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2007 I I I .:�..� . � ' CITY OF BAI�GOR,MAINE ' Reports Required by Government Auditing Standards and OMB Circular A-133 � For the Year Ended June 30,2007 � � � � , CERTIFIED PUBLIC ACCOUNTANTS � � AND BUSINESS CONSULTANTS � � 1 1 �1�i 1�L 1�' 011- � `1�er5teevti Du ettette CITY OF BANGOR,MAINE Reports Required by Government Auditing Standards and OMB Circular A-133 June 30,2007 Re� Pa�e Report on Internal Control over Financial RepoRing and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governrrcent Auditing Standards 1-2 Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 3-4 Schedule of Expenditures of Federal Awards 5-7 Notes to Schedule of Expenditures of Federal Awards 8 Report on Compliance with Requirements Applicable to the Passenger Facility Charge Program, Internal Control over Compliance and Schedule of Expenditures of Passenger Facility Charges 9-10 Schedule of Expenditures of Passenger Facility Charges 11 Schedule of Findings and Questioned Costs: Section I-Summary of Auditor's Results 12 Section II-Findings Required to be Reported Under Government Auditing Standards 13 Section III-Findings and Questioned Costs for Federal Awards 14 Section IV-Status of Prior Yeaz Findings and Questioned Costs 15 - 16 ..�.�- Ru v��vvc �-.�- xersteev�� ��-� Or�etlette Certified Public Accountants and Business Consultants REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS City Council City of�angor,Maine We have audited the financial statements of the governmental activities,business-type activities,each major fund, and the aggregate remaining fund information of the City of Bangor,Maine as of and for the year ended June 30,2007, which collectively comprise the City of Bangor's basic financial statements and have issued our report thereon dated�December 21,2007. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Bangor,Maine's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Bangor,Maine's internal control over financial repoRing. Accordingly, we do not express an opinion on the effectiveness of the City of Bangor,Maine's internal control over financial reporting. Our consideration of the internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial repoRing that we consider to be a significant deficiency. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency,or a combination of control deficiencies, that adversely affects the City of Bangor,Maine's ability to initiate, authorize, record,process,or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City of Bangor, Maine's financial statements that is more than inconsequential will not be prevented or detected by the City of Bangor,Maine's internal control. We consider the deficiency described in the accompanying schedule of findings as item 2007-1 to be a significant deficiency in intemal control over financial reporting. 1 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, CONTINUED A material weakness is a significant deficiency,or a combination of significant deficiencies,that result in more than a remote likelihood that a material misstatement of the�nancial statements will not be prevented or detected by the City of Bangor,Maine's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in . the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and,accordingly,would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that the significant deficiency described above is not a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Bangor,Maine's financial statements are free of material misstatement,we performed tests of its compliance with certain provisions of laws, regulations,contracts and grant agreements, noncompliance with which could have a direct and material effect on the deternunation 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 that are required to be reported under Government Auditing Standards. We noted other matters involving fhe internal control over financial reporting that we have reported to the management of the City in a separate letter dated December 21,2007. This report is intended solely for the information and use.of the City Council, School Board,management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. � � December 21,2007 South Portland,Maine � 2 .�.� �Zt 1�L L/O1�L M.� �C,ersteen. ��— Oj�lelle�e Certified Public Accountants and Business Consultants REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 City Council City of Bangor,Maine Compliance We have audited the compliance of the City of Bangor,Maine with the types of compliance requirements described in the U.S.Office of Management and Budget(OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2007. The City of Bangor,Maine's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws,regulations,contracts,and grants applicable to each of its major federal programs � is the responsibility of the City of Bangor,Maine's management. Our responsibility is to express an opinion on the City of Bangor,Maine'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 appticable to financial audits contained in GovernmentAuditing Standards, issued by the Comptroller General of the United States;and OMB Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct ancl material effect on a major federal program occurred. An audit includes examining, on a test basis,evidence about the City of Bangor,Maine's cornpliance with those requirements and performing such other procedures as we considered necessary in fhe circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City of Bangor,Maine's compliance with those requirements. As described in item#2007-2 in the accompanying schedule of findings and questioned costs,the City of Bangor,Maine did not comply with the requirements regarding cash management that is applicable to its U.S.Department of Education,Special Education—Grants to States (CFDA#84.027)program. Compliance with such requirement is necessary,in our opinion,for the City of Bangor to comply with � requirements applicable to that program. In our opinion,except for the noncompliance described in the preceding paragraph,the City of Bangor, Maine,complied,in all material respects,with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30,2007. 3 REPORT ON GOMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133,CONTINUED Internal Control Over Compliance The management of the City of Bangor,Maine is responsible for establishing and maintaining effective internal control over compliance with requirements of laws,regulations,contracts,and grants applicable to federal programs. In planning and performing our audit, we considered the City of Bangor,Maine's internal control over compliance with requirements that could have a direct and material effect on a major�federal program in order to deternune 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 the City of Bangor,Maine's internal control over compliance. A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency,or a combination of control deficiencies,that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency,or a combination of significant deficiencies,that results in more than a remote likelihood that a material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first . paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities,business-type activities,each major fund,and the aggregate remaining fund information of the City of Bangor,Maine as of and for the year ended June 30,2007, and have issued our report thereon dated December 21, 2007. Our audit was performed for the purpose of forming opinions on the financial statements the collectively comprise the City of Bangor,Maine's basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circulaz A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and,in our opinion,is fairly stated, in all material respects,in relation to the basic financial statements taken as a whole. This report is intended for the information and use of the City Council,School Board,management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. k�� a December 21, 2007 South Portland,Maine 4 CITY OF BANGOR,MAINE Schedule of Expenditures of Federal Awards For the year ended June 30,2007 Pass- Federal through/ , CFDA Award grantor Beginning Revenue . Ending Federal Awards number amount number balance Federal State Other 'h�ansfers Expenditures balance Received Direcflv Department of Housing and Urban Development: Community Development Block Grants: B-02-MC-23-0004 14.218 $ 1,292,000 N/A 89,618 - - - - 85,001 4,617 B-OS-MG23-0004 14.218 1,181,'771 N/A (890,096) 548,731 - 388,901 - 47,536 - B-06-MC-23-0004 14.218 1,060,750 N/A - 393,814 - 248,903 - 1,628,686 (985,969) Supportive Housing: ME O1B50-1002(8719) 14.235 9,975 N/A - 9,975 - - - 9,975 - ME O1B50-1003(8711) 14.235 118,422 N/A - 59,211 - - - 59,211 - ME'O1B50-1004(8718) 14.235 18,600 N/A - 18,600 - - - 18,600 - ME O1B40-1005(8730) 14.235 16,758 N/A - 16,758 - - - 16,758 - Shelter Plus Care: ME O1050-3010 TRA(8715) 14.238 221,400 N/A - 90,562 - - - 90,562 - ME O1050-1U12 TRA(8713) 14.238 64,008 N/A - 45,728 - - - 45,728 - ME O1C00-1001 TRA(8712) 14.238 259,200 N/A - 25,425 - - - 25,425 - ME O1050-1013 PRA(8716) 14.238 61,632 N/A - 35,973 - - - 35,973 - ME O1060-1009 TRA(8714) 14.238 246,660 N/A - 57,964 - - - 57,964 - ME O1050-1011 TRA(8714) 14.238 168,444 N/A - 116,341 - - - 116,341 - ME O1C90-1002 TRA(8715) 14.238 804,540 N/A - 31,130 - - - 31,130 - ME O1C40-1009 PRA(8716) 14.238 61,632 N/A - 21,886 - - - 21,886 - TotalDepartmentofHousingandUrbanDevelopment (800,478) 1,472,098 - 637,804 - 2,29Q776 (981,352) Department of Justice: Cops Interoperable Communication Tech Program 16.710 448,674 2004-IN-WX-0010 - 238,489 - 79,496 - 317,985 - Local Law Enforcement Block Grant 16.592 10,306 2004-LB-BX-1373 8,301 - - - - 8,301 - Total Department of Justice 8,301 238,489 - 79,496 - 326,286 - Department of Homeland Security: State Domestic Preparedness(7915) 97.004 425,000 N/A - 116,750 - - - 116,750 - Homeland Security Grant Program(7902) 97.067 445,000 N/A - 198,838 - - - 198,838 - Homeland Security Grant Pragram(7906) 97.067 3'86,500 N/A - 49,103 - - - 49,103 - Law Enforcement Tenorism Prevenfion(7903) 97.074 328,739 N/A - 224,452 - - - 2�4,452 - Law Enforcement Reimbursement Proerem 97.090 300,159 HSTS1-04-A-LEF-010 - 83,400 - 48,286 - 131,686 - Federal Emergency Management Agency: Assistance to Firefighters Grant 97.044 198,000 EMW2005FG04060 - 198,000 - 22,013 - 171,871 48,142 Total Department of Homeland Security - 870,543 - 70,299 - 892,700 48,142 Department of Transporte[ion: Aitport Improvement Plan: ' 3-23-0005-35 20.106 4,501,268 N/A 55,139 - - 90,102 - 145,241 - 3-23-0005-38 20.106 541,071 N/A - 205,087 5,521 5,521 - 210,187 5,942 3-?3-0005-39 20.106 1,387,220 N/.A - 312,380 16,441 8,�21 - 323,821 8,221 3-?3-0005-40 ?0.106 1,420,649 N/A - 3,839 202 79 - 4,1?0 - 3-23-0005-42 ?0.106 219,545 N/.A - 44,212 1,874 1,374 - 47,960 - 3-23-0005-43 20.106 2,584,251 N/A - 2,?16,191 60,153 57,013 - 2,333,36? - 3-23-0005-44 ?0.106 2,164,810 7V/,4 - 414,050 21,792 20,291 - 456,133 - Federal Hiehway Administration- Traysportation&Community Service Preser��ation ?0.205 562,460 01 ME01 - 30,016 - - - 30,016 - Totnl DepartrnentofTransportaGou SS,139 3,?25,775 105,933 133,106 - 3,555,840 14]63 5 CTTY OF BANGOR,MAINE Schedule of Expenditures of Federal Awards,Continued For the year ended June 30,2007 Pass- Federal through/ CFDA Award grantor Beginning Revenue . Ending Federai Awards number amount number balance Federal State Other Transfers Expenditures balance Pass Through Deparhnent of Agriculhue,passed through Maine Depariment of � Health and Human Services: Women,Infant and Children-Admin: WIC 06-02 10.557 $ 469,129 N/A - 123,384 - - - 123,384 - WIC 07-02 10.557 475,821 N/A - 360,396 - - - 360,396 - Women,Infant and Children-Food: WIC 06-02 10.557 1,787,460 N/A - 414,502 - - - 414,502 - WIC 07-02 10.557 2,063,070 N/A - 1,359,994 - - - 1,359,994 - Passed through Maine Department of Educafion: Food Distnbution-Food Donation Program 10.550 N/A 013-6134-OS - 49,456 - - - 49,456 - School Breakfast Program 10.553 N/A 013-7127-05 - 86,593 - - - 86,593 - School Lunch Program 10.555 N/A 013-7128-OS - 457,264 - - - 457,264 - Total Department ofAgriculture - 2,851,589 - - - 2,851,589 - Deparhnent of Homeland Security: Ot�ice of Domesfic Preparedness,passed thmugh the Maine Emergency Management Agency: Law Enforcement Terrorism Prevention(3003) 97.074 110,822 2005GET50053 - 110,822 - - - 110,822 - Homeland Security Grant Program(3003) 97.067 21,599 2006GET60047 - 21,599 - - - 21,599 - Total Department of Homeland Security - 132,421 - - - 132,421 - Environmental Protection Agency,passed through the State Revolving Loan Fund Program: Combined Sewer OverYlow 66.458 2,000,000 C230071-0'I - 930,259 - - - 930,259 - Department of Health&Human Services,passed through the Maine Bureau of Health: Baneor Children's Dental Clinic 93.994 30,000 CDC 07-299 - 30,000 - 154,847 - 184,847 - HIV Prevention&Education 93.940 42,472 HEA 06-250 1,373 21,236 - 2,673 - 21,733 3,549 STD/HIV Clinical and Epidemiologic Services 93.977 43,572 HEA 06-250 1,113 20,494 1,292 2,737 - 22,�61 3,375 STD/HN Clinic 93.977 86,044 CDC 07-289 - 43,022 - 8,262 - 53,979 (2,695) Immunization Program Nursing 93.268 100,000 HEA 06-256 40,7A3 50,000 - 215 - 90,998 - Adult Immunization Clinic 93.268 100,000 CDC 07-273 - 50,000 - - - 45,297 4,703 SuUstance Abuse Prevention 93.243 80,000 SA3-07-364 - A0,000 - - - 50,621 29,379 Bio Teirorism Crrant 93.283 50,000 CDC 07-374 - 25,000 - - - 26,110 (1,110) Total Department of Health&Human Services 43,269 319,752 1,292 168,734 - 495,846 37,201 � CITY OF BANGOR MAINE Schedule of Expenditures of Federal Awards,Continued For the year ended June 30,2007 Pass- Federal through/ • CFDA A�vard grantor Beginning Revenue Ending Federal A�vards number amount number balance Federal Statc Other Transfers Expenditures balance Pass Throueh.Continued Department of Education,passed through the Maine Dep.arunent af Education: Adult Basic Education 84.002 $ 55,938 013-OSA-6296-642 - 55,938 - - - 55,938 - Title lA � 84.010 1,165,889 013-OSA-6334-132 20,530 1,165,889 - - - 1,153,435 32,984 Title V 84.298 8,090 013-OSA-1072-662 - 8,090 - - 28,372 36,462 - Title IID-Ed Technology 84318 16,347 013-OSA-1006-072 11,280 16,347 - - 20,000 47,627 - Special Fducation-Grants to Local States 84.027 853,854 013-OSA-6317-122 97,377 853,854 - - - 851,176 100,055 Title IIA 84.367 329,676 013-OSA-1138-112 - 329,676 - -. (33,130) 396,546 - Preschool Local Entitlement 84.173 15,399 013-OSA-6241-232 - 15,399 � - - - 15,399 - Passed through the Maine Office of Substance Abuse: Drug Free Schools and Communities 84.086 30,485 N/A - 30,485 - - (15,242) 15,243 - Total Department of Education 129,187 2,4�5,678 - - - 2,471,826 133,039 Depardnent of the Interior,passed through Maine Department of Transportation Boating Infrastructure Grant 15.622 100,000 PIN 013134.01 - 15,338 - 5,113 - 20,451 - . Ivlaine Department of Conservation ' Land and Water Conservation Fund 15.91 G 22,500 23-00795 - 22,500 - 22,500 - 45,000 - Totsl Departrnent of the Interior - 37,838 - 27,613 - 65,451 - Deparhnent of Transportation,passed through Maine Deparhnent of Transpor(ation: Ferry Boat Discretionary Project 20.205 520,417 PIN 013872.00 - 65,026 - 16,257 - 81,283 - Operating 20.507 34,000 ME 37-X-005 - 4,122 - 4,122 - $,244 - Operating 20.507 Unknown Unknown - 38,'798 - 28,798 - � 57,596 - Operating 20.507 644,338 ME 90-X-154 - 128,656 - 142,858 - 271,514 - Operating 20.507 613,623 ME 90-X-164 - 572,425 43,930 838,502 - 1,454,857 - Capital 20.507 30,825 ME 90-X-130 - 30,825 - 8,531 - 39,356 - RTAP 20.509 3,100 ME 18-X-039 - 3,100 - - - 3,100 - T�tal Deparhnent of Transportation - 832,95? 43,930 1,039,068 - 1,915,950 - Total Federal Awards (564;582) 13.387;394 151;205 2,206,120 - 15.928,944 (748.807) See accompanying notes�o schedule oferpenditures offederal awards. 7 CITY OF BANGOR,MAINE Notes to Schedule of Expenditures of Federal Awards June 30,2007 PURPOSE OF TI�SCHEDULE Office of Management and Budget(OMB)Circular A-133,Audits of States:Local Governments and Non-profit Organizations, requires a Schedule of Expenditures of Federal Awards showing total expenditures for each federal award program as identified in the Catalog of Federal Domestic Assistance(CFDA). SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity-The accompanying schedule includes all federal award programs of the City of Bangor, Maine for the fiscal year ended June 30, 2007. The reporting entity is defined in Notes to Basic Financial Statements of the City of Bangor,Maine. B. Basis of Presentation-The information in the accompanying Schedule of Expenditures of Federal Awards is presented in accordance with OMB Circular A-133. 1. Pursuant to OMB Circular A-133,federal awazds are defined as assistance provided by a federal agency, either directly or indirectly, in the form of grants,contracts,cooperative agreements,loans,loan guarantees,property, interest subsidies,insurance or direct appropriations. 2. Major-OMB Circular A-133 establishes the level of expenditures or expenses to be used in defining major federal award programs. Major programs for the City of Bangor are identified in the summary of auditor's results in the Schedule of Findings and Questioned Costs. C. Basis of Accounting-The information presented in the Schedule of Expenditures of Federal Awards is presented on the modified accrual basis of accounting, which is consistent with the repoRing in the City's fund financial statements. 8 ti,..�- �Li YL 1�OYL � , �Gersteev� � Or�ellette Certified Public Accountants and Business Consultants REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO THE PASSENGER FACILITY CHARGE PROGRAM,INTERNAL CONTROL OVER COMPLIANCE AND SCHEDULE OF EXPENDITURES OF PASSENGER FACILITY CHARGES City Council - City of Bangor,Maine Compliance We have audited the compliance of the City of Bangor,Maine with the compliance requirements described in the Passenger Facility Charge Audit Guide for Public Agenczes, issued by the Federal Aviation Administration (Guide),for its passenger facility charge program for the year ended June 30, 2007. Compliance with the requirements of laws and regulations applicable to its passenger facility charge program is the responsibility of the City of Bangor,Maine's management. Our responsibility is to express an opinion on the City of Bangor,Maine'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 chazge program occurred. An audit includes examining,on a test basis, evidence about the City of Bangor,Maine'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 deternunation of the City of Bangor, Maine's compliance with those requirements. In our opinion,the City of Bangor,Maine complied,in all material respects, with the requirements referred to above that are applicable to its passenger facility charge program for the year ended June 30, 2007. Internal Control Over Compliance The rnanagement of the City of Bangor,Maine 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 perfornung our audit, we considered the City of � Bangor,Maine'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 and to test and report on the internal control over compliance in accordance with the Guide but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the City of Bangor,Maine's internal control over compliance. 9 REPORT ON COMPLIANCE WITH REQUIItEMENTS APPLICABLE TO THE PASSENGER FACILITY CHARGE PROGRAM,INTERNAL CONTROL OVER COMPLIANCE AND SCHEDULE OF EXPENDITURES OF PASSENGER FACILITY CHARGES,CONTINUED A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees;in the normal course of perfornung their assigned functions,to prevent or detect noncompliance with a type of compliance requirement of the passenger facility charges program on a timely basis. A significant deficiency is a control deficiency,or a combination of control deficiencies,that adversely affects the City of Bangor,Maine's ability to admiriister the passenger facility charges program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of the passenger facility charges program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency,or combination of significant deficiencies,that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of passenger facility charges program will not be prevented or detected by the entity's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses.We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above. Schedule of Expenditures of Passenger Facility Char e�s We have audited the financial statements of the governme�tal activities,business-type activities,each major fund and the aggregate remaining fund information of the City of Bangor,Maine as of and for the year ended June 30,2007,and have issued our report thereon dated December 21,2007. Our audit was performed for the purpose of forming opinions on the financial statements that.collectively comprise the City of Bangor,Maine's basic financial statements. The accompanying schedule of expenditures of passenger facility charges is presented for purposes of additional analysis as specified in the Guide and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the City Council,management, and the Federal Aviation Administration and is not intended to be and should not be used by anyone other than these specified parties. k�� o December 21,2007 South Portland,Maine 10 CITY OF BANGOR,MAINE ' Schedule of Expenditures of Passenger Facility Charges For the Year and Each Quarter Within the Year Ended June 30,2007 Memorandum Memorandum Only Only Cumulative Quarter Ended Quarter Ended Cumula6ve Approved Amounts Total September 30, December 31, Quarter Ended Quarter Ended Year Ended Totals Impose and Use June 30,2006 2006 2006 March 31,2007 June 30,2007 June 30,2007 June 30,2007 9S-O]-C-00-BGR(as amended) Passenger facility charge revenue and interest $ 8 961 006 6 402 295 167 676 122 973 152 506 156,744 599 899 7 002 194 Expenditures: . Reconstruct Domesdc Ternunal Apron-South 2,301,222 2,301,222 - - - - - 2,301,222 Reconstruct Domesdc Terminal Apron-Nonh 1,070,596 937,451 - - - - - 937,451 Reconstruct Intemational Terminal Apron-North 3,464,41:5 2,013,116 175,433 1,255 - 22,674 199,362 2,212,478 Reconstruct Commuter Apron Area 2 124 773 - - _ _ _ _ _Total expenditures $ 8,961,006 5,251,789 175 433 1,255 - 22,674 199,362 5,451,151 ll , CITY OF BANGOR,MAINE Schedule of Findings and Questioned Costs June 30,2007 SecNon I-Summary of Auditor's Results Financial Statements Type of auditor's report issued: Unqualified . Internal control over financial reporting: Material weaknesses identified? no . Significant deficiencies identified not considered to be a material weakness? yes Noncompliance material to financial statements noted? no Federal Awards Internal Control over major programs: Material weaknesses identified? no Significant deficiencies identified not considered to be material weaknesses? no Type of auditor's report issued on compliance for major programs: Qualified Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .510(a)? yes Identification of major programs tested: CFDA Numbers Name of Federal Pro�ram or Cluster 10.557 WIC-Nutrition Prog.ram 20.507 Federal Transit Cluster 14.218 Communit,y Development Block Grant 20.106 Airport Improvement Program 84.027, 84.173 Special Education Cluster 66.458 Combined Sewer Overflow Dollar threshold used to distinguish between Type A and Type B programs: $477,868 Auditee qualified as low-risk auditee? no 12 CITY OF BANGOR,MAINE � Schedule of Findings and Questioned Costs, Continued Section II-Findings Required to be Reported Under Government Auditing Standards SIGNIFICANT DEFICIENCY � #2007- 1 -Sewer Svstem Controls Controls at the sewer utility are potentially weakened because of the utility's relationship with the Bangor Water District, which is a separate,non-City entity. The problem arises because the water and sewer utilities share many aspects of billing and collection. Specifically, sewer bills are based upon water usage data,as provided by the water districts; water and sewer bills are mailed together; sewer payments may be made at, among other ' places, the Water District; and the Water District's billing and payment software, which is incompatible with the City's general accounting software,is also employed by the sewer utility. As a result, a number of problems arise. First, where payments are made at the Water District,City funds remain outside the City's control for the period of time between their receipt from customers and the forwarding of payment to the City. This,combined with the increased handling of the City assets introduces the potential for diversion of City property by non-City employees. Second, the flow of funds between the two utilities and their timing often results in the"float"of relatively large amounts due the City. Third,the incompatibility of systems between the sewer utility and the rest of City government makes timely tracking of sewer utility performance difficult. Further,it makes reconcilement increasingly important and time consuming. We recommend the City review its relationship with the water utility to correct these cash handling and accounting deficiencies: 13 CITY OF,BANGOR,MAINE Schedule of Findings and Questioned Costs,Continued Section III-Findings and QuesNoned Costs For Federal Awards #2007-2-U.S.Denartment of Education—Snecial Education—Grants to States.CFDA#84.027.for the ueriod Julv 1,2006 throuEh Tune 30.2007 Finding-The Special Education—Grants to States program had excess cash balances on hand for excessive , periods of time. - . Criteria-Drawdowns of federal funds must be as close as possible to the time of making.distributions. Time should be minimized between the transfer from the U. S.Treasury and the disbursement of funds by the recipient. Effect-Payment of federal funds could be delayed or denied. Recommendation-Request for drawdowns, which are accomplished in the application,should be timed such that they are received in the later periods of the grant resulting in these payments being reimbursements for expenditures already made rather than advances. Questioned Costs-None 14 CITY OF BANGOR,MAINE Status of Prior Year Findings and Questioned Costs Section IV—Findings Required to be Reported Under Government Auditing Standards #2006- 1 - Sewer Svstem Controls Controls at the sewer utility are potentially wealcened because of the utility's relationship with the Bangor Water District, which is a separate, non-City entity. The problem arises because the water and sewer utilities share many aspects of billing and collection. Specifically, sewer bills are based upon water usage data, as provided by the water districts; water and sewer bills are mailed together; sewer payments may be made at,among other places,the Water District;and the Water District's billing and payment softwaze,which is incompatible with the City's general accounting software,is also employed by the sewer utility. As a result,a number of problems arise. First, where payments are made at the Water District,City funds remain outside the City control for the period of time between their receipt from customers and the forwarding of payment to the City. This,combined with the increased handling of the City assets introduces the potential for diversion of City property by non-City employees. Second,the flow of funds between the two utilities and their timing often results in the"float" of relatively large amounts due the City. Third,the incompatibility of systems between the sewer utility and the rest of City government makes timely tracking of sewer utility perforinance difficult. Further, it makes reconcilement increasingly important and time consurrvng. We recommend the City review its relationship with the water utility to correct these cash handling and accounting deficiencies. Status—See current year findings required to be reported under Government Auditing Standards#2007-1. 15 - CITY OF BANGOR,MAINE Status of Prior Year Findings and Questioned Costs Section IV- Findings and Questioned Costs for Federal Awards #2006-2-U.S.Denartment of Education—Snecial Education—Grants to States.CFDA#84.027.for the ueriod Tulv 1,2005 through June 30,2006 Finding-The Special Education—Grants to States program had excess cash balances on hand for excessive periods of time. � Criteria-�Drawdowns of federal funds must be as close as possible to the time of making distributions. Time should be minimized between the transfer from the U. S.Treasury and the disbursement of funds by the recipient. Effect-Payment of federal funds could be delayed or denied. Recommendation-Request for drawdowns, which are accomplished in the application, should be timed such that they are received in the later periods of the grant resulting in these payments being reimbursements for expenditures already made rather than advances. QuesNoned Costs-See current year findings and questioned costs for federal awards#2007-2. � 16 �� �g &.�� i �,+� �-�..� �u,�r' ,� 5 �� - � '� c �v'{� �� � " p r Mr :�a� Y ` � i i =°E e r, a .� � � 4" p N^ w 4 l 0 � �w� t � ��° �1 � r �M q�^n ` K�� 1� � d�?�� ��� � iy� .�, � ,�k T M �� Yan � �� ,� � ��� ; �, � - `�: ; � �, , ��. � ,����' „ �� '�..i �� A.E � 4; �� � � m �" � ��^"� _ 4' 9,, - s� ) ;�. < ..., �,: ...... � , ` .�.m"q"�`� �� , � �NP� � SOUTH PORTLAND WATERVILLE Tel. 207-773-2986 Tel. 207-877-9397 Fax 207-772-3361 Fax 207-877-9398