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Home My Public Portal AboutExhibit MSD 11A25 Independent Auditors' Reports on Federal Awards June 2010Exhibit MSD 11A25 THE METROPOLITAN ST. LOUIS SEWER DISTRICT INDEPENDENT AUDITORS' REPORTS ON FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2010 THE METROPOLITAN ST. LOUIS SEWER DISTRICT 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 - 2 Independent Auditor's Report on Compliance with Requirements that Could have a Direct and Material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 and on Schedule of Expenditures of Federal Awards 3 - 4 Schedule of Expenditures of Federal Awards 5 Schedule of Findings and Questioned Costs and Summary Schedule of Prior Audit Findings 6 SCHMERSAHL TRELOAR& CO. moo= Certified Public Accountants 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 Board of Trustees of the Metropolitan St. Louis Sewer District We have audited the financial statements of the Metropolitan St. Louis Sewer District (the "District") as of and for the year ended June 30, 2010, and have issued our report thereon dated November 9, 2010. We conducted our audit in accordance with 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District's internal control over financial reporting. 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. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. (314) 966-2727 • fax (314) 966-6464 • 10805 Sunset Office Drive, Suite 400 • St. Louis, MO 63127 • e-mail: stcpa@stcpa.com Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's financial statements are free of 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. We noted certain matters that we reported to management of the District in a separate letter dated November 9, 2010. This report is intended solely for the information and use of management, Board of Trustees, others within the entity, and federal awarding agencies and pass -through entities and is not intended to be and should not be used by anyone other than these specified parties. November 9, 2010 St. Louis, Missouri 2 DalSCHMERSAHLTRELOAR & CO. mon= Certified Public Accountants INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS To the Board of Trustees of the Metropolitan St. Louis Sewer District St. Louis, Missouri Compliance We have audited the Metropolitan St. Louis Sewer District's compliance of with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. Metropolitan St. Louis Sewer District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of Metropolitan St. Louis Sewer District's management. Our responsibility is to express an opinion on Metropolitan St. Louis Sewer District's compliance based on our audit. 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 OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133 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 Metropolitan St. Louis Sewer District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Metropolitan St. Louis Sewer District's compliance with those requirements. In our opinion, Metropolitan St. Louis Sewer District complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. 3 (314) 966-2727 • fax (314) 966-6464 • 10805 Sunset Office Drive, Suite 400 • St. Louis, /40 63127 • e-mail: stcpa@stcpa.com Internal Control Over Compliance Management of Metropolitan St. Louis Sewer District is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered Metropolitan St. Louis Sewer District's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Metropolitan St. Louis Sewer District's 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 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. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of Metropolitan St. Louis Sewer District as of and for the year ended June 30, 2010, and have issued our report thereon dated September 30, 2010. Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. Metropolitan St. Louis Sewer District's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit Metropolitan St. Louis Sewer District's responses and, accordingly, we express no opinion on the responses. This report is intended solely for the information and use of management, Board of Trustees, others within the entity, federal awarding agencies, and pass -through entities and is not intended to be and should not be used by anyone other than these specified parties. ovember 9, 2010 St. Louis, Missouri 4 THE METROPOLITAN ST. LOUIS SEWER DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2010 Federal Grantor / Pass -through Grantor / Program Title Pass -Through Federal Entity CFDA Identifying Federal Number Number Expenditures U.S. Environmental Protection Agency: Direct program: Survey, Studies, Investigations and Special Purpose Grant 66.606 $ 4,018 Pass -through programs from: Missouri Department of Natural Resources Capitalization Grants for Clean Water State Revolving Funds Capitalization Grants for Clean Water State Revolving Funds - ARRA Clean Water Education and Resources Project 66.458 22,866,719 66.458 604,131 66.460 G06-NPS-22 1,860 Total Federal Awards Expended $ 23,476,728 NOTE 1 - BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the District and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, "Audits of State, Local Governments, and Non -Profit Organizations." Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures for federal programs are recognized using the accrual basis of accounting and the cost accounting principles contained in the OMB Circular A-122, Cost Principles for Non -Profit Organizations. Under those cost principles, certain types of expenditures are not allowable or are limited as to reimbursement. 5 THE METROPOLITAN ST. LOUIS SEWER DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS AND SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED JUNE 30, 2010 SUMMARY OF AUDITORS' RESULTS 1. The auditors' report expresses an unqualified opinion on the financial statements of the Metropolitan St. Louis Sewer District. 2. No significant deficiencies related to the audit of the financial statements are reported in the 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. 3. No instances of noncompliance material to the financial statements of the District which would be required to be reported in accordance with Government Auditing Standards were disclosed during the audit. 4. No significant deficiencies relating to the audit of the major federal award program was reported in the Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133. 5. The auditors' report on compliance for the major federal award program for the District expresses an unqualified opinion on the major federal program. 6. The audit disclosed no findings that are required to be reported in accordance with Section 510(a) of OMB Circular A-133. 7. The program tested as a major program was: Program: Capitalization Grants for Clean Water State Revolving Funds CFDA: 66.458 8. The threshold used for distinguishing Type A and B programs was $704,302. 9. The Metropolitan St. Louis Sewer District qualified as a low -risk auditee. FINDINGS — FINANCIAL STATEMENT AUDIT None FINDINGS AND QUESTIONED COSTS — MAJOR FEDERAL AWARD PROGRAM AUDIT None SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS None 6