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
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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
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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
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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.
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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.
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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
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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.
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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
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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