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1990 � ; CITY OF BANGOR, MAINE ��� Auditor's Report on Supplementary Information Schedule of Federal Financial Assistance June 30, 1990 � i � l Brooks - � and � Carter Certified Public Accountants � , . .; .�- � _ � CITY OF SANGOR, MAINS R$PORT ON FSD$RFIL FINANCIAL ASSISTANCS YBAR B�NDRD JIINS 30, 1990 TABLE OF CONTENTS PaQe Independent Auditor's Reports: Schedule of Federal Financial Assistance 1 Internal Controls at the General Purpoae Financial Statement Level 2 Internal Accounting and Administrative Controla at the Federal Financial Assistance Program Level-- Major Programa More Than 50 Percent . ( Compliance at the General Purpose Financial Statement Level 11 Compliance with General Requirements 12 Compliance with Specific Requirements Applicable to Major Federal Financial Assistance Programs 13 Schedule of General Findings 15 Schedule of Specific Findinga l� Schedule of Federal Financial Assistance 22 Notes to Schedule of Federal Financial Assistance 25 Br�ooks and Car�ter Certified Pubiic Accountants SCHSDIILB OF FSD&RAL FINANCIAL ASSISTANCS Independent Auditor's Report The Honorable Mayor and City Council City of Bangor, Maine We have audited the general purpose financial statements of the City of Bangor, Maine, for the year ended June 30, 1990, and have issued our. report thereon dated November 30, 1990 (except for Note 12, as to which the date is April 8, 1991) . These general purpose financial statementa are the responsibility of the City of Bangor, Maine, management. Our responsibility is to expreas an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing atandarda and 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 general purpose financial etatements are free of material misstatement. An audit includea examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statementa. An audit also �includes asseasing the accounting principles used and significant estimates made by management, as well ae evaluating the overall financial statement presentation. We believe that our audit providea a reasonable basis for our opinion. Our audit was made for the purpose of forming an opinion on the general purpose financial atatements of the City of Bangor, Maine, taken as a whole. The accompanying Schedule of federal financial assistance is presented for purposes of additional analysie and is not a required part of the general purpose financial statements. The information in this achedule has been subjected to the auditing procedures applied in the audit of the general purpose financial atatements and, in our opinion, is fairly presented in all material reapects in relation to the general purpose financial statements taken ae a whole. .� ����z� November 30, 1990 1 P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568 Br�ooks and Car�te�r� Certified Pubiic Accountants � internal Controla at the General Purpose Financial Statement Level Independent Auditor's Report The Honorable Mayor and City Council City of Bangor, Maine We have audited the general purpoae financial atatements of the City of Bangor, Maine for the year ended June 30, 1990, and have issued our report thereon dated November 30, i990 (except for Note 12, as to which the date fs April 8, 1991) . We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose financial statements are free of material misstatement. In planning and performing our audit of the financial statements of the City of Bangor, Maine for the year ended June 30, 1990, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control atructure. The management of the City of Bangor, Maine is reaponsible for establishing and maintaining an internal control structure. In fulfilling this responeibility, estimatea and judgments by management are required to assess the expected benefits and related coets of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that asseta are safeguarded against lose from unauthorized use or disposition, and that transactiona are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent liunitations in any internal control etructure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate � because of changes in conditions or that the effectiveness of the design and operation of policiea and procedures may deteriorate. 2 P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568 For the purpoae of this report, we have clasaified the significant internal control structure policies and procedurea in the following categories: * Treasury or financing * Revenue/receipts * Purchases/diaburaements * External financial reporting Our consideration of the internal control structure included all of the control categories listed above. The purpose of our consideration of the internal control structure was to determine the nature, ti.ming, and extent of the auditing procedures necessary for expressing an opinion on the general purpose financial statements. We noted certain matters involving the internal control atru�ture and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountanta. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. We noted the following reportable condition that we consider to be a material weakness: Retportable Condition Condition: During our audit of Cash and Securities we noted the following: 1. The treasurer has accesa to cash, makes daily deposits, and reconciles the checking accounts. There is a lack of segregation of duties regarding cash. The treasurer is both custodian and record keeper with the audit division acting as overseer. 2. Payments received in the mail are opened and entered by the cashiers in Treasury. This represents a lack of proper segregation of dutiea. The cashiers are both custodian and record keeper. 3. The treasurer reconciles cash from cash sheets to bank balance. This creates an underlying assumption that the cash sheets are accurate, when in fact warrants are often omitted. In addition, Treasury doesn't track cash on a per fund basis. The audit div�sion reconciles cash from the general ledger to cash sheets by fund. This is where errors in the cash aheets and general ledger are detected and corrected. 4. The treasurer bases all investing decisions on the balance reflected on the cash sheets. In addition, when investments are made they are coded as belonging solely to the general fund which is not accurate. Since Treasury doesn•t keep track of cash by fund, when investments are made Treasury is unaware of how much belongs to which fund. 5. When employees, who are authorized signers for the City, leave their position, all affected banks should be notified immediately that they are no longer empowered by the City to sign checks. The previous finance director hasn't been employed by the City since December 1989, but was atill listed as an authorized signer for several cash accounts � including both Fleet Bank accounts at June 30, 1990. 3 6. There was no written Policy and Procedures Manual for Investmenta adopted and implemented as of June 30, 1990. We understand that in the subsequent period the City has engaged Fleet Bank to handle the overnight idle cash investmenta, and the City reviewe all other inveatment options on a daily basis to insure that prudent investment deciaions are being implemented. ' 7. The treasurer does not have adequate written procedures for the preparation of the Statement of Governmental Accounting Standards No. 3 workaheet, which is required every year at June 30, for financial statement diaclosure purposes. Effects: Failure to have a written investment policy, to segregate duties for persona having cuetody of caeh and investmente from the record keeping function are violations of an effective internal control structure and exposes City assets to a greater risk of loas. Recommendations: We recommend that: 1. Someone other than Treasury should prepare the bank reconciliation and report directly to the audit division. 2. A finance employee, who is not involved with the daily deposita or posting to customer•s accounts, ehould open and log all cash received in the mail. 3. Cash ahould be reconciled from the general ledger balance to the bank � balance by fund. This would greatly reduce the amount of time apent reconciling cash on a monthly basis thereby increasing employee efficiency. 4. The City should inatitute a procedure whereby the cash sheets can be used to monitor cash by fund on a daily basis and incorporate omitted warrants. Then the treasurer would be able to make investing deciaions based upon a more accurate cash balance. Also, this would allow the treasurer to properly record the investments and resulting income in the proper fund on a continuous basis versus an adjustment by the finance director at year end. 5. By notifying the banks immediately, the City could prevent ex-employees from having complete accesa to the City's cash accounts. The act of notification would also lessen the City's liability for checks signed without authorization. 6. If a Policies and Procedurea Manual for Investmenta has not been implemented, it should be i.mmediately. 7. Written procedurea for the preparation of the Statement of Governmental Accounting Standarda No. 3 disclosure be prepared and implemented. A material weakneas is a reportable condition in which the design or operation of the specific internal control atructure elements does not reduce to a relatively low level the risk that errora or irregularities in amounts that would be material in relation to the general purpoae financial statements being audited or that noncompliance with lawa andoregulations that would be material to a federal financial assistance program may occur and not be detected within a ti.mely period by employees in the normal course of performing their assigned functions. 4 Our conaideration of the internal control structure would not neceasarily diaclose all reportable conditione that are also considered to be material weakneeees as defined above. However, we believe the reportable condition described above to be a material weakneae. We also noted other mattere involving the internal control structure and its operation that we have reported to the management of the City of Bangor, Maine, in a separate letter dated April 17, 1991. This report ia intended for the information of the City Council, management and the federal cognizant agency. This restriction ia not intended to limit the distribution of this report, which is a matter of public record. �rL�, _t� � C� . IVI'�'►"�-' November 30, 1990 5 Br�ooks and Cl�l���l Certified Public Accountants Internal Accounti.ng and Administrative Controls at the Federal Financial Assistance Program Level--Major Programs More Than 50 Perceat Independent Auditor's Report The Fionorable Mayor and City Council City of Bangor, Maine We have audited the general purpose financial etatements of the City of Bangor, Maine for the year ended June 30, 1990, and have isaued our report thereon dated November 30, 1990 (except for Note 12, as to which the date is April 8, 1991) . As part of our audit, we made a study and evaluation of the internal control systems, including applicable internal administrative controls, used in administering federal financial assistance programs to the extent � we considered necessary to evaluate the systems as required by generally accepted auditing standards, Government Auditing Standards, isaued by the Comptroller General of the United States, the Single Audit Act of 1984, and _ the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments". The management of the City of Bangor, Maine, is responsible for establishing and maintaining internal control systema used in administering federal financial assistance programa. In fulfilling that responsibility, eatimates and judgements by management are required to aesess the expected benefits and related costs of control procedures. The objectives of internal control syatems used in administering federal financial assistance programs are to provide management with reasonable, but not absolute, � assurance that, with respect to federal financial assistance programs, resource uae is consistent with laws, regulations, and policies; resources are safeguarded against waste, loes, and misuse; and reliable data are obtained, maintained, and fairly disclosed in reports. Because of inherent limitations in any system of internal accounting and administrative controls used in administering federal financial assistance programs, errors or irregularities may nevertheless occur and not be detected. Also projection of any evaluation of the systema to future periods is subject to the risk that procedures may become inadequate • because of changes in conditions or that the degree of compliance with the procedures may deteriorate. 6 P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568 _ For the purpose of this report, we have classified the aignificant internal accounting and administrative controls used in adminietering federal financial assistance programs in the following categories: Accounting Controls: ._ * Treasury or financing * Revenue/receipts � * Purchases/disbursements * External financial reporting Adminiatrative Controls: General Requirements - * Political Activity * Davis-Bacon Act * Civil Rights * Cash Management * Relocation Assistance and Real Property Acquisition * Federal Financial Reports * Drug Free Work Place Act * Allowable Costs/Cost Principles Specific Requirements: * Types of services * Eligibility * Matching level of effort * Reporting * Special requirements, if any Our study included all of the applicable control categories listed above. During the year ended June 30, 1990, the City of Bangor, Maine expended 76� of ita total federal financial assistance under major federal financial assistance programs. With respect to internal control systenns used in administering major federal financial assistance programs, our atudy and evaluation included considering the types of errors and irregularities that could occur, determining the internal control procedures that ahould prevent ar detect such errors and irregularities, determining whether the necessary procedures are prescribed and are being followed satisfactorily, � and evaluating any weaknesses. With respect to the internal control systems used solely in administering the nonmajor federal financial assistance programa of the City of Bangor, Maine, our study and evaluation was li.mited to a preliminary review of the systems to obtain an understanding of the control environment and the flow of transactions through the accounting system. Our study and evaluation of the internal control syatems used solely in adminiatering the nonmajor federal financial assistance programs of the City of Bangor, Maine, did not extend beyond this preliminary review phase. Accordingly, our audit would not necessarily diaclose material weaknesses in the internal control systems used solely in adminiatering nonmajor federal financial assistance programe. 7 Our atudy and evaluation described in the two preceding paragraphs was more limited than would be necessary to express an opinion on the internal control systems used in administering the major and nonmajor federal financial assiatance programs of the City of Bangor, Maine. Accordingly, we do not expreas an opinion on the internal control systems uaed in - administering the major and nonmajor federal financial asai�tance programs of the City of Sangor, Maine, taken as a whole, or on any of the control categories identified above. However, our study and evaluation and our audit disclosed the following condition that we believe results in more . than a relatively low risk that errors or irregularitiea in amounts that would be material to a federal financial assistance program may occur and not be detected within a timely period. Reportable Condition _ Condition: During our audit of Cash and Securities we noted the following: l. The treasurer has access to cash, makes daily deposits, and reconciles _ the checking accounts. There is a lack of segregation of dutiea regarding cash. The treasurer is both custodian and record keeper with the audit division acting as overseer. 2. Payments received in the mail are opened and entered by the cashiers in Treasury. This represents a lack of proper segregation of dutiea. The cashiers are both custodian and record keeper. 3. The treasurer reconciles cash from cash sheets to bank balance. This creates an underlying assumption that the cash sheets are accurate, when in fact warrants are often omitted. In addition, Treasury doesn't , track cash on a per fund basis. The audit division reconciles cash _ from the general ledger to cash aheets by fund. This is where errors in the cash aheets and general ledger are detected and corrected. 4. The treasurer bases all inveating decisions on the balance reflected on the cash sheets. In addition, when investments are made they are coded as belonging solely to the general fund which is not accurate. Since Treasury doesn't keep track of cash by fund, when investments are made Treasury is unaware of how much belongs to which fund. 5. When employees, who are authorized signers for the City, leave their position, all affected banks should be notified immediately that they are no longer empowered by the City to sign checks. The previous finance director hasn't been employed by the City aince December 1989, but was still listed as an authorized signer for several cash accounta including both Fleet Bank accounts at June 30, 1990. 6. There was no written Policy and Procedures Manual for Investments adopted and implemented as of June 30, 1990. We understand that in the subsequent period the City has engaged Fleet Bank to handle the overnight idle cash investments, and the City reviews all other investment options on a daily basis to insure that prudent investment decisions are being implemented. 8 7. The treasurer doea not have adequate written procedures for the preparation of the Statement of Governmental Accounting Standards No. 3 worksheet, which ia required every year at June 30, for financial atatement disclosure purposea. Effects: Failure to have a written investment policy, to segregate duties � for persons having cuatody of cash and investments from the record keeping function are violations of an effective internal control structure and exposes City assets to a greater riak of loss. , Recommendations: We recommend that: l. Someone other than Treasury ahould prepare the bank reconciliation and report directly to the audit division. � 2. A finance employee, who is not involved with the daily depoaita or posting to customer's accounts, should open and log all cash received , in the mail. � 3. Cash ahould be reconciled from the general ledger balance to the bank balance by fund. This would greatly reduce the amount of time apent reconciling cash on a monthly basis thereby increasing employee efficiency. 4. The City should institute a procedure whereby the cash sheets can be used to monitor cash by fund on a daily basis and incorporate omitted warrants. Then the treasurer would be able to make inveating decisions based upon a more accurate cash balance. Also, this would allow the , treasurer to properly record the investments and resulting income in the proper fund on a continuous basis versus an adjustment by the � finance director at year end. , 5. By notifying the banks immediately, the City could prevent ex-employees from having complete accesa to the City's cash accounts. The act of notification would also lessen the City's liability for checks signed without authorization. 6. If a Policies and Procedures Manual for Investments has not been implemented, it should be immediately. 7. Written procedures for the preparation of the Statement of Governmental Accounting Standards No. 3 disclosure be prepared and implemented. A material weakness is a reportable condition in which the design or operation of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial ' statements being audited or that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur � and not be detected within a timely period by employees in the normal ' course of performing their assigned functions. We also noted other matters involving the internal control structure and its operation that we have reported to the management of the City of ' Bangor, Maine in a separate letter dated April 17, 1991. 9 These conditions were conaidered in determining the nature, timing, and extent of the audit teste to be applied in (1)our audit of the June 30, 1990, general purpose financial statements and (2)our audit and review of the City of Bangor, Maine, compliance with lawe and regulationa non-compliance with which we believe could have a material effect on the allowability of program expenditures for each major federal financial assistance program and non-major federal financial assistance programe. Thie report does not affect our reporta on the general purpose financial statements and on the City of Bangor, Maine, compliance with lawa and regulations dated November 30, 1990. � This report is intended for the information of the City Council, management and the federal cognizant agency. The restriction ie not intended to limit the distribution of this report, which is a matter of public record. �`���-- �- ��G�+� November 30, 1990 10 Br1ooks and Carter� Certified Public Accountants Compliance at the General Purpose Financial Statement Level Independent Auditor's Report The Honorable Mayor and City Council _ City of Bangor, Maine We have audited the general purpose financial statements of the City of Bangor, Maine for the year ended June 30, 1990, and have iseued our report thereon dated November 30, 1990 (except for Note 12, as to which the date is April 8, 1991) . We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, iaeued by the Comptroller General of the United States. Those etandards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statementa are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the City of Bangor, Maine is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of lawa, regulations, contracts, and granta. However, it should be noted that our objective wae not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, the City of Bangor, Maine complied, in all material respects, with the proviaions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Bangor, Maine had not complied, in all material respects, with those provisions. This report is intended for the information of the City Council, management and the federal cognizant agency. This restriction is not intended to limit the distribution of this report, which is a matter of public record. . I�y'�� � . `,elrL� November 30, 1990 11 P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568 Br�ooks and Carter Certified Public Accountants Compliance with General Requirements 2ndeoendent Auditor's Report The Honorable Mayor and City Council City of Bangor, Maine We have audited the general purpose financial statements of the City of Bangor, Maine as of and for the year ended June 30, 1990, and have iesued our report thereon dated November 30, 1990 (except for Note 12, ae to which the date is April 8, 1991j . � We have also applied procedures to test the City of Bangor, Maine's compliance with the following requirements applicable to each of ita major federal financial assistance programs, which are identified in the schedule of federai financial assistance for the year ended June 30, 1990: political activity, Davis-Bacon Act, civil rights, cash management, relocation assistance, federal financial reports, and drug free workplace. our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for Sinale Audits of State and Local Governments. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the City of Bangor, Maine's compliance with the requirements liated in the preceding paragraph. Accordingly, we do not expresa auch an opinion. With respect to the items tested, the results of those procedurea dieclosed no material instances of noncompliance with the requirements listed in the aedond paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Bangor, Maine, had not complied, in all material respects, with those requirementa. However, the results of our procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the accompanying schedule of findings and questioned costs. This report is intended for the information of the City Council, management and the federal cognizant agency. This restriction is not intended to limit the distributicn of this report, which is a matter of public record. ���� � ��� November 30, 1990 12 P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568 Br�ooks and Car�ter� Certified Public Accountants Compliance with Specific Requir�ents Applicable to Kajor Bederal Fi.nancial Assistance Programs Independent Auditor's Renort ' The Honorable Mayor and City Council City of Bangor, Maine We have audited the general purpose financial statements of the City of Bangor, Maine as of and for the year ended June 30, 1990, and have iasued our report thereon dated November 30, 1990 (except for Note 12, as to which the date is April 8, 1991) . We. have also audited the City of Bangor, Maine's compliance with the requirements governing types of aervices allowed or unallowed; eligibility; matching, level of effort, or earmarking; reporting; claims for advances and reimbursements; and amounts claimed or uaed for matching that are applicable to each of its major federal financial assistance programe, which are identified in the accompanying schedule of federal financial assistance, for the year ended June 30, 1990. The management of the City of Bangor, Maine ia responsible for the City of Bangor, Maine's compliance with those requirements. our responsibility is to express an opinion on compliance with those requirementa based on our audit. We conducted our audit in accordance with generally accepted auditing � standards, Government Auditina Standards, issued by the Comptroller General of the United States, and OMB Circular A-128, Audits of State and Local Governments. Those standarda and OMB Circular A-128 require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about the City of Bangor, Maine's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. The results of our audit procedures discloaed immaterial instances of noncompliance with the requirements referred to above, which are deecribed in the accompanying schedule of findings and questioned costs. We considered these inatances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. 13 � P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568 In our opinion, the City of Bangor, Maine complied, in all material respecte, with the requirements governing types of services allowed or unallowed; eligibility; matching, level of effort, or earmarking; reporting; claims for advances and reimbursements; and amou�te claimed or used for matching that are applicable to each of its major federal financial aesistance programs for the year ended June 30, 1990. ��� � �.!%'l/�'`� November 30, 1990 14 CITY OF BANGOR, MAIN1� SC�DIILE OF GENSRAL FINDINGS FOR THS YSAR BNDSD JIINI3 30, 1990 Condition The City of Bangor adopted a policy on alcohol and drug abuae. The existing policy is deficient on several iasues and will require reviaions. • Criteria- In 1988 the Federal Government passed the Drug Free Work Place Act�. The law requires that recipients of federal funding muat adopt a formal written policy concerning alcohol and drug use in the work place. Effect• . If the City does not amend the existing policy as prescribed by the Department of Labor, federal funding could be denied. Recommendation: The City of Bangor should make revisiona to the existing drwg free policy as soon as possible. Auditee Response: � The City will prepare necessary revisions to the Substance Abuse Policy and resubmit the Policy to the State of Maine for their review and approval. Document should be ready for resubmission on or before June 15, 1991. 15 ` � CITY OF SANGOR, 1KAINS SCSEDIILS OF GSNSRAI. FINDINGS FOR TSB Y$AR SNDSD JIINS 30, 1990 Condition• - The City of Bangor is currently using an outdated indirect cost allocation plan (ICAP) . Criteria• OMB Circular A-87 requires that indirect costs charged to a federal program be supported by an ICAP. Effect• If City departmenta do not consistently use current federally approved ICAP rates, grant programs will be inappropriately charged for indirect coats. If the rates used are higher than the approved rates, the granta will be over-billed, and this will result in questioned costs. If the rates used are lower than the approved rates, the City will end up absorbing the additional costs. • Recommendation: A new indirect cost allocation plan muat be implemented and submitted to the, Department of Health and Human Services as soon as posai3�le. Auditee Response: City is preparing proposal solicitation for preparation of an ICAP based on , fiscal year 90 audited costs; and anticipates incorporating annual update of the ICAP as part of the annual audit process. 16 CITY OF BANGOR, MAINS SC�HEDIILE OF SPBCIFIC FINDINGS AND QIISSTIONBD COSTS FOR THE Y$AR $ND$D JIINE 30, 1990 Federal Grantor: Department of Housing and Urban Development City Department: Community Development Paes-Through Grantor: N/A FINDING/NON-�LIANCB NO. 1 QUESTIONED COSTS Procrram � Condition: � � � � ( Community � The City is currently using an outdated � $ 0 � Development � indirect cost allocation plan. � � Block Grant � � � � � � � � � � � � CFDA No. � Criteria: � � � � � 14.218 � OMB Circular A-87 requires that indirect � � � costs charged to a federal program be � � � supported by an ICAP. � � � . � � i� � � Effect: � If City departments do not consistently � ( � use current federally approved CAP rates, � ( � grant programs will be inappropriately � � � charged for indirect costs. If the rates � � � used are higher than the approved rates, � � � the grants will be over-billed and this � � � will result in questioned costs. � � � Conversely, lower rates could result in � � � the City absorbing the cost difference. � � � � � � Recommendation: � � � � � � A new indirect cost allocation plan must � � � be implemented and submitted to HHS as � � � soon as possible. � � � � � � Auditee Response: � � � City is preparing proposal solicitation I � � � for preparation of an ICAP based on fiscal� � � year 90 audited costs; and anticipates ( � � incorporating annual update of the ICAP as� � � part of the annual audit proceas. � � � � � � � � � I I � �� CITY OF SANGOR, lSAINS SCHEDIILB OF SPSCIFIC FINDINGS AND • QII$STION$D COSTS FOR THE Y$AR RNDSD JIINS 30, 1990 Federal Grantor: Department of Housing and Urban Development City Department: Community Development • Pass-Through Grantor: N/A FINDING/NON-COI�IPLIANCS NO. 2 _ QIIESTIONED COSTS Proqram � Condition: � ( � � � Community ( A computer system was purchased with CDBG � $3,286 � Development � funds, and it was determined by HUD that � � _ Block Grant � this system was not necessary to � � � administer the grant program. � � � � � � � � � � � CFDA No. � Criteria: � � 14.218 � OMB Circular A-87 states that to be I I � allowable under a grant program, costs � � � must meet the following general criteria: � � � a. Be necessary and reasonable for proper� � � and efficient administration of the � � � grant program; and � � � b. Be allowable to a particular cost � � � objective to the extent of benefits � � � received by such objective. � � � Effect• I I � � � � Program expenses have been overstated. � � � � � � � Recommendation: � I � The $3,286 be reimbursed to the funding � ( � source. � � � � � .i Auditee Response: I I � $3,286 has been reimbursed to the CDBG � � i program. � � � � � � � � - � � 18 CITY OF BANGOR, 1�lAIN$ SCHSDIILB OF SPBCIFIC FINDINGS AND QIIESTIONSD COSTS FOR THE YSAR BSiDSD JIINB 30, 1990 Federal Grantor: U.S. Department of Transportation City Department: Airport Pasa-Through Grantor: Federal Aviation Adminiatration FINDING/NON-COI�LIANGB NO. 3 QUESTIONED COSTS ProQram � Condition: � � � � � AIP � Engineering costs were applied against the� $468.32 � 3-23-0005-02 � project after the project was closed out. � � � � � � � � � � . � � � � � � � � ( � � � � � � � CFDA No. � Criteria: I I � � � 20.106 ( Engineering costs should be submitted on a� � � timely basis to the consulting firm over- � � � seeing the AIP projects, to insure that � � � the request for reimbursements include all� ( � project costs. � � � � � � Effect: � � � � � � When direct costs of the projects have � � � been omitted from the request for � � � reimbursements, the City paya more than � � � the required matching requirement. � � � � � � Recommendation: � � � � � � Reconciliations should be done by the en- � � � gineering department from their records to� � � the request for reimbursements to insure � � � that coats have been accounted for on the � � � projects. � � � � � � Auditee Response: � ( � � � � City is reviaing handling of capital � � � projects, which will include i.mproved � � � monitoring and reconciliations. The � � � $468.32 questioned was not included in � � � cloaeout costs reported to FAA. � � � � � � � � ! L l 19 CITY OF BANGOR, 2sAIN$ SCHSDIILE OF SPBCIFIC FINDINGS AND QII$STION$D OOSTS FOR TSB YEAR $NDBD JIINS 30, 1990 Federal Grantor: Department of Agriculture City Department: WIC Pass-Through Grantor: Department of Human Services FINDING/NON-COlSPLIANCE NO. 4 QUESTIONED COSTS Proqram � Condition: � � � � � WIC � The City of Bangor is currently charging � $ 0 � � actual workers• compensation losses � � � against the WIC program. These costs have� � � not been allowed for 6/30/90; therefore � � � there were no questioned costs. � � • � � � � � � CFDA No. � Criteria: � I 10.557 � OMB Circular A-87 states that to be � � � allowable under a grant program, costs ,� � _ � must be necessary, reasonable and I( � � allowable. � � � � � i Effect: � � � Program expenses have been charged with � ` � � actual workers' compensation losaes � � � � instead of an allowable method as � � � prescribed by Circular A-87. � � � � � � Recommendation: � � � That the allocation of workers' I I � compensation be modified to comply with � � � Circular A-87 to insure that all costs of � � � � the grants have been recovered. � � � � � � Auditee Response: � � � � � � City is creating an internal aervice fund � � � effective July 1, 1991, and will charge � � � all units based on manual premium for � � � Maine Municipal Association Workers' Comp. � � i Fund. � � � � � 20 CITY OF BANGOR, MAINS SCHSDIILE OF SPBCIFIC FINDINGS AND QIIESTIONSD COSTS FOR THE YBAR ENDED JIINS 30, 1990 Federal Grantor: Department of Transportation City Department: Airport � Pass-Through Grantor: N/A FINDING/NON-COHPLIANCS NO. 5 QUESTIONED COSTS ProQram � Condition: � � � � � Airport � The City is currently using an outdated � $ 8,387 � Development Aid� indirect cost allocation plan. � � Program/Airport� � � Improvement � � � Program � � � � � � � � � CFDA No. � Criteria: � � ( � � 20.106 � OMB Circular A-87 requires that indirect � . � � costs charged to a federal program be � � � supported by an ICAP. I ' � � � � � � � � Effect: � � � � � � If City departments do not consistently � � � use current federally approved CAP rates, � � � grant programs will be inappropriately � � � charged for indirect costs. If the rates � � � used are higher than the approved rates, � � � the grants will be over-billed and this � � � will result in questioned costs. I� � � Conversely, lower rates could result in I� � � the City absorbing the coat difference. � � � ( � � Recommendation: � � � � � � A new indirect cost allocation plan muat � � � be implemented and submitted to HHS ae � � � soon as poasible. � � � Auditee Response: I � � � � � City is preparing proposal solicitation � � � for preparation of an ZCAP based on fiacal� � � year 90 audited costa; and anticipates � ( � incorporating annual update of the ICAP as� � � part of the annual audit process. � � � � � � � � � ( � � - � � 1 ' zi , " CITY OF BaB(�D$, 11�� SClISDQIS OF FBDSRSL FIHSHCIaL �SSIST�iHCB FOB THB YSAS SBDED JIIHE 30� 1990 Reference Catalogue Federal of Federal Received Through State Other• Local Total Total Assistance Directly State Grante Income income Transfere Revenues Bxnenditures Depnrtment of Aqriculture WIC 10.557 $ - $1,410,115 $ 16,855 $ - $ - $ - $1.426,970 $1,438,661 Department of Nealth S Humen Services � Venereal Disease Clinics $ - $ - $ 55,536 $ 26,490 $ - $ - $ 82,028 $ 73,912 Childhood Immunization - - 17,674 - - - 17,674 40,917 Public Health Nurse - - 44,B89 2,065 133,619 - 180,573 180,573 Dental Clinic 16,000 50,367 50,338 116,705 116,705 Total - Accruel Basie $ $ S 134,101 $ 78,922 S 183,957 S $ 396,960 S 412,107 Department of Housinq and Urban Development Community Development Block Grants/Bntitle- ment Grantss 14.218 B-87-MC-23-0004 $ 251�574 $ - $ - $ - $ - $ (427,832) $ (176�258) $ - B-88-MC-23-0004 534,107 - - - - - 534,107 765,656 5-89-MC-23-0004 - - - - - 457�831 457�831 558�176 Progrnm Income 12.221 - - - 176,266 - (29,999) 146,267 - urban Development Action Grnnts: Program Income - - - 12,953 - - 12,953 Total - Cash Basie 785,681 - � 189,219 = - 974,900 1,323,832 Receivables - 7/1/89 (106,220) - - - - - (106,220) - 6/30/90 416,528 416,528 Total - Accrual Basie 51.095,989 S - $ - S 189,219 S - S - �1,285,208 $1,323,832 22 CITY OF BaBODE, 1lSIHB SC�DIILB OF FBDBRSL FIH�HCI�L �SSIS�H(� FOB � YBaR H�BD JUH6 30, 1990 Reference Catalogue Federal of Federal Received Through State Other Local Total Total Assistance Directiv State Grants Income Income Transfers Revenues Expenditures Department of Education Adult Basic Education 84.002 $ - $ 29,000 $ - $ - $ - S - $ 29,000 $ 29,000 Indo-Chinese Bilinguel 84.146 - - - - - - - 163 E.S.E.A. Chapter I 84.010 - 535,504 - - - - 535,504 432,698 Local Bntitlement 84.027 - 134,250 - - - - 134,250 147,417 S.S.E.A. Chapter I Handicapped 84.009 - 10,974 - - - - 10�974 10�794 E.S.E.A. Chapter I Migrant 84.011 - 66,850 - - - _ - 66,850 31�599 E.S.E.A. Chapter ii 84.151 - 56,743 - - - - 56,743 73,954 Arts 6 Humanities - - 4,840 ^ - - - 4,840 4,740 Teacher Recertification - - 34,183 - - - 34,163 32,374 Dwight D. Eisenhower Act 84.164 - 11,877 - - - - 11,677 20,293 Drug Free Schools 84.186 - 20,955 - - - - 20,955 18,198 Aids Grant 13.118 - 2,000 - - - - 2,000 3,674 Project Rebound - 16,000 44,000 - - 60,000 51,509 Total - Accrusl Basis S $ 868,153 $ 55,023 S 44,000 $ S S 967,176 S 856,413 23 � r CITY OF BSH(-0OR, MMaIHB SC�DIILS OF FSDBRaL FIHSHCIaL SSSIS�HCS FOB ffi YE�B E6DSD JOHS 30, 1990 Reference Catalogue Federal of Federal Received Through State Other Local Total Total Assistance Directiv State Grants Income Income Transfers Revenues Expenditures Denartment of Transportation Airport Development Aid Program/Airport Improvement Program 20.106 • 6-23-0005-06 $ - $ - $ - $ - $ - $ - $ - $ - 6-23-0005-06 Amendment - - - - 87,714 - 87,714 - 6-23-0005-07 - - - - - - - - 6-23-0005-09 - - - - - (37�609) (37�609) 9,005 6-23-0005-10 71,224 - - - - - 71,224 - 6-23-0005-11 - - - - - - - - 3-23-0005-01 - - 199 - - - 199 - 3-23-0005-02 - - - - - - - - 3-23-0005-03 - - - - 87,787 25,523 113,310 - 3-23-0005-04 - - - - 9,361 (193,127) (183,766) - 3-23-0005-OS - - - - - 230,736 230�736 82,831 3-23-0005-06 - - - - - (25�523) (25,523) - 3-23-0005-07 - - 1,319 - 45,000 - 46,319 68,932 3-23-0005-0869 91�057 - 5,059 - - - 96�116 40,866 3-23-0005-09 - - 24,227 - 20,000 - 44,227 1,360,844 - 3-23-0005-10 80,213 Subtotal 162,2B1 - 30,804 - 249,862 - 442,947 1,662,711 Other Airport Projects (1,071) - - - - - (1,071) - Total - Cnsh Basis 161,210 - 30,804 - 249,662 - 441,876 1,662,711 Receivables - 7/1/89 (821,734) - (27,693) - - - (849,427) - 6/30/90 2,094,718 68,102 341,678 2,504,498 - Total - Accrunl Basie $1,434,194 S - $ 71,213 S - S 590,640 S - 52,096.947 �1,662,711 Urban Mass Traneportation Capital and Operating Assistance 20.057 Operating $ - $ 172,B15 $ 34,563 $ 234,455 $ 150,514 $ - $ 592,347 $ 592,347 Capital - - - - - - - - Total - Cash Basie - 172,B15 34,563 234�455 150,514 - 592,347 592�347 Receivables - 7/1/89 - (15,183) (3,037) - - - (18,220) - 6/30/90 Total - Accruel Hasis S S 157,632 S 31,526 5 234,455 S 150,514 S S 574.127 S 592,347 24 CITY OF BANGOR, HAINB . NOTSS TO THE SC�DIILE OF FSDSRAL FINANCIAL ASSISTANCS JIIN$ 30, 1990 Basis of Prex�aration Receipta and expenditures preaented in the Schedule of Federal Financial Asaistance are taken directly from the books and records of the City, with the net change in receivables being added to convert the atatements to accrual basis, which is in conformance with generally accepted accounting principles. Maior Federal ProQrams A major federal financial asaistance program, in accordance with the Single Audit Act of 1984 as it relates to the City for the year ended June 30, 1990, is defined as any program for which total exgenditures of federal financial asaistance are the larger of $300,000 or 3$ of total federal financial asaistance expenditures. CFDA Source: Catalogue of Federal Domestic Assistance 25