Loading...
HomeMy Public PortalAboutFiscal Year 2016 Single Audit Report TOWN OF WATERTOWN, MASSACHUSETTS Independent Auditors' Reports Pursuant to Governmental Auditing Standards and Uniform Guidance For the Year Ended June 30, 2016 TABLE OF CONTENTS PAGE REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 1 REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERALAWARDS REQUIRED BY THE UNIFORM GUIDANCE 3 Schedule of Expenditures of Federal Awards 7 Notes to Schedule of Expenditures of Federal Awards 8 Schedule of Findings and Questioned Costs 9 MELANSON ACCOUNTANTS•AUDITORS 10 New England Business Center Dr.•Suite 107 Andover,MA 01810 (978)749-0005 melansonheath.com Additional Offices: Nashua,NH Manchester,NH Greenfield,MA Ellsworth,ME 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 Independent Auditors' Report To the Town Manager and Town Council Town of Watertown, Massachusetts 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 Town of Watertown, Massachusetts, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Town's basic financial state- ments, and have issued our report thereon dated November 8, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Town'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 Town's internal control. Accordingly, we do not express an opinion on the effectiveness of the Town'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.Asignificant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these lim- itations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town's financial state- ments are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompli- ance 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 entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in con- sidering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. I� November 8, 2017 2 MELANSON • ACCOUNTANTS•AUDITORS , 10 New England Business Center Dr.•Suite 107 Andover, MA 01810 (978)749-0005 melansonheath.com Additional Offices: Nashua, NH Manchester,NH Greenfield,MA Ellsworth,ME REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE Independent Auditors' Report To the Town Manager and Town Council Town of Watertown, Massachusetts Report on Compliance for Each Major Federal Program We have audited the Town of Watertown, Massachusetts' compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Town's major federal programs for the year ended June 30, 2016. The Town's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors'Responsibility Our responsibility is to express an opinion on compliance for each of the Town's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to finan- cial 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 3 Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards(Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Town's compliance with those requirements and performing such other procedures as we considered nec- essary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determi- nation of the Town's compliance. Basis for Qualified Opinion on Title I As described in Findings 2016-001 and 2016-002 in the accompanying schedule of findings and questioned costs, the Town of Watertown, Massachusetts did not comply with requirements regarding the following: Finding # CFDA # Program (or Cluster) Compliance Name Requirement 2016-001 84.010 Title I Eligibility 2016-002 84.010 Title I Eligibility Compliance with such requirements is necessary, in our opinion, for the Town to comply with the requirements applicable to that program. Qualified Opinion on Title I In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, the Town of Watertown, Massachusetts complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on Title I program for the year ended June 30, 2016. Unmodified Opinion on Each of the Other Major Federal Programs In our opinion, the Town of Watertown, Massachusetts complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the sum- mary of auditors'results section of the accompanying schedule of findings and questioned costs for the year ended June 30, 2016. Other Matters The Town's response to the noncompliance findings identified in our audit are described and questioned costs. The Town's response in the accompanyingschedule of findings p g q 4 was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. Report on Internal Control Over Compliance Management of the Town is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Town's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accord- ingly, we do not express an opinion on the effectiveness of the Town's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficien- cies in internal control over compliance that we consider to be significant deficiencies. 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, non- compliance with a type of compliance requirement of a federal program on a timely basis. Amaterial weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is reasonable pos- sibility 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 combi- nation 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. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 2016-001 and 2016-002 to be significant deficiencies. The Town's response to the internal control over compliance findings identified in our audit are described in the accompanying schedule of findings and questioned costs. The Town's response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. 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 5 based on the requirements of the Uniform Guidance. Accordingly, this report is not suit- able for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the Town of Watertown, Massachusetts as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements. We issued our report thereon dated November 8, 2017 which contained unmodified opinions on those financial statements. Our audit was con- ducted 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 com- paring and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial state- ments themselves, and other additional procedures in accordance with auditing stand- ards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. ' November 8, 2017 6 TOWN OF WATERTOWN,MASSACHUSETTS Schedule of Expenditures of Federal Awards For the Year Ended June 30,2016 Federal Aaencv Cluster Federal Pass Through Pass-through Agency CFDA Identifying Federal Program Title Number Number Expenditures U.S.Department of Agriculture Child Nutrition Cluster Passed Through Massachusetts Department of Elementary and Secondary Education School Breakfast Program 10.553 DOENUT2016 $ 321,930 National School Lunch Program-Cash Assistance 10.555 DOENUT2016 76,512 National School Lunch Program-Non-cash Assistance 10.555 DOENUT2016 68,294 Total Child Nutrition Cluster 466,736 Total U.S.Department of Agriculture 466,736 U.S.Department of Housing and Urban Development Passed Through Massachusetts Department of Housing and Community Development Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii 14.228 Unknown 53 Total U.S.Department of Housing and Urban Development 53 U.S.Department of Justice Passed Through Massachusetts Office for Victim Assistance Antiterrorism Emergency Reserve 16.321 2016AEAPWPS 110,742 Total U.S.Department of Justice 110,742 U.S.Department of Education Direct Federal Program Fund for the Improvement of Education-Carol M.White Physical Education Program 84.215 NIA 166,870 Special Education Cluster Passed Through Massachusetts Department of Elementary and Secondary Education Special Education Grants to States-Title VIB 84.027 240-343-6-0314 817,109 Special Education Grants to States-Professional Development 84.027 274-035-6-0314-Q 12,265 Special Education Grants to States-Early Childhood Program Improvement 84.027 298-727-6-0314 1,960 Passed Through Massachusetts Department of Early Education and Care Special Education Preschool Grants 84.173 26216WATERTOWNPUBLIC 32,967 Total Special Education Cluster 864,301 Passed Through Massachusetts Department of Elementary and Secondary Education Title I Grants to Local Educational Agencies 84.010 305-081204-2016-0314 291,634 Career and Technical Education-Basic Grants to States 84.048 400-004-6-0314 31,590 Supporting Effective Instruction State Grants 84.367 140-062865-2016-0314 72,512 English Language Acquisition State Grants 84.365 180-055-6-0314 25,814 English Language Acquisition State Grants 84.365 184-044-6-0314-Q 1,526 English Language Acquisition State Grants 84.365 180-080-5-0314-P 210 Total U.S.Department of Education 1,454,457 U.S.Department of Homeland Securitv Direct Federal Program Staffing for Adequate Fire and Emergency Response(SAFER) 97.083 N/A 301,226 Total U.S.Department of Homeland Security 301,226 Total Federal Expenditures $ 2,333,214 The accompanying notes are an integral part of this schedule. 7 1 TOWN OF WATERTOWN, MASSACHUSETTS Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2016 Note 1. Basis of Presentation The accompanying schedule of expenditures of federal awards (the"Schedule") includes the federal award activity of the Town of Watertown, Massachusetts under programs of the federal government for the year ended June 30, 2016. The information in this schedule is presented in accordance with the 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). Because the schedule presents only a selected portion of the operations of the Town, it is not intended to and does not present the financial position, changes in net position or cash flows of the Town. Note 2. Summary of Significant Accounting Policies • Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited to reimbursement. • The amounts reported for the National School Lunch Program — Non-Cash Assistance (Commodities) represent the fair value of commodities provided by the Commonwealth. • The Town has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. Note 3. Subrecipients Of the federal expenditures presented in the Schedule, the Town did not provide federal awards to subrecipients. 8 TOWN OF WATERTOWN, MASSACHUSETTS Schedule of Findings and Questioned Costs For the Year Ended June 30, 2016 SECTION I - SUMMARY OF AUDITORS' RESULTS Financial Statements Type of auditors' report issued: Unmodified Internal control over financial reporting: • Material weaknesses identified? —yes ✓ no • Significant deficiencies identified? —yes ✓ none reported Noncompliance material to financial state- ments noted? —yes ✓ no Federal Awards Internal control over major programs: • Material weaknesses identified? _yes ✓ no • Significant deficiencies identified? ✓ yes _none reported Type of auditors' report issued on compliance for major programs: Title I Qualified Special Education Cluster Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? ✓ yes _no Identification of major programs: CFDA Number(s) Name of Federal Proaram or Cluster 84.010 Title I 84.027/84.173 Special Education Cluster Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? _yes ✓ no 9 SECTION II - FINANCIAL STATEMENT FINDINGS None. SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS 2016-001 Review Eligibility Requirements (Significant Deficiencv and Compliance Finding) Federal Programs) Information Federal Program or CFDA Identification Cluster Name Numbers Number(s) Federal Agency Pass-through Entity Title I Grants to Local Education 84.010 305-081204-2016- U.S.Department of Massachusetts Agencies 0314 Education Department of Elementary and Secondary Education Tvne of Findinq Compliance and significant deficiency Criteria or Specific Requirement Title I, Part Afunds are to be used to provide services and benefits to eligible children residing or enrolled in eligible school attendance areas. Once funds are allocated to eligible school attend- ance areas, a school operating a targeted assistance program must use Title I funds only for programs that are designed to meet the needs of children identified by the school as failing, or most at risk of failing, to meet the State's challenging student academic achievement standards. In general, eligible children are identified on the basis of multiple, educationally- related, objective criteria established by the LEA and supplemented by the school. Children who are economically disadvantaged, children with disabilities, migrant children, and limited English proficient (LEP) children are eligible for Part A services on the same basis as other children who are selected for services. From the pool of eligible children, a targeted assistance school selects those children who have the greatest need for special assistance to receive Part A services. Condition and Context Student files are kept electronically, however, there was no documented approval or review of student eligibility. I Cause The electronic eligibility tracking system does not include documented approval or review of student eligibility. Effect The School Department did not comply with eligibility requirements and an increased risk that eligible students did not receive services. There are no questioned costs associated with this finding since the School receives a fixed amount of funding for Title I services. Identification as Repeat Findinq, As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2015-001. 10 Recommendation We recommend that the School Department revise the electronic files to include a checkbox, or to begin to track the information for each pupil on individual summary sheets to include reviewer signature and date, Views of Responsible Official We agree with the finding and have implemented the planned corrective action noted below. Planned Corrective Action Planned Action: Per recommendation, the Watertown Public Schools revised the electronic files to include a checkbox and began to track the information for each student on individual summary sheets to include reviewer signature (principal or designee), and date for FY17 and beyond. Planned Implementation Date of Corrective Action:Corrected for the 2016—2017 school year and beyond. Person Responsible for Corrective Action:Assistant Superintendent of Teaching, Learning, and Assessment. 2016-002 Comply with Per Pupil Allocation Requirements. Federal Proaram(s) Information Federal Program or CFDA Identification Cluster Name Numbers Number(s) Federal Agency Pass-through Entity Title I Grants to Local Education 84.010 305-081204-2016- U.S.Department of Massachusetts Agencies 0314 Education Department of Elementary and Secondary Education Tvpe of Finding k Compliance and significant deficiency i Criteria or Specific Requirement If a local education authority (LEA) serves any attendance area with less than a 35-percent pov- erty rate, the LEA must allocate to all its participating areas an amount per child from a low-income family that equals at least 125 percent of the LEA's Part A allocation per child from a low-income family. Condition and Context Watertown High School had a poverty rate of less than 35%. Per Title I regulations, the School Department should have allocated Title I funds at 125% of the calculated per pupil amount to all its participating areas. Based on this calculation the School Department should have allo- cated at least $865 per pupil in each of the Title I schools. The Watertown High School had a per pupil allocation of$637, which is below the calculated rate. Cause The School Department has not established adequate procedures to ensure compliance with the per pupil allocation requirements. 11 Effect We have not questioned any costs relative to this finding as it is related to an administrative allocation method. Recommendation We recommend the School Department implement procedures to ensure Title I per pupil allo- cations are made in accordance with grant regulations and that data used to determine this allocation be reviewed for accuracy. Views of Responsible Official We agree with the finding and have implemented the planned corrective action noted below. Planned Corrective Action Planned Action: In the 2016—2017 school year, our audit of the Title I program revealed that Watertown High School (24.3%) and Watertown Middle School (26.6%) had a poverty rate of less than 35%. Watertown High School had a per pupil allocation of$777 and Watertown Middle School had a per pupil allocation of$1,077. Per Title I regulations,the School Department needed to allocate at least $752 per pupil in each of those Title I schools. Planned Implementation Date of Corrective Action: Corrected for the 2016—2017 school year and beyond. Person Responsible for Corrective Action:Assistant Superintendent of Teaching, Learning, and Assessment. SECTION IV - SCHEDULE OF PRIOR YEAR FINDINGS Current Year Findinq # Program Findinq/Noncompliance Status 2015-001 84.010 Review Eliqibilitv Requirements Repeated as 2016-001 i 12 1630 Watertown Public Schools 30 Common Street Watertown,Massachusetts 02472-3492 Phone: (617)926-7700 Fax: (617)923-1234 Mary C.DeLai Theresa B.McGuinness,Ed.D. Assistant Superintendent Assistant Superintendent Finance&Operations Dede Galdston,Ed.D. Teaching, Learning, &Assessment Superintendent of Schools Kathleen Desmarais,M.Ed. Craig Hardimon,M.Ed. Director of Student Services Director of Human Resources Corrective Action Plan December, 2017 To: Jacob Fitzgerald From: Dr. Theresa McGuinness, Assistant Superintendent of Teaching, Learning, & Assessment CC: Dr. Dede Galdston, Superintendent of Schools RE: Title I, FYI Audit 2016-001 Review Eli6bility Requirements Planned Corrective Action Per recommendation,the Watertown Public Schools revised the electronic files to include a checkbox, and began to track the information for each student on individual summary sheets to include reviewer signature (principal or designee), and date for FYI and beyond. Planned Implementation Date of Corrective Action: Corrected for the 2016—2017 school year, and beyond. Person Responsible for Corrective Action: Assistant Superintendent of Teaching, Learning, & Assessment 2016-002 ComDly with Per Pupil Allocation Requirements Planned Corrective Action In the 2016—2017 school year, our audit of the Title I program revealed that Watertown High School(24.3%) and Watertown Middle School (26.6%)had a poverty rate of less than 35%. Watertown High School had a per pupil allocation of$777 and Watertown Middle School had a per pupil allocation of$1,077. Per Title I regulations,the School Department needed to allocate at least$752 per pupil in each of those Title I schools. Planned Implementation Date of Corrective Action: Corrected for the 2016—2017 school year, and beyond. Person Responsible for Corrective Action: Assistant Superintendent of Teaching, Learning, & Assessment