 16.710 54,600 54,600 - State Criminal Alien Assistance Program Not Applicable 16.606 130,742 130,742 - Federal Asset Forfeiture Not Applicable 16.000 65,490 65,490 - DEA Domestic Cannabis Eradication & Suppression 2016-45 16.111 41,015 41,015 - Justice Assistance Grant 2016-DJ-BX-0365 16.738 20,862 20,862 - Passed through California Emergency Management Agency: Victim Witness Assistance VW16350400 16.575 227,675 227,675 - County Victim Services (XC) Program XC16010400 16.575 36,572 36,572 - Unserved/Underserved Victim Advocacy and Outreach XV15010400 16.575 134,641 134,641 - Unserved/Underserved Victim Advocacy and Outreach XV15A10400 16.575 127,089 127,089 17,733 Subtotal Pass-Through CFDA 16.575 525,977 525,977 17,733 Total U.S. Department of Justice 838,686 838,686 17,733 U.S. DEPARTMENT OF LABOR Passed through California Employment Development Department: Workforce Investment Act-Adult K594794 & K698395 17.258 504,989 504,989 327,776 Workforce Investment Act-Adult - PY K594794 & K698395 17.258 18,749 18,749 - Workforce Investment Act-Youth K594794 & K698395 17.259 575,622 575,622 550,204 Workforce Invest Act-Disloc Workr&Rapid Resp - PY K594794 & K698395 17.278 (18,749) (18,749) - Workforce Invest Act-Disloc Workr&Rapid Resp K594794 & K698395 17.278 696,249 696,249 370,689 Subtotal Pass-Through Workforce Investment Act Cluster 1,776,860 1,776,860 1,248,669 Total U.S. Department of Labor 1,776,860 1,776,860 1,248,669 (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, 2017 FEDERAL 2016-17 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2016-17 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 3,890 3,890 - Airport Improvement Program-Pr Yr Adj 3-06-0228-041 20.106 13 13 - Airport Improvement Program 3-06-0228-043-2015 20.106 15,205,200 15,205,200 - Airport Improvement Program-Pr Yr Adj 3-06-0228-044-2015 20.106 1,165 1,165 - Airport Improvement Program 3-06-0228-044-2015 20.106 85,225 85,225 - Airport Improvement Program 3-03-0172-008-2017 20.106 83,278 83,278 - Subtotal Direct CFDA 20.106 15,378,771 15,378,771 - Passed through State Department of Transportation: Highway Planning and Construction BPMP-5949(151) 20.205 19,007 19,007 - Highway Planning and Construction BHLS-5949(136) 20.205 144,457 144,457 - Highway Planning and Construction HSIPL-5949(148) 20.205 162,164 162,164 - Highway Planning and Construction -Prior year adjustment HSIPL-5949(148) 20.205 (15,483) (15,483) - Highway Planning and Construction HSIPL-5949(154) 20.205 127,539 127,539 - Highway Planning and Construction HSIPL-5949(159) 20.205 24,897 24,897 - Highway Planning and Construction BRLO-5949(065) 20.205 202,089 202,089 - Highway Planning and Construction -Prior year adjustment BRLO-5949(065) 20.205 (114,728) (114,728) - Highway Planning and Construction BRLO-5949(116) 20.205 84,888 84,888 - Highway Planning and Construction -Prior year adjustment BRLO-5949(116) 20.205 (74,141) (74,141) - Highway Planning and Construction BRLO-5949(119), BHLO-5949(164) 20.205 132,899 132,899 - Highway Planning and Construction BRLO-5949(120) 20.205 98,952 98,952 - Highway Planning and Construction BRLO-5949(127) 20.205 342,221 342,221 - Highway Planning and Construction BRLO-5949(152) 20.205 106,002 106,002 - Highway Planning and Construction BRLO-5949(156) 20.205 12,979 12,979 - Highway Planning and Construction BRLO-5949(157) 20.205 15,999 15,999 - Highway Planning and Construction BRLS-5949(129) 20.205 52,597 52,597 - Highway Planning and Construction BRLS-5949(131) 20.205 34,169 34,169 - Highway Planning and Construction BRLS-5949(135) 20.205 63,773 63,773 - Highway Planning and Construction HPLU-5949 (132) 20.205 558 558 - Highway Planning and Construction RPSTPLE-5949 (140) 20.205 56,756 56,756 - Highway Planning and Construction BRLS-5949(137) 20.205 116,720 116,720 - Highway Planning and Construction RPLCML-5949(074) 20.205 3,821,132 3,821,132 - Subtotal Pass-Through CFDA 20.205 5,415,446 5,415,446 - Office Of Traffic Safety PS1605 20.600 20,309 20,309 9,758 Office Of Traffic Safety PS1723 20.600 54,117 54,117 - Office Of Traffic Safety AL1728 20.608 59,899 59,899 - Office Of Traffic Safety PS 1605 20.616 14,393 14,393 - Office Of Traffic Safety-Pr Year Adj PS 1605 20.616 1 1 - Office Of Traffic Safety OP1711 20.616 33,989 33,989 - Subtotal Pass-Through Highway Safety Cluster 182,708 182,708 9,758 Total U.S. Department of Transportation 20,976,925 20,976,925 9,758 ENVIRONMENTAL PROTECTION AGENCY Passed through State Water Resource Control Board: State Revolving Fund Loan- Rates and Charges 10-846-550 66.458 2,919,111 2,919,111 - Total Enviromental Protection Agency 2,919,111 2,919,111 - U.S. DEPARTMENT OF EDUCATION Passed through State Department of Education: State Vocational Rehabilitation Services Not Applicable 84.126A 4,367 4,367 - State Vocational Rehabilitation Services -PY Not Applicable 84.126A 1,268 1,268 - Subtotal Pass-Through 5,635 5,635 - Total Department of Education 5,635 5,635 - (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, 2017 FEDERAL 2016-17 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2016-17 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES Direct Programs: Drug Free Community 101 Friday Night Live 2H79SP020904-06 93.276 131,895 131,895 - Drug Free Community 101 Friday Night Live - PY 2H79SP020904-06 93.276 519 519 - Subtotal CFDA 66.458 132,414 132,414 - SLO Health Integration Partnership (SAMHSA) 1H79SM062377-01 93.243 147,384 147,384 19,999 Behavioral Health Treatment Court Collaborative 5H79SM061698-02 93.243 348,142 348,142 - Subtotal CFDA 93.243 495,526 495,526 19,999 Passed through State Department of Alcohol & Drug Programs: Substance Abuse Prev&Trtmt Block Grant-Discrete Funds 14-90098 93.959 1,087,382 1,087,382 - Substance Abuse Prev&Trtmt Block-Discrete -Prior Year Adjustment 14-90098 93.959 57,598 57,598 - Substance Abuse Prev&Trtmt Block-Friday Night/Club 14-90098 93.959 30,000 30,000 - Substance Abuse Prev&Trtmt Block-Friday Night/Club-PY 14-90098 93.959 270 270 - Substance Abuse Prev&Trtmt Block Grant-PrevSet-aside 14-90098 93.959 231,571 231,571 - Substance Abuse Prev&Trtmt Block Grant-PrevSet-asidePY 14-90098 93.959 1,394 1,394 - Substance Abuse Prevention & Treatment Block Grant-Adolescent and Youth Treatment 14-90098 93.959 177,123 177,123 - Substance Abuse Prevention & Treatment Block Grant-Adolescent and Youth Treatment 14-90098 93.959 1,688 1,688 - Substance Abuse Prev&Trtmt Block-Perinatal 14-90098 93.959 72,569 72,569 - Substance Abuse Prev&Trtmt Block-Perinatal - PY 14-90098 93.959 668 668 - Subtotal CFDA 93.959 1,660,263 1,660,263 - Passed through State Department of Child Support Services: Child Support Enforcement: Child Support Admin & EDP Not Applicable 93.563 2,717,977 2,717,977 - Passed Through California Family Health Council: Title X 2016 88000-5320-71219-16-17 93.217 90,725 90,725 - Title X 2017 88000-5320-71219-16-17 93.217 41,804 41,804 - Subtotal CFDA 93.217 132,529 132,529 - Health Resources Services Administration HPP Not Applicable 93.074 194,661 194,661 18,572 Health Resources Services Admin-Prior year adj Not Applicable 93.074 168 168 - Ebola 15-10383 93.074 17,556 17,556 3,968 Ebola - PY Adj 15-10383 93.074 (89) (89) - CDC Base PH Emergency Preparedness Not Applicable 93.074 583,029 583,029 43,750 CDC Base PH Emergency Preparedness-Prior Year Adj Not Applicable 93.074 (780) (780) - Subtotal CFDA 93.074 794,545 794,545 66,290 TB Control Branch/Real Time Allotment 5U52PS900515-31 93.116 7,222 7,222 - Immunization Action Plan 15-10449 93.268 107,283 107,283 - Maternal Child Health (MCH) 201640 93.994 139,542 139,542 - Passed through State Department of Health Care Services: Medical Assistance Program: Medi-Cal Admin (MAA) 14-90041 93.778 334,858 334,858 - Medi-Cal Administration - Prior Year Adjustment 14-90041 93.778 26,532 26,532 - First Five Medi-Cal 14-90041 93.778 15,219 15,219 - School Based Medi-Cal Administration 14-90007 93.778 493,692 493,692 - Maternal Child Health - Title XIX 201640 93.778 348,357 348,357 - Maternal Child Health - Title XIX Prior Year Adj 201640 93.778 (245) (245) - Medi-Cal Admin -Targeted Case Management 40-1318A 93.778 589,099 589,099 - Medi-Cal Admin -Targeted Case Mgt-Prior Year Adj 40-1318A 93.778 180,974 180,974 - Administration: Medi-Cal 14-90041 93.778 39,997 39,997 - Medical Outreach and Enrollment Not Applicable 93.778 8,631 8,631 - Medi-Cal Renewal Assistance Grant Not Applicable 93.778 5,059 5,059 - Administration: Medi-Cal-Prior year adjustment 09-86011 A01 93.778 57,531 57,531 - CA CHILDRENS SERVICES (CCS) Title XIX Not Applicable 93.778 635,376 635,376 - Foster Care (HCPCFC) Not Applicable 93.778 130,390 130,390 - Foster Care (PMMO) Not Applicable 93.778 19,357 19,357 - Lead Program 14-10051 93.778 16,473 16,473 - Lead Program - Prior Year Adj 14-10051 93.778 (68) (68) - Child Hlth & Disability Prevention Not Applicable 93.778 127,593 127,593 - Administration: Medi-Cal - IHSS Not Applicable 93.778 8,282,322 8,282,322 508,911 Administration: Medi-Cal - IHSS - Prior Year Adjustment Not Applicable 93.778 (1) (1) - Medi-Cal Administration Not Applicable 93.778 239,775 239,775 - Medi-Cal Administration - Prior Year Adjustment Not Applicable 93.778 (743) (743) - Subtotal CFDA 93.778 11,550,178 11,550,178 508,911 (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, 2017 FEDERAL 2016-17 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2016-17 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 93.958 351,443 351,443 - Mental Health-Subst Abuse (SAMHSA)-Pr Yr Adj Not Applicable 93.958 (1) (1) - Mental Health-Subst Abuse (SAMHSA)-Pr Yr Adj. Not Applicable 93.958 (647) (647) - Mental Health-Substance Abuse (SAMHSA) Not Applicable 93.958 240,265 240,265 - Subtotal CFDA 93.958 591,060 591,060 - Passed through State Department of Mental Health: Mental Health-McKinney Assist in Transition from Homeless Not Applicable 93.150 48,129 48,129 - Passed through State Department of Social Services: KinGap - Kingship Guardian Assistance Program Not Applicable 93.090 297,172 297,172 - KinGap IV-E Admin Not Applicable 93.090 1,068 1,068 - Subtotal CFDA 93.090 298,240 298,240 - Promoting Safe and Stable Families Not Applicable 93.556 151,195 151,195 - Refugee Cash Assistance Not Applicable 93.566 1,405 1,405 - Temporary Assistance for Needy Families: Assistance: CALWORKS Not Applicable 93.558 3,717,330 3,717,330 - Administration: CalWORKS, SAWS-CalWIN, TANF Not Applicable 93.558 12,428,932 12,428,932 - Administration: CalWORKS, SAWS-CalWIN, TANF - Prior Yr Adj. Not Applicable 93.558 (889,565) (889,565) - Subtotal CFDA 93.558 15,256,697 15,256,697 - Foster Care - Title IV-E: Administration: Probation - Title IV E Not Applicable 93.658 180,505 180,505 - Child Welfare Services - Title IV E Not Applicable 93.658 3,827,258 3,827,258 - Child Welfare Services - Title IV E - Prior Year Adjustment Not Applicable 93.658 77,104 77,104 - Assistance: Foster Care Not Applicable 93.658 2,379,862 2,379,862 - Subtotal CFDA 93.658 6,464,729 6,464,729 - Child Welfare Services Title IV-B Not Applicable 93.645 183,602 183,602 - Child Welfare Services Title IV-B - Prior Year Adjustment Not Applicable 93.645 78 78 - Subtotal CFDA 93.645 183,680 183,680 - Adoption Assistance - Prior Year Adjustment Not Applicable 93.659 (1,051) (1,051) - Adoption Assistance Not Applicable 93.659 4,519,380 4,519,380 - Subtotal CFDA 93.659 4,518,329 4,518,329 - Child Welfare Services-Title XX Not Applicable 93.667 263,556 263,556 - Child Welfare Services-Title XX - PY Not Applicable 93.667 9,730 9,730 - Subtotal CFDA 93.667 273,286 273,286 - Independent Living Program Not Applicable 93.674 114,971 114,971 - Independent Living Program - Prior Year Adjustment Not Applicable 93.674 910 910 - Subtotal CFDA 93.674 115,881 115,881 - CA Childrens Services and TLIP Title XXI Not Applicable 93.767 233,973 233,973 47,560 Total U.S. Department of Health & Human Services 45,874,083 45,874,083 642,760 DEPARTMENT OF HOMELAND SECURITY Passed through California Emergency Management Agency: Emergency Management Performance Grants: Emergency Management Performance 2015-PrYrAd 2015-0049 97.042 (450) (450) - Emergency Management Performance 2016 2016-0010 97.042 159,491 159,491 - Subtotal CFDA 97.042 159,041 159,041 - (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, 2017 FEDERAL 2016-17 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTER/ PASS-THROUGH ENTITY CFDA REVENUE 2016-17 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS DEPARTMENT OF HOMELAND SECURITY (Continued) Homeland Security - Prior Year Adjustment Stonegarden Grant 2015-1078 97.067 (16,504) (16,504) - Homeland Security Stonegarden Grant 2015-1078 97.067 131,292 131,292 - Homeland Security - Prior Year Adjustment 079-00000 2014-0093 97.067 (58) (58) - Homeland Security 2016-0102 97.067 87,268 87,268 - Homeland Security 2016-0102 97.067 2,244 2,244 - Homeland Security 2015-0078 97.067 5,542 5,542 - Homeland Security 2016-0102 97.067 42,021 42,021 - Homeland Security 079-00000 2015-0078 97.067 160,612 160,612 - Subtotal CFDA 97.067 412,417 412,417 - Total Department of Homeland Security 571,458 571,458 - TOTAL FEDERAL FINANCIAL AWARDS EXCLUDING LOANS CARRIED FORWARD FROM PRIOR YEAR $ 83,916,640 $ 83,916,640 $ 5,187,411 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 18,992,043 FEDERAL LOAN BALANCES CARRIED FORWARD FROM PRIOR YEAR 21,458,660 TOTAL FEDERAL FINANCIAL AWARDS INCLUDING LOANS CARRIED FORWARD FROM PRIOR YEAR $ 105,375,300 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, 2017 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 $ 62,238 14.218 Community Development Block Grant/Entitlement Grants 1,017,334 14.231 Emergency Solutions Grant Program 145,394 14.239 Home Investment Partnerships Program 1,199,747 14.267 Continuum of Care 843,778 16.575 County Victim Services 17,733 17.258 Workforce Investment Act-Adult 327,776 17.259 Workforce Investment Act-Youth 550,204 17.278 Workforce Investment Act-Dislocated Worker/Rapid Response 370,689 20.600 Office of Traffic Safety 9,758 93.243 SLO County Health Integration Partnership 19,999 93.767 California Children's Services (Title XXI and Title XIX) 47,560 93.778 Activities (CBOMAA and SMAA) 508,911 93.074 Ebola 3,968 93.074 HRSA HPP 18,572 93.074 PH Emergency preparedness 43,750 Total $ 5,187,411 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, 2016 New Loans Loan Payments June 30, 2017 14.218 Community Development Block Grant/Entitlement Grants $ 2,466,617 $ - $ (24,743) $ 2,441,874 14.239 Home Investment Partnerships Program 18,992,043 - (75,000) 18,917,043 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, 2017 10.760, 10.781 Water and Waste Program Cluster $ 78,089,000 66.458 State Revolving Fund 30,607,882 * 10.760 Water and Waste Program Cluster 1,489,436 * 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 10.225 $ 2,349 17.258 523,738 17.259 575,622 17.278 677,500 20.600 74,426 20.616 48,383 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, 2017 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 20.205 Highway Planning and Construction 93.659 Adoption Assistance 93.778 Medical Assistance Program The threshold for distinguishing type A and B programs was $3,000,000. 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, 2017, 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 None noted. 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, 2017 Share of Expenditures Expenditures Claimed Current Year For the Period For the Year Cumulative Through Ended As of Federal State County Program June 30, 2016 June 30, 2017 June 30, 2017 Share Share Share Victim Witness Assistance - VW16350400 Personnel Services $ - $ 273,982 $ 273,982 $ 172,894 $ 101,088 $ - Operating Expenses - 15,189 15,189 15,189 - - Equipment - 39,592 39,592 39,592 - - Totals $ - $ 328,763 $ 328,763 $ 227,675 $ 101,088 $ - Unserved/Underserved Victim Advocacy and Outreach - XV15010400 Personnel Services $ - $ 162,948 $ 162,948 $ 125,564 $ - $ 37,384 Operating Expenses 425 9,077 9,502 9,077 - - Totals $ 425 $ 172,025 $ 172,450 $ 134,641 $ - $ 37,384 Unserved/Underserved CVWD - XV15A10400 Personnel Services $ - $ 156,579 $ 156,579 $ 119,195 $ - $ 37,384 Operating Expenses 975 7,894 8,869 7,894 - - Totals $ 975 $ 164,473 $ 165,448 $ 127,089 $ - $ 37,384 County Victim Services (XC) - XC16010400 Personnel Services $ - $ 25,969 $ 25,969 $ 16,061 $ - $ 9,908 Operating Expenses - 20,511 20,511 20,511 - - Totals $ - $ 46,480 $ 46,480 $ 36,572 $ - $ 9,908 2015 Stonegarden Grant 2016-0102 Personnel Services $ 84,274 $ 66,283 $ 150,557 $ - $ - $ - Operating Expenses - 6,759 6,759 - - - Equipment - 73,490 73,490 - - - Totals $ 84,274 $ 146,532 $ 230,806 $ - $ - $ - 2016 Stonegarden Grant 2016-0102 Personnel Services $ - $ 43,270 $ 43,270 $ - $ - $ - Totals $ - $ 43,270 $ 43,270 $ - $ - $ - 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, 2016 to June 30, 2017. 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, 2016 to June 30, 2017, 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 December 19, 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 December 19, 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, 2016 to June 30, 2017. 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, 2016 to June 30, 2017. 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 December 19, 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, 2016 to June 30, 2017, and have issued our report thereon dated December 19, 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 December 19, 2017 23 COUNTY OF SAN LUIS OBISPO SCHEDULE OF PASSENGER FACILITY CHARGE REVENUES AND EXPENSES FOR THE YEAR ENDED JUNE 30, 2017 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 - - - 1,361,347 - - 6,351,533 (6,351,533) Total 4/6: 1997-04-I and 2000-06-U 6,820,830 2,464,620 - - 1,361,347 6,370,839 449,991 6,351,533 469,297 2002-07-C Revenues - (970,533) - - - 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) - - - 1,730,271 - 1,730,271 - 2007-08-C Revenues - (1,494,087) 633,160 2,967 - 846,873 12,601 - 859,474 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) 633,160 2,967 - 846,873 12,601 1,328,771 (469,297) Total Passenger Facility Charges $ 10,579,291 $ - $ 633,160 $ 2,967 $ 1,361,347 $ 8,947,983 $ 462,592 $ 9,410,575 $ - 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, 2017, 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 None noted. 26