Single Audit Report, 2017-18

COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2018 COUNTY OF SAN LUIS OBISPO SINGLE AUDIT REPORT FOR THE YEAR ENDED JUNE 30, 2018 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, 2018, 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 14, 2018. 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 14, 2018 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, 2018. 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, 2018. 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, 2018, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements. We issued our report thereon dated December 14, 2018, 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 14, 2018 4 COUNTY OF SAN LUIS OBISPO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2018 FEDERAL 2017-18 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTOR/ PASS-THROUGH ENTITY CFDA REVENUE 2017-18 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 $ - $ - $ - Water and Waste Disp Prog-Loan Prior Year Adj 300279,300383 10.760 36,564 36,564 - Subtotal Water and Waste Disposal Program 36,564 36,564 - USDA Community Food Project 2016-33800-25603 10.225 3,132 3,132 - Subtotal Direct CFDA 10.225 3,132 3,132 - Passed through State Department of Health Care Services: Women Infant Children Nutrition Program 15-10074 10.557 1,308,806 1,308,806 - Women Infant Children Nutrition Program - Prior Year Adjustment 15-10074 10.557 (896) (896) - Subtotal Pass-Through CFDA 10.557 1,307,910 1,307,910 - Passed through State Department of Food and Agriculture: ACP Bulk Citrus 16-0740-SA, 17-0473-000-SA, 17-0473-000-SA Amd #1 10.025 9,792 9,792 - Glassy-Winged Sharpshooter 16-0425-SF 10.025 335,431 335,431 - Glassy-Winged Sharpshooter (Prior Year) 16-0425-SF 10.025 (11) (11) - Asian Citrus Psyllid Detection 16-0594-SF, 16-0594-SF Amd #1, 17-0428-005-SF 10.025 195,846 195,846 - European Grape Vine Moth 16-0674-SF, 17-0549-009-SF 10.025 147,212 147,212 - Khapra Beetle Detection & Admin (Prior Year) KB-1617-40 10.025 103 103 - Light Brown Apple Moth Detection 17-0154-018-SF 10.025 6,485 6,485 - Light Brown Apple Moth Regulatory 17-0154-037-SF 10.025 78,485 78,485 - Phytophthora Ramorum (SOD) 17-0213-035-SF 10.025 2,971 2,971 - Pest Detection Trapping 17-0154-037-SF, 17-0140 10.025 189,061 189,061 - Subtotal Pass-Through CFDA 10.025 965,375 965,375 - Passed through State Department of Public Health: Supplemental Nutrition Assistance Program Education (SNAP-ED) 16-10157 10.561 379,667 379,667 12,596 Supplemental Nutrition Assistance Program Education (SNAP-ED) - Prior Year Adjustment 16-10157 10.561 2,450 2,450 - CalFresh&CalFresh Employment Training Not Applicable 10.561 5,131,557 5,131,557 - CalFresh&CalFresh Employment Train - Prior year adjustment Not Applicable 10.561 278,782 278,782 - Subtotal Pass-Through CFDA 10.561 5,792,456 5,792,456 12,596 Total U.S. Department of Agriculture 8,105,437 8,105,437 12,596 U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT Direct Programs: Low Income Housing Assistance Community Development Block Grants Community Development Block Grants B-14_UC-06-0508 14.218 178,867 178,867 178,867 Community Development Block Grants B-15_UC-06-0508 14.218 248,896 248,896 248,896 Community Development Block Grants B-16_UC-06-0508 14.218 400,916 400,916 400,916 Community Development Block Grants B-17_UC-06-0508 14.218 1,147,361 1,147,361 887,975 Subtotal CFDA 14.218 1,976,040 1,976,040 1,716,654 Emergency Solutions Grant Program E-15-UC-06-0508 14.231 4,384 4,384 4,384 Emergency Solutions Grant Program E-16-UC-06-0508 14.231 30,370 30,370 30,370 Emergency Solutions Grant Program E-17-UC-06-0508 14.231 42,860 42,860 37,229 Subtotal CFDA 14.231 77,614 77,614 71,983 Home Partnership Investment Program M-14-UC-05-0545 14.239 418,872 418,872 418,872 Home Partnership Investment Program M-16-UC-05-0545 14.239 499,928 499,928 499,928 Home Partnership Investment Program M-17-UC-05-0545 14.239 264,366 264,366 229,034 Subtotal CFDA 14.239 1,183,166 1,183,166 1,147,834 Continuum of Care Program 2015 Various 14.267 301,420 301,420 278,692 Continuum of Care Program 2016 Various 14.267 550,415 550,415 511,306 Subtotal CFDA 14.267 851,835 851,835 789,998 Total U.S. Department of Housing & Urban Development 4,088,655 4,088,655 3,726,469 U.S. DEPARTMENT OF THE INTERIOR Passed through California Bureau of Land Management: Taylor Grazing Act Not Applicable 15.227 18,658 18,658 - Subtotal Pass-Through CFDA 15.227 18,658 18,658 - Total U.S. Department of Interior 18,658 18,658 - (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, 2018 FEDERAL 2017-18 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTOR/ PASS-THROUGH ENTITY CFDA REVENUE 2017-18 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF JUSTICE Direct Programs: Bureau of Immigration & Customs Enforcement Not Applicable 16.710 42,000 42,000 - State Criminal Alien Assistance Program Not Applicable 16.606 136,893 136,893 - Federal Asset Forfeiture Not Applicable 16.000 56,020 56,020 - DEA Domestic Cannabis Eradication & Suppression 2017-43 16.111 26,000 26,000 - Justice Assistance Grant 2017-H2496-CA-DJ 16.738 22,670 22,670 - Passed through California Emergency Management Agency: Victim Witness Assistance VW16350400 16.575 343,700 343,700 - County Victim Services (XC) Program XC16010400 16.575 291,072 291,072 269,947 Unserved/Underserved Victim Advocacy and Outreach XV15010400 16.575 191,337 191,337 - Unserved/Underserved Victim Advocacy and Outreach XV15A10400 16.575 194,492 194,492 - Subtotal Pass-Through CFDA 16.575 1,020,601 1,020,601 269,947 Total U.S. Department of Justice 1,304,184 1,304,184 269,947 U.S. DEPARTMENT OF LABOR Passed through California Employment Development Department: Workforce Investment Act-Adult K7102073 & K8106685 17.258 507,904 507,904 294,917 Workforce Investment Act-Youth K7102073 & K8106685 17.259 437,283 437,283 367,574 Workforce Invest Act-Disloc Workr&Rapid Resp K7102073 & K8106685 17.278 625,337 625,337 328,857 Subtotal Pass-Through Workforce Investment Act Cluster 1,570,524 1,570,524 991,348 Total U.S. Department of Labor 1,570,524 1,570,524 991,348 U.S. DEPARTMENT OF TRANSPORTATION Direct Programs: Airport Improvement Program-Pr Yr Adj 3-06-0228-041 20.106 (3,904) (3,904) - Airport Improvement Program 3-06-0228-043-2015 20.106 1,926,847 1,926,847 - Airport Improvement Program-Pr Yr Adj 3-06-0228-043-2015 20.106 (3) (3) - Airport Improvement Program 3-06-0228-044-2015 20.106 21,879 21,879 - Airport Improvement Program 3-03-0172-008-2017 20.106 266,145 266,145 - Subtotal Direct CFDA 20.106 2,210,964 2,210,964 - Small Community Air Service Development Not Applicable 20.930 622 622 - Small Community Air Service Development- Pr Yr Not Applicable 20.930 20,537 20,537 - Subtotal Direct CFDA 20.930 21,159 21,159 - Passed through State Department of Transportation: Highway Planning and Construction BPMP-5949(151) 20.205 67,647 67,647 - Highway Planning and Construction BHLS-5949(136) 20.205 127,617 127,617 - Highway Planning and Construction - Prior year adjustment BHLS-5949(136) 20.205 (813) (813) - Highway Planning and Construction HSIPL-5949(168) 20.205 23,045 23,045 - Highway Planning and Construction HSIPL-5949(167) 20.205 8,294 8,294 - Highway Planning and Construction HSIPL-5949(169) 20.205 5,587 5,587 - Highway Planning and Construction HSIPL-5949(170) 20.205 15,458 15,458 - Highway Planning and Construction CML-5949(171) 20.205 14,828 14,828 - Highway Planning and Construction HSIPL-5949(159) 20.205 208,409 208,409 - Highway Planning and Construction BRLO-5949(065) 20.205 3,896 3,896 - Highway Planning and Construction BRLO-5949(116) 20.205 82,826 82,826 - 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 76,040 76,040 - Highway Planning and Construction - Prior year adjustment BRLO-5949(119), BHLO-5949(164) 20.205 (1,449) (1,449) - Highway Planning and Construction BRLO-5949(120) 20.205 188,805 188,805 - Highway Planning and Construction - Prior year adjustment BRLO-5949(120) 20.205 (639) (639) - Highway Planning and Construction BRLO-5949(127) 20.205 1,646,028 1,646,028 - Highway Planning and Construction - Prior year adjustment BRLO-5949(127) 20.205 (247) (247) - Highway Planning and Construction BRLO-5949(152) 20.205 184,980 184,980 - Highway Planning and Construction BRLO-5949(156) 20.205 40,732 40,732 - Highway Planning and Construction BRLO-5949(157) 20.205 66,478 66,478 - Highway Planning and Construction BRLS-5949(129) 20.205 256,875 256,875 - Highway Planning and Construction BRLS-5949(131) 20.205 131,888 131,888 - Highway Planning and Construction - Prior year adjustment BRLS-5949(131) 20.205 367 367 - Highway Planning and Construction BRLS-5949(135) 20.205 126,354 126,354 - Safe Acctble,Flex,Effic Transp Eq Act(SAFETEA-LU) HPLU-5949 (132) 20.205 2,634 2,634 - Federal Transportation Improvement Program RPSTPLE-5949 (140) 20.205 92,514 92,514 - Highway Planning and Construction BRLS-5949(137) 20.205 74,749 74,749 - Highway Planning and Construction CMFERPL16-5949(161) 20.205 151,359 151,359 - Highway Planning and Construction RPLCML-5949(074) 20.205 1,869,626 1,869,626 - Highway Planning and Construction - Prior year adjustment RPLCML-5949(074) 20.205 (114,210) (114,210) - Highway Planning and Construction BPMPL-5949(162) 20.205 3,257 3,257 - Highway Planning and Construction ER-32LO(110) 20.205 25,991 25,991 - Subtotal Pass-Through CFDA 20.205 5,304,785 5,304,785 - (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, 2018 FEDERAL 2017-18 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTOR/ PASS-THROUGH ENTITY CFDA REVENUE 2017-18 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF TRANSPORTATION (Continued) Passed through State Department of Transportation (Continued): Office Of Traffic Safety PS1723 20.600 27,144 27,144 5,872 Office Of Traffic Safety AL1728 20.600 55,190 55,190 - Office Of Traffic Safety - PrYrAdj PS1723 20.600 (595) (595) - Office Of Traffic Safety PS18028 20.600 107,601 107,601 4,031 Office Of Traffic Safety - PrYrAdj PS1723 20.616 17,567 17,567 - Office Of Traffic Safety PS1723 20.616 (205) (205) - Office Of Traffic Safety OP18016 20.616 32,887 32,887 - Subtotal Pass-Through Highway Safety Cluster 239,589 239,589 9,903 Total U.S. Department of Transportation 7,776,497 7,776,497 9,903 ENVIRONMENTAL PROTECTION AGENCY Passed through State Water Resource Control Board: State Revolving Fund Loan- Rates and Charges 10-846-550 66.458 5,233,998 5,233,998 - Total Environmental Protection Agency 5,233,998 5,233,998 - U.S. DEPARTMENT OF EDUCATION Passed through State Department of Education: State Vocational Rehabilitation Services Not Applicable 84.126A 2,167 2,167 - State Vocational Rehabilitation Services -PY Not Applicable 84.126A 1,078 1,078 - Subtotal Pass-Through 3,245 3,245 - Total U.S. Department of Education 3,245 3,245 - U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES Direct Programs: Drug Free Community 101 Friday Night Live 5H79SP020904-08 93.276 121,692 121,692 - Subtotal CFDA 93.276 121,692 121,692 - SLO Health Integration Partnership (SAMHSA) 1H79SM062377-01 93.243 305,684 305,684 - Behavioral Health Treatment Court Collaborative 5H79SM061698-02 93.243 348,142 348,142 - Subtotal CFDA 93.243 653,826 653,826 - Passed through State Department of Alcohol & Drug Programs: Substance Abuse Prev&Trtmt Block Grnt-Discret Funds 14-90098 93.959 1,110,072 1,110,072 - Substance Abuse Prev&Trtmt Blck-Friday Night/Club 14-90098 93.959 30,000 30,000 - Substance Abuse Prev&Trtmt Blck Grnt-PrevSet-aside 14-90098 93.959 322,424 322,424 - Substance Abuse Prevention & Treatment Block Grant- Adolescent and Youth Treatment 14-90098 93.959 110,234 110,234 - Substance Abuse Prev&Trtmt Blck-Perinatal 14-90098 93.959 72,569 72,569 - Subtotal CFDA 93.959 1,645,299 1,645,299 - Passed through State Department of Child Support Services: Child Support Enforcement: Child Support Admin & EDP Not Applicable 93.563 2,561,888 2,561,888 - Passed Through California Family Health Council: Title X 2018 Not Applicable 93.217 52,361 52,361 - Title X 2017 88000-5320-71219-16-17 93.217 100,866 100,866 - Subtotal CFDA 93.217 153,227 153,227 - Health Resources Services Administration HPP Not Applicable 93.074 190,357 190,357 14,678 Health Resources Services Admin-Prior year adj Not Applicable 93.074 (415) (415) - CDC Base PH Emergency Preparedness 17-10191 93.074 619,756 619,756 - CDC Base PH Emergency Preparedness-Prior Year Adj 17-10191 93.074 (11,729) (11,729) - Subtotal CFDA 93.074 797,969 797,969 14,678 TB Control Branch/Real Time Allotment 5U52PS900515-31 93.116 15,593 15,593 - CALBRACE 16-10604 93.070 9,990 9,990 - Immunization Action Plan 15-10449 93.268 107,283 107,283 - Maternal Child Health (MCH) 201640 93.994 124,108 124,108 - Passed through State Department of Health Care Services: NACCHO 2017-092905 93.424 14,794 14,794 8,000 (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, 2018 FEDERAL 2017-18 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTOR/ PASS-THROUGH ENTITY CFDA REVENUE 2017-18 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES (Continued) Passed through State Department of Health Care Services (Continued): Medical Assistance Program: Medi-Cal Outreach and Enrollment Grant Not Applicable 93.778 15,738 15,738 - Medi-Cal Renewal Assistance Grant Not Applicable 93.778 267 267 - Local Dental Pilot Project (LDPP) 16-93575 93.778 36,430 36,430 - Medi-Cal Admin (MAA) 14-90041 93.778 386,861 386,861 - Medi-Cal Administration - Prior Year Adjustment 14-90041 93.778 (29,433) (29,433) - First Five Medi-Cal 14-90041 93.778 61,546 61,546 61,546 School Based Medi-Cal Administration 17-94052 93.778 582,966 582,966 582,966 Maternal Child Health - Title XIX 201740 93.778 285,671 285,671 - Maternal Child Health - Title XIX Prior Year Adj 201740 93.778 (43) (43) - Medi-Cal Admin -Targeted Case Management 40-1318A 93.778 458,875 458,875 - Medi-Cal Admin -Targeted Case Mgt-Prior Year Adj 40-1318A 93.778 - - - Administration: Medi-Cal-Prior year adjustment 09-86011-A01 93.778 66,597 66,597 - CA CHILDRENS SERVICES (CCS) Title XIX Not Applicable 93.778 568,664 568,664 47,680 CA CHILDRENS SERVICES (CCS) Title XIX - PY Not Applicable 93.778 9,774 9,774 - Foster Care (HCPCFC) Not Applicable 93.778 65,224 65,224 - Foster Care (HCPCFC) PY Not Applicable 93.778 (8,021) (8,021) - Foster Care (PMMO) Not Applicable 93.778 25,806 25,806 - Lead Program 17-10261 93.778 16,355 16,355 - Lead Program - Prior Year Adj 17-10261 93.778 (170) (170) - Child Hlth & Disability Prevention Not Applicable 93.778 147,808 147,808 - IHSS, Public Authority & Medi-Cal Not Applicable 93.778 8,168,464 8,168,464 - Medi-Cal Administration Not Applicable 93.778 77,858 77,858 - Medi-Cal Administration - Prior Year Adjustment Not Applicable 93.778 24,462 24,462 - Subtotal CFDA 93.778 10,961,699 10,961,699 692,192 Targeted Case Management (TCM) Not Applicable 93.779 71,390 71,390 - Subtotal 71,390 71,390 - Mental Health-Substance Abuse (SAMHSA) Not Applicable 93.958 388,531 388,531 - Mental Health-Subst Abuse (SAMHSA)-Pr Yr Adj. Not Applicable 93.958 (274) (274) - Mental Health-Substance Abuse (SAMHSA) Not Applicable 93.958 249,393 249,393 - Subtotal CFDA 93.958 637,650 637,650 - Passed through State Department of Mental Health: Mental Health-McKinney Assist in Transition from Homeless Not Applicable 93.150 41,678 41,678 - Passed through State Department of Social Services: KinGap - Kingship Guardian Assistance Program Not Applicable 93.090 385,693 385,693 - KinGap IV-E Admin - Prior Yr Adj. Not Applicable 93.090 2,152 2,152 - Subtotal CFDA 93.090 387,845 387,845 - Promoting Safe and Stable Families Not Applicable 93.556 154,848 154,848 - Promoting Safe and Stable Families -Prior Year Adjustment 93.556 2 2 - Subtotal CFDA 93.556 154,850 154,850 - Refugee Cash Assistance Not Applicable 93.566 (9) (9) - Temporary Assistance for Needy Families: Assistance: CALWORKS Not Applicable 93.558 2,674,752 2,674,752 - Administration: CalWORKS, SAWS-CalWIN, TANF Not Applicable 93.558 12,123,539 12,123,539 - Administration: CalWORKS, SAWS-CalWIN, TANF - Prior Yr Adj. Not Applicable 93.558 (429,831) (429,831) - Subtotal CFDA 93.558 14,368,460 14,368,460 - Adoption Incentive 93.603 47,881 47,881 - Foster Care - Title IV-E: Administration: Probation - Title IV E Not Applicable 93.658 110,865 110,865 - Administration: Probation-Title IV E-PrYrAdj Not Applicable 93.658 4,003,619 4,003,619 Child Welfare Services - Title IV E Not Applicable 93.658 (15,343) (15,343) - Child Welfare Services - Title IV E - Prior Year Adjustment Not Applicable 93.658 2,466,104 2,466,104 - Subtotal CFDA 93.658 6,565,245 6,565,245 - Child Welfare Services Title IV-B Not Applicable 93.645 182,859 182,859 - Child Welfare Services Title IV-B - Prior Year Adjustment Not Applicable 93.645 65 65 - Subtotal CFDA 93.645 182,924 182,924 - Adoption Assistance - Prior Year Adjustment Not Applicable 93.659 (8,157) (8,157) - Adoption Assistance Not Applicable 93.659 700,091 700,091 - Assistance: Adoption Not Applicable 93.659 3,940,198 3,940,198 - Subtotal CFDA 93.659 4,632,132 4,632,132 - (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, 2018 FEDERAL 2017-18 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTOR/ PASS-THROUGH ENTITY CFDA REVENUE 2017-18 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES (Continued) Passed through State Department of Social Services (Continued): Child Welfare Services-Title XX Not Applicable 93.667 87,852 87,852 - Child Welfare Services-Title XX - PY Not Applicable 93.667 87,852 87,852 - Subtotal CFDA 93.667 175,704 175,704 - Independent Living Program Not Applicable 93.674 107,934 107,934 - Independent Living Program - Prior Year Adjustment Not Applicable 93.674 482 482 - Subtotal CFDA 93.674 108,416 108,416 - CA Childrens Services and TLIP Title XXI Not Applicable 93.767 217,971 217,971 - CA Childrens Services and TLIP Title XXI - PY Not Applicable 93.767 763 763 - Subtotal CFDA 93.767 218,734 218,734 - Child Health & Disability Prevention - PY 2 2 - Total U.S. Department of Health & Human Services 44,760,270 44,760,270 714,870 DEPARTMENT OF HOMELAND SECURITY Direct Programs Public Assistance - Disaster Grants - Prior Year FEMA-4305-DR-CA 97.036 10,057 10,057 - Public Assistance - Disaster Grants - Prior Year FEMA-4308-DR-CA 97.036 11,220 11,220 - Public Assistance - Disaster Grants - Prior Year FEMA-4301-DR-CA 97.036 12,497 12,497 - Public Assistance - Disaster Grants - Prior Year FEMA-4301-DR-CA 97.036 1,060 1,060 - Public Assistance - Disaster Grants - Prior Year FEMA-4305-DR-CA 97.036 199 199 - Public Assistance - Disaster Grants FEMA-4308-DR-CA 97.036 23,556 23,556 - Subtotal CFDA 97.036 58,589 58,589 - Stafford Act - Prior Year FEMA-5146-FM-CA 97.046 1,360 1,360 - Stafford Act - PY Not applicable 97.046 148,957 148,957 - Stafford Act - PY FEMA-5146-FM-CA 97.046 10,674 10,674 - Stafford Act - Prior Year Adjustment FEMA-5146-FM-CA 97.046 4,028 4,028 - Subtotal CFDA 97.046 165,019 165,019 - Passed through California Emergency Management Agency: Disaster Grants - Public Assistance - Prior Year Adjustment FEMA-4301, 05 08-DR-CA 97.036 10,051 10,051 - Disaster Grants - Public Assistance - Prior Year Adjustment FEMA-4301-DR-CA 97.036 188,628 188,628 - Disaster Grants - Public Assistance FEMA-4301-DR-CA 97.036 8,743 8,743 - Disaster Grants - Public Assistance - Prior Year Adjustment FEMA-4301-DR-CA 97.036 25,819 25,819 - Disaster Grants - Public Assistance - Prior Year Adjustment FEMA-4305-DR-CA 97.036 71,434 71,434 - Disaster Grants - Public Assistance FEMA-4305-DR-CA 97.036 39,758 39,758 - Disaster Grants - Public Assistance FEMA-4305-DR-CA 97.036 41,432 41,432 - Disaster Grants - Public Assistance FEMA-4305-DR-CA 97.036 33,735 33,735 - Disaster Grants - Public Assistance FEMA-4305-DR-CA 97.036 25,221 25,221 - Disaster Grants - Public Assistance - Prior Year Adjustment FEMA-4308-DR-CA 97.036 219,967 219,967 - Disaster Grants - Public Assistance FEMA-4308-DR-CA 97.036 33,236 33,236 - Disaster Grants - Public Assistance FEMA-4308-DR-CA 97.036 89,581 89,581 - Disaster Grants - Public Assistance FEMA-4308-DR-CA 97.036 53,893 53,893 - Subtotal CFDA 97.036 841,497 841,497 - Emergency Management Performance Grants: Emergency Management Performance 2016 2017-0007 97.042 152,046 152,046 - Subtotal CFDA 97.042 152,046 152,046 - 2015 Stonegarden Grant - PY Stonegarden Grant 2015-1078 97.067 76 76 - 2015 Stonegarden Grant Stonegarden Grant 2015-1078 97.067 28,933 28,933 - 2016 Stonegarden Grant - PY Stonegarden Grant 2016-0102 97.067 1,249 1,249 - 2016 Stonegarden Grant Stonegarden Grant 2016-0102 97.067 128,430 128,430 - 2017 Stonegarden Grant Stonegarden Grant 2017-0083 97.067 14,177 14,177 - 2017 Homeland Security 2017-0083 97.067 86,700 86,700 - Homeland Security 2017-0083 97.067 4,006 4,006 - Homeland Security 2016-0102 97.067 3,449 3,449 - Homeland Security 2017-0083 97.067 1,083 1,083 - Homeland Security 2015-0078 97.067 489 489 - 2015 Homeland Security 2015-0049 97.067 54,590 54,590 - 2016 Homeland Security 2016-0102 97.067 117,745 117,745 - State Homeland Security Grant 2016 079-00000 2016-002 97.067 103,450 103,450 - State Homeland Security Grant 2015 079-00000 2015-0078 97.067 38,540 38,540 - Subtotal CFDA 97.067 582,917 582,917 - Total Department of Homeland Security 1,800,068 1,800,068 - TOTAL FEDERAL FINANCIAL AWARDS EXCLUDING LOANS CARRIED FORWARD FROM PRIOR YEAR $ 74,661,537 $ 74,661,537 $ 5,725,133 (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, 2018 FEDERAL 2017-18 AMOUNT PASSED FEDERAL GRANTOR/PASS-THROUGH GRANTOR/ PASS-THROUGH ENTITY CFDA REVENUE 2017-18 THROUGH TO PROGRAM TITLE IDENTIFICATION NUMBER NUMBER RECOGNIZED EXPENDITURES SUBRECIPIENTS 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 $ 2,441,874 Home Partnership Investment Program - 3rd Party Loans 14.239 18,901,293 FEDERAL LOAN BALANCES CARRIED FORWARD FROM PRIOR YEAR 21,343,167 TOTAL FEDERAL FINANCIAL AWARDS INCLUDING LOANS CARRIED FORWARD FROM PRIOR YEAR $ 96,004,704 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, 2018 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 $ 12,596 14.218 Community Development Block Grant/Entitlement Grants 1,716,654 14.231 Emergency Solutions Grant Program 71,983 14.239 Home Investment Partnerships Program 1,147,834 14.267 Continuum of Care 789,998 16.575 County Victim Services 269,947 17.258 Workforce Investment Act-Adult 294,917 17.259 Workforce Investment Act-Youth 367,574 17.278 Workforce Investment Act-Dislocated Worker/Rapid Response 328,857 20.600 Office of Traffic Safety 9,903 93.767/93.768 California Children's Services (Title XXI and Title XIX) 47,680 93.778 Activities (CBOMAA and SMAA) 644,512 93.424 National Association of Country and City Health Officials 8,000 93.074 HRSA HPP 14,678 Total $ 5,725,133 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 June 30, 2017 New Loans Loan Payments June 30, 2018 14.218 Community Development Block Grant/Entitlement Grants $ 2,441,874 $ - $ - $ 2,441,874 14.239 Home Investment Partnerships Program 18,917,043 - (15,750) 18,901,293 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, 2018 10.760, 10.781 Water and Waste Program Cluster $ 76,746,000 66.458 State Revolving Fund 35,071,581 * 10.760 Water and Waste Program Cluster 1,501,000 * 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 17.258 $ 507,904 17.259 437,283 17.278 625,337 20.106 2,210,964 20.600 189,341 20.616 50,248 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, 2018 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 14.239 Home Investment Partnership Program 66.458 Capitalization Grants for Clean Water State Revolving Funds 93.658 Foster Care Title IV-E 93.778 Medical Assistance Program The threshold for distinguishing type A and B programs was $2,858,114. 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, 2018, 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, 2018 Share of Expenditures Expenditures Claimed Current Year For the Period For the Year Cumulative Through Ended As of Federal State County Program June 30, 2017 June 30, 2018 June 30, 2018 Share Share Share Victim Witness Assistance - VW16350400 Personnel Services $ - $ 364,752 $ 364,752 $ 303,820 $ 60,932 $ - Operating Expenses - 41,845 41,845 25,732 - 1,965 Equipment - - - 14,148 - - Totals $ - $ 406,597 $ 406,597 $ 343,700 $ 60,932 $ 1,965 Unserved/Underserved Victim Advocacy and Outreach - XV15010400 Personnel Services $ - $ 196,920 $ 196,920 $ 162,554 $ - $ 34,366 Operating Expenses - 36,420 36,420 28,783 - 7,637 Totals $ - $ 233,340 $ 233,340 $ 191,337 $ - $ 42,003 Unserved/Underserved CVWD - XV15A10400 Personnel Services $ - $ 185,044 $ 185,044 $ 153,669 $ - $ 31,375 Operating Expenses - 48,394 48,394 40,823 - 7,571 Totals $ - $ 233,438 $ 233,438 $ 194,492 $ - $ 38,946 County Victim Services (XC) - XC16010400 Personnel Services $ - $ 36,424 $ 36,424 $ 19,262 $ - $ 17,162 Operating Expenses - 271,810 271,810 271,810 - - Totals $ - $ 308,234 $ 308,234 $ 291,072 $ - $ 17,162 2015 Stonegarden Grant 2015-1078 Personnel Services $ 150,557 $ 12,971 $ 163,528 $ - $ - $ - Operating Expenses 6,759 5,239 11,998 - - - Equipment 73,490 12,031 85,521 - - - Totals $ 230,806 $ 30,241 $ 261,047 $ - $ - $ - 2016 Stonegarden Grant 2016-0102 Personnel Services $ 43,270 $ 120,981 $ 164,251 $ - $ - $ - Operating Expenses - 6,200 6,200 - - - Totals $ 43,270 $ 127,181 $ 170,451 $ - $ - $ - 2017 Stonegarden Grant 2017-0083 Personnel Services $ - $ 13,035 $ 13,035 $ - $ - $ - Operating Expenses - 1,142 1,142 - - - Totals $ - $ 14,177 $ 14,177 $ - $ - $ - 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, 2017 to June 30, 2018. 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, 2017 to June 30, 2018, 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 14, 2018, 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 14, 2018 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 (Guide), issued by the Federal Aviation Administration, for its Passenger Facility Charge Program for the annual period and each quarterly period from July 1, 2017 to June 30, 2018. 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, 2017 to June 30, 2018. 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 14, 2018 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, 2017 to June 30, 2018, and have issued our report thereon dated December 14, 2018. 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 14, 2018 23 COUNTY OF SAN LUIS OBISPO SCHEDULE OF PASSENGER FACILITY CHARGE REVENUES AND EXPENSES FOR THE YEAR ENDED JUNE 30, 2018 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 - - - 469,297 - - 6,820,830 (6,820,830) Total 4/6: 1997-04-I and 2000-06-U 6,820,830 2,464,620 - - 469,297 6,370,839 449,991 6,820,830 - 2007-08-C Revenues - (1,494,087) 845,501 3,514 - 1,692,375 16,115 - 1,708,490 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) 845,501 3,514 - 1,692,375 16,115 1,328,771 379,719 Total Passenger Facility Charges $ 8,849,020 $ 970,533 $ 845,501 $ 3,514 $ 469,297 $ 8,063,214 $ 466,106 $ 8,149,601 $ 379,719 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 year ending June 30, 2018, 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