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HomeMy Public PortalAbout2022 Single Audit Report CITY OF PARKVILLE, MISSOURI SINGLE AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 2022 City of Parkville, Missouri Single Audit Report For the Year Ended December 31, 2022 Table of Contents Page Number Independent Auditor's Report on Schedule of Expenditures of Federal Awards 1 A copy of the City of Parkville, Missouri’s Basic Financial Statements for the year ended December 31, 2022 accompanies this report. The independent auditor’s report and the financial statements are hereby incorporated by reference. Additional information: Schedule of Expenditures of Federal Awards 2 Notes to the Schedule of Expenditures of Federal Awards 3 Schedule of Findings and Questioned Costs 4-6 Corrective Action Plan 7 Compliance reports: Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 8-9 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 10-12 Independent Auditor's Report on Schedule of Expenditures of Federal Awards To the Honorable Mayor and Board of Aldermen City of Parkville, Missouri We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Parkville, Missouri (the City) as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated December 27, 2023 which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Hood and Associates CPAs, PC Kansas City, Missouri December 27, 2023 ADDITIONAL INFORMATION City of Parkville, Missouri Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2022 Assistance Listing Pass-Through Federal Program Number Number Expenditures U.S. Department of Treasury: American Rescue Plan Act Coronavirus State and Local Fiscal Recovery Funds 21.027 325,000$ Total U.S. Department of Treasury 325,000 U.S. Department of Transportation: Passed Through Missouri Highways and Transportation Commission Highway Planning and Construction Cluster 20.205 STP-3400(442) 833,881 Total U.S. Department of Transportation 833,881 Total Expenditures of Federal Awards 1,158,881$ See accompanying notes to the schedule of expenditures of federal awards. 2 City of Parkville, Missouri Notes to the Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2022 3 Note 1. Organization The City of Parkville, Missouri (the City), is the recipient of federal awards. All federal awards received directly from federal agencies as well as those awards that are passed through other government agencies, are included on the Schedule of Expenditures of Federal Awards. Note 2. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Parkville , Missouri, and is presented on the modified accrual basis of accounting. The information presented in this schedule is in accordance with the requirements of Title 2 U.S. Code of Federal Regulation (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Note 3. Local Government Contributions Local cost sharing, as defined by Title 2 CFR Part 200, Subpart D, Section 200.306 is required by certain federal grants. The amount of cost sharing varies with each program. Only the federal share of expenditures is presented in the Schedule of Expenditures of Federal Awards. Note 4. Additional Audits Grantor agencies reserve the right to conduct additional audits of the City’s grant programs for economy and efficiency and program results that may result in disallowed costs to the City. However, management does not believe such audits would result in any disallowed costs that would be material to the City’s financial position at December 31, 2022. Note 5. Indirect Cost Rate The City does not allocate indirect costs, and therefore has not elected to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. City of Parkville, Missouri Schedule of Findings and Questioned Costs For the Year Ended December 31, 2022 4 Section 1 - Summary of Auditor's Results Financial Statements: Type Audit Report Issued on the Basic Financial Statements of Auditee Unmodified Internal Control Over Financial Reporting No significant deficiencies reported, material weakness identified. General Compliance The audit did not disclose any instances of noncompliance, which would be material to the basic financial statements. Federal Awards: Internal Control Over Major Programs No significant deficiencies reported, no material weaknesses identified. Type Audit Report Issued on Compliance for Major Programs Unmodified Audit Findings None Major Programs CFDA Number Name of Federal Program 20.205 Highway Planning and Construction Cluster Dollar Threshold Used to Distinguish Between Type A and Type B Program $750,000 Auditee Qualified as a Low-risk Auditee No City of Parkville , Missouri Schedule of Findings and Questioned Costs (continued) For the Year Ended December 31, 2022 5 Section 2 – Financial Statement Findings Financial Statement Findings Required to be Reported in Accordance with Generally Accepted Government Auditing Standards 2022-001 Financial Reporting Condition Our audit procedures identified adjustments that were required to properly report certain transactions of the City in accordance with generally accepted accounting principles. These adjustments were not initially identified by the City’s internal controls over financial reporting. Criteria An effective internal control system over financial reporting should be in place to ensure year-end balances and external financial reporting conforms to generally accepted accounting principles. Cause Year-end procedures were not sufficient to identify the adjustments noted above in a timely manner. Effect Potential exists for material misstatements to the financial statements. Recommendation We recommend that management review year-end closing procedures to ensure that transactions are properly recorded in accordance with generally accepted accounting principles. In addition, due to the complexities of financial reporting, we recommend that management explore various alternatives for improving the controls over financial reporting including the use of governmental accounting standards, reference guides and continuing education and training courses. Management’s Response/Corrective Action See Corrective Action Plan – page 7 Summary Schedule of Prior Audit Findings 2021-001 Financial Reporting Condition Our audit procedures identified adjustments that were required to properly report certain transactions of the City in accordance with generally accepted accounting principles. These adjustments were not initially identified by the City’s internal controls over financial reporting. Recommendation We recommended that management review year-end closing procedures to ensure that transactions are properly recorded in accordance with generally accepted accounting principles. In addition, due to the complexities of financial reporting, we recommended that management explore various alternatives for improving the controls over financial reporting including the use of governmental accounting standards, reference guides and continuing education and training courses. Current Year Status Comment repeated in the current year as part of finding 2022-001 City of Parkville , Missouri Schedule of Findings and Questioned Costs (continued) For the Year Ended December 31, 2022 6 Section 3 – Federal Award Findings and Questioned Costs Federal Award Findings Required to be Reported in Accordance with the Uniform Guidance None Summary Schedule of Prior Audit Findings None 7 Corrective Action Plan Year Ended December 31, 2022 2022-001 Financial Reporting Criteria An effective internal control system over financial reporting should be in place to ensure year-end balances and external financial reporting conforms to generally accepted accounting principles. Condition Our audit procedures identified adjustments that were required to properly report certain transactions of the City in accordance with generally accepted accounting principles. These adjustments were not initially identified by the City’s internal controls over financial reporting. Cause Year-end procedures were not sufficient to identify the adjustments noted above in a timely manner. Effect Potential exists for material misstatements to the financial statements. Recommendation We recommend that management review year-end closing procedures to ensure that transactions are properly recorded and approved in accordance with generally accepted accounting principles. Corrective Action Plan Staff agrees with the adjustments recommended by our auditors. The City experienced staff turnover in the finance area at the end of 2022 that had significant impact on the timing of performing year-end adjustments. Staff understands that the City is ultimately accountable for the accuracy of the financial statements and will endeavor to increase the in-house knowledge of governmental accounting standards to improve this reporting process. The City hired a Deputy City Administrator/Finance Director at the end of August 2023 for the purpose of restructuring the finance processes of the City. While this change took place after the 2022 fiscal year, we are encouraged that the amount of adjustments staff performed increased over prior years. Staff has already started the 2023 audit process and believe there will be substantial overall improvements in processes and procedures to make for smoother, more efficient financial audits moving forward. Personnel responsible For Corrective Action: Bryan Kidney, Deputy City Administrator/Finance Director, 816-268-5014 Anticipated Completion Date: March 31, 2024 Prior Year Reference Number: 2021-001 Finding Summary: Financial Reporting – Material Adjustments Status: See Current Year finding 2022-001 COMPLIANCE REPORTS Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Mayor and Board of Aldermen City of Parkville, Missouri We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Parkville, Missouri (the City), as of and for the year ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 27, 2023. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did identify a certain deficiency in internal control described in the accompanying schedule of findings and responses as item 2022- 001 that we consider to be a material weakness. 9 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Hood and Associates CPAs, PC Kansas City, Missouri December 27, 2023 Independent Auditor’s Report on Compliance for the Major Program and on Internal Control Over Compliance Required by the Uniform Guidance To the Honorable Mayor and Board of Aldermen City of Parkville, Missouri Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the City of Parkville, Missouri’s (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal program for the year ended December 31, 2022. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended December 31, 2022. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City’s compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs. 11 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of the City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. 12 Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Hood and Associates CPAs, PC Kansas City, Missouri December 27, 2023