1990CITY OF BANGOR, MAINE
Auditor's Report on Supplementary Information
Schedule of Federal Financial Assistance
June 30, 1990
l
ooks
er Certified Public Accountants
CITY OF BANGOR, MAINE
REPORT ON FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED JUNE 30, 1990
TABLE OF CONTENTS
Page
Independent Auditor's Reports:
Schedule of Federal Financial Assistance 1
Internal Controls at the General Purpose Financial
Statement Level 2
Internal Accounting and Administrative Controls at
the Federal Financial Assistance Program Level --
Major Programs 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 Findings 17
Schedule of Federal Financial Assistance 22
Notes to Schedule of Federal Financial Assistance 25
Brooks
land
EarterCertified Public Accountants
SCBBDULE OF FEDERAL FINANCIAL ASSISTANCE
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 statements are the
responsibility of the City of Bangor, Maine, management. Our
responsibility is to express an opinion on these general purpose financial
statements based on our audit.
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. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the general purpose financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
Our audit was made for the purpose of forming an opinion on the general
purpose financial statements of the City of Bangor, Maine, taken as a
whole. The accompanying Schedule of federal financial assistance is
presented for purposes of additional analysis and is not a required part of
the general purpose financial statements. The information in this
schedule has been subjected to the auditing procedures applied in the audit
of the general purpose financial statements and, in our opinion, is fairly
presented in all material respects in relation to the general purpose
financial statements taken as a whole.
90k,.r-i ��
November 30, 1990
1
P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568
rooks
ar't (2-r' Certified Public Accountants
Internal Controls 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 issued 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, 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 structure.
The management of the City of Bangor, Maine is responsible for establishing
and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs 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 assets are safeguarded against loss from unauthorized use or
disposition, and that transactions 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 limitations in any internal control
structure, 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 policies and procedures may deteriorate.
2
P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568
For the purpose of this report, we have classified the significant internal
control structure policies and procedures in the following categories:
* Treasury or financing
* Revenue/receipts
* Purchases/disbursements
* 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, timing, 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 structure and its
operation that we consider to be reportable conditions under standards
established by the American Institute of Certified Public Accountants.
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:
Reportable Condition
Condition: During our audit of Cash and Securities we noted the following:
1. The treasurer has access 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 duties. 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 sheets by fund. This is where errors
in the cash sheets 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 still 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 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.
7. The treasurer does not have adequate written procedures for the
preparation of the Statement of Governmental Accounting Standards No. 3
worksheet, which is required every year at June 30, for financial
statement disclosure purposes.
Effects: Failure to have a written investment policy, to segregate duties
for persons having custody of cash and investments from the record keeping
function are violations of an effective internal control structure and
exposes City assets to a greater risk of loss.
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 deposits or
posting to customer's accounts, should open and log all cash received
in the mail.
3. Cash should be reconciled from the general ledger balance to the bank
balance by fund. This would greatly reduce the amount of time spent
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 investing 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 access 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.
4
Our consideration of the internal control structure would not necessarily
disclose all reportable conditions that are also considered to be material
weaknesses as defined above. However, we believe the reportable condition
described above to be a material weakness.
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.
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.
It4 49--k ��
November 30, 1990
5
Brooks
and
EE]r'tP,r' Certified Public Accountants
Internal Accounting and Administrative Controls at the Federal
Financial Assistance Program Level --Major Programs More Than 50 Percent
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).
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, issued 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 systems used in administering
federal financial assistance programs. In fulfilling that responsibility,
estimates and judgements by management are required to assess the expected
benefits and related costs of control procedures. The objectives of
internal control systems 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 use is consistent with laws, regulations, and policies; resources
are safeguarded against waste, loss, 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 systems 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 significant internal
accounting and administrative controls used in administering federal
financial assistance programs in the following categories:
Accounting Controls:
* Treasury or financing
* Revenue/receipts
* Purchases/disbursements
* External financial reporting
Administrative 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 its total federal financial assistance under major federal financial
assistance programs. With respect to internal control systems used in
administering major federal financial assistance programs, our study and
evaluation included considering the types of errors and irregularities that
could occur, determining the internal control procedures that should
prevent or 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 programs of the City of Bangor,
Maine, our study and evaluation was limited 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 systems used solely in administering 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 disclose material weaknesses in the internal control
systems used solely in administering nonmajor federal financial assistance
programs.
7
Our study 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 assistance programs of the City of Bangor, Maine. Accordingly,
we do not express an opinion on the internal control systems used in
administering the major and nonmajor federal financial assistance programs
of the City of Bangor, 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 irregularities 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:
1. The treasurer has access 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 duties. 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 sheets by fund. This is where errors
in the cash sheets 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.
S. 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 still listed as an authorized signer for several cash accounts
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 does not have adequate written procedures for the
preparation of the Statement of Governmental Accounting Standards No. 3
worksheet, which is required every year at June 30, for financial
statement disclosure purposes.
Effects: Failure to have a written investment policy, to segregate duties
for persons having custody of cash and investments from the record keeping
function are violations of an effective internal control structure and
exposes City assets to a greater risk of loss.
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 deposits or
posting to customer's accounts, should open and log all cash received
in the mail.
3. Cash should be reconciled from the general ledger balance to the bank
balance by fund. This would greatly reduce the amount of time spent
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 investing 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 access 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 considered in determining the nature, timing, and
extent of the audit tests to be applied in (I)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 laws and regulations
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 programs.
This report does not affect our reports on the general purpose financial
statements and on the City of Bangor, Maine, compliance with laws 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 is not intended to limit
the distribution of this report, which is a matter of public record.
November 30, 1990
10
Drooks
land
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 issued 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, 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.
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 laws, regulations, contracts,
and grants. However, it should be noted that our objective was 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
provisions 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.
November 30, 1990
11
P.O. Box 1167, 84 Harlow Street,. Bangor, Maine 04401 (207) 947-8568
Brooks
sand
Carter, Certified Public Accountants
Compliance with General Requirements
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 as of and 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).
We have also applied procedures to test the City of Bangor, Maine's
compliance with the following requirements applicable to each of its major
federal financial assistance programs, which are identified in the schedule
of federal 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 Single 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 listed in
the preceding paragraph. Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed
no material instances of noncompliance with the requirements listed in the
second 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 requirements.
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 distribution of this report, which is a matter of public record.
" -.14-k alvc,
November 30, 1990
12
P.O. Box 1167, 84 Harlow Street, Bangor, Maine 04401 (207) 947-8568
rooks
ar'ter' Certified Public Accountants
Compliance with Specific Requirements Applicable to
Major Federal Financial Assistance Programs
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 as of and 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).
We. have also audited the City of Bangor, Maine's compliance with the
requirements governing types of services allowed or unallowed; eligibility;
matching, level of effort, or earmarking; reporting; claims for advances
and reimbursements; and amounts claimed or used for matching that are
applicable to each of its major federal financial assistance programs,
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 is responsible for the City of Bangor, Maine's compliance
with those requirements. our responsibility is to express an opinion on
compliance with those requirements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General
of the United States, and OMB Circular A-128, Audits of State and Local
Governments. Those standards 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 disclosed immaterial instances of
noncompliance with the requirements referred to above, which are described
in the accompanying schedule of findings and questioned costs. We
considered these instances 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
respects, with the requirements governing types of services allowed or
unallowed; eligibility; matching, level of effort, or earmarking;
reporting; claims for advances and reimbursements; and amounts claimed or
used for matching that are applicable to each of its major federal
financial assistance programs for the year ended June 30, 1990.
November 30, 1990
14
CITY OF BANGOR, MAINE
SCHEDULE OF GENERAL FINDINGS
FOR THE YEAR BLADED JUNE 30, 1990
Condition
The City of Bangor adopted a policy on alcohol and drug abuse. The existing
policy is deficient on several issues and will require revisions.
Criteria-
In 1988 the Federal Government passed the Drug Free Work Place Act. The
law requires that recipients of federal funding must 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 revisions to the existing drug free policy
as soon as possible.
Auditee Response: 6
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 BANGOR, MAINE
SCHEDULE OF GENERAL FINDINGS
FOR THE YEAR ENDED JUNE 30, 1990
Condition:
The City of Bangor is currently using an outdated indirect cost allocation
plan (ICRP).
Criteria•
OMB Circular A-87 requires that indirect costs charged to a federal program
be supported by an ICAP.
Effect•
If City departments do not consistently use current federally approved ICAP
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. 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 must be implemented and submitted to
the,Department of Health and Human Services as soon as possible.
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, MAINE
SCHEDULE OF SPECIFIC FINDINGS AND
QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 1990
Federal Grantor: Department of Housing and Urban Development
City Department: Community Development
Pass -Through Grantor: N/A
FINDING/NON-COMPLIANCE NO. 1
Program Condition:
Community The City is currently using an outdated
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 ICRP.
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
for preparation of an ICAP based on fiscal
year 90 audited costs; and anticipates
incorporating annual update of the ICAP asi
part of the annual audit process.
17
QUESTIONED
COSTS
$ 0
CITY OF BANGOR, MAINE
SCHEDULE OF SPECIFIC FINDINGS AND
QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 1990
Federal Grantor: Department of Housing and Urban Development
City Department: Community Development
Pass -Through Grantor: N/A
FINDING/NON-COMPLIANCE NO. 2
QUESTIONED
COSTS
Program Condition:
Community ( A computer system was purchased with CDBG $3,286
Development
Block Grant
CFDA No.
14.218
funds, and it was determined by HUD that
this system was not necessary to
administer the grant program.
Criteria:
OMB Circular A-87 states that to be
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•
Program expenses have been overstated.
Recommendation:
The $3,286 be reimbursed to the funding
source.
Auditee Response: I I
$3,286 has been reimbursed to the CDBG
program. I I
18
CITY OF BANGOR, MAINE
SCHEDULE OF SPECIFIC FINDINGS AND
QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 1990
Federal Grantor: U.S. Department of Transportation
City Department: Airport
Pass -Through Grantor: Federal Aviation Administration
FINDING/NON-COHPLIANCE NO. 3
QUESTIONED
COSTS
Program Condition:
AIP Engineering costs were applied against they $468.32
3-23-0005-02 project after the project was closed out.
CFDA No. Criteria:
20.106 ( Engineering costs should be submitted on al
timely basis to the consulting firm over-
seeing the AIP projects, to insure that
the request for reimbursements include ally
project costs.
Effect:
When direct costs of the projects have
been omitted from the request for
reimbursements, the City pays more than
the required matching requirement.
Recommendation:
Reconciliations should be done by the en-
gineering department from their records tol
the request for reimbursements to insure
that costs have been accounted for on the
projects.
A_uditee Response:
City is revising handling of capital
projects, which will include improved
monitoring and reconciliations. The
$468.32 questioned was not included in
closeout costs reported to FAA.
19
CITY OF BANGOR, MAINE
SCHEDULE OF SPECIFIC FINDINGS AND
QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 1990
Federal Grantor: Department of Agriculture
City Department: WIC
Pass -Through Grantor: Department of Human Services
FINDING/NON-COMPLIANCE NO. 4
W
QUESTIONED
COSTS
Program
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:
10.557
OMB Circular A-87 states that to be I
allowable under a grant program, costs
must be necessary, reasonable and
allowable.
Effect:
Program expenses have been charged with
actual workers' compensation losses
instead of an allowable method as
prescribed by Circular A-87.
Recommendation:
That the allocation of workers'
compensation be modified to comply with
Circular A-87 to insure that all costs of
the grants have been recovered.
A_uditee Response:
City is creating an internal service fund
effective July 1, 1991, and will charge
all units based on manual premium for
Maine Municipal Association Workers' Comp.
Fund. I I
W
CITY OF BANGOR, MAINE
SCHEDULE OF SPECIFIC FINDINGS AND
QUESTIONED COSTS
FOR THE YEAR ENDED JUNE 30, 1990
Federal Grantor: Department of Transportation
City Department: Airport
Pass -Through Grantor: N/A
FINDING/NON-COMPLIANCE NO. 5
0a?
QUESTIONED
COSTS
Program
Condition:
Airport
The City is currently using an outdated $ 8,387
Development Aidl
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.
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
for preparation of an ICAP based on fiscal
year 90 audited costs; and anticipates
incorporating annual update of the ICAP ash
part of the annual audit process. I I
0a?
CITY OF BANGDR, MAl�
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
FOR THE YEAR ENDED JUNE 30, 1990
22
Reference
Catalogue
Federal
of Federal
Received
Through
State
Other-,
Local
Total
Total
Assistance
Directly
State
Grants
Income
Income
Transfers Revenues Expenditures
Department of Agriculture
WIC
10.557
$ -
$1,410,115
$ 16,855
$ -
$ -
$ - $1,426,970
$1,438,661
Department of Health S
Human Services
i
Venereal Disease Clinics
$ -
$ -
$ 55,538
$ 26,490
$ -
$ - $ 82,028
$ 73,912
Childhood Immunization
-
-
17,674
-
-
- 17,674
40,917
Public Health Nurse
-
-
44,889
2,065
133,619
- 180,573
180,573
Dental Clinic
16,000
50,367
50,338
116,705
116,705
Total - Accrual Basis
$
$
$ 134,101
$ 78,922
$ 183,957
$ $ 396,980
$ 412,107
Department of Housing and
Urban Development
Community Development
Block Grants/Entitle-
ment Grants:
14.218
B -87 -MC -23-0004
$ 251,574
$ -
$ -
$ -
$ -
$ (427,832) $ (176,258)
$ -
B -88 -MC -23-0004
534,107
-
-
-
-
- 534,107
765,656
B -89 -MC -23-0004
-
-
-
-
-
457,831 457,831
558,176
Program Income
12.221
-
-
-
176,266
-
(29,999) 146,267
-
Urban Development
Action Grants:
Program Income
-
-
-
12,953
-
- 12,953
Total - Cash Basis
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 Basis
$1,095,989
$ -
$ -
$ 189,219
$ -
S - $1,285,208
$1,323,832
22
CITY OF BANGOR, NA188
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
FOR THS YEAR ENDED JDNE 30, 1990
Reference
Catalogue Federal
of Federal Received Through State Other Local Total Total
Assistance Directly State Grants income Income Transfers Revenues Expenditures
Department of Education
Adult Basic Education
84.002 $ -
$ 29,000
$ - $ - $ -
$ - $ 29,000
$ 29,000
Indo-Chinese Bilingual
84.146 -
-
- - -
- -
163
E.S.E.A. Chapter I
84.010 -
535,504
- - -
- 535,504
432,698
Local Entitlement
84.027 -
134,250
- - -
- 134,250
147,417
E.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
-
-
41840 - -
- 4,840
4,740
Teacher Recertification
-
-
34,183 - -
- 34,183
32,374
Dwight D. Eisenhower Act
84.164 -
11,877
- - -
- 11,877
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 - Accrual Basis
$
$ 868,153
$ 55,023 $ 44,000 $
S S 967,176
$ 856,413
23
CITY OF BANGOR, NAIVE
SCBEDULS OF FEDERAL FINANCIAL ASSISTANCE
FOR THE YEAR ENDED JUNE 30, 1990
24
Reference
Catalogue
Federal
of Federal Received
Through
State
Other
Local
Total
Total
Assistance Directly
State
Grants
Income
Income
Transfers
Revenues Expenditures
Department 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)
-
3-23-0005-05
-
-
-
-
-
230,736
230,736
82,831
3-23-0005-06
-
-
-
-
-
(25,523)
(25,523)
-
3-23-0005-07
-
-
1,319
-
45,000
-
46,319
88,932
3-23-0005-0889
91,057
-
5,059
-
-
-
96,116
40,886
3-23-0005-09
-
-
24,227
-
20,000
-
44,227
1,360,844
- 3-23-0005-10
80,213
Subtotal
162,281
-
30,804
-
249,862
-
442,947
1,662,711
Other Airport Projects
(1,071)
-
-
-
-
-
(1,071)
-
Total - Cash Basis
161,210
-
30,804
-
249,862
-
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 - Accrual Basis
$1,434,194
$ -
S 71,213
$ -
S 590,640
$ -
$2,096,947
$1,662,711
Urban Mass Transportation
Capital and Operating
Assistance
20.057
Operating
$ -
$ 172,815
$ 34,563
$ 234,455
$ 150,514
$ -
$ 592,347
$ 592,347
Capital
-
-
-
-
-
-
-
-
Total - Cash Basis
-
172,815
34,563
234,455
150,514
-
592,347
592,347
Receivables - 7/1/89
-
(15,183)
(3,037)
-
-
-
(18,220)
-
6/30/90
Total - Accrual Basis
S
$ 157,632
$ 31,526
$ 234,455
$ 150,514
$
$ 574,127
$ 592,347
24
CITY OF BANGOR, MAINE
NOTES TO THE SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
JUNE 30, 1990
Basis of Preparation
Receipts and expenditures presented in the Schedule of Federal Financial
Assistance are taken directly from the books and records of the City, with
the net change in receivables being added to convert the statements to
accrual basis, which is in conformance with generally accepted accounting
principles.
Major Federal Programs
A major federal financial assistance 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 expenditures of federal
financial assistance are the larger of $300,000 or 3% of total federal
financial assistance expenditures.
CFDA
Source: Catalogue of Federal Domestic Assistance
25