HomeMy Public PortalAboutBrewster 2010 - Auditor's Report as Required by OMB Circular A-133 and GAS Draft Version as of January 25, 2011DRAFT
TOWN OF BREWSTER, MASSACHUSETTS
AUDITORS’ REPORT AS REQUIRED BY
OMB CIRCULAR A-133
AND GOVERNMENT AUDITING STANDARDS
AND RELATED INFORMATION
FOR THE YEAR ENDED JUNE 30, 2010
DRAFTTOWN OF BREWSTER, MASSACHUSETTS
AUDITORS’ REPORT AS REQUIRED BY OMB CIRCULAR A-133
AND GOVERNMENT AUDITING STANDARDS AND RELATED INFORMATION
FOR THE YEAR ENDED JUNE 30, 2010
INDEX
PAGE
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
1 – 2
Schedule of Expenditures of Federal Awards 3
Notes to Schedule of Expenditures of Federal Awards 4
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
5 – 6
Schedule of Current Year Findings and Questioned Costs 7 – 10
Summary Schedule of Prior Audit Findings 11
DRAFT
R. E. BROWN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
25 CEMETERY STREET – P.O. Box 230
Mendon, Massachusetts 01756
Phone: (508) 478-3941 Fax: (508) 478-1779
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
To the Honorable Board of Selectmen
Town of Brewster, Massachusetts
Compliance
We have audited Town of Brewster, Massachusetts’ compliance with the types of compliance requirements
described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each
of the Town of Brewster, Massachusetts’ major federal award programs for the year ended June 30, 2010. The
Town of Brewster, Massachusetts’ 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 the
Town of Brewster, Massachusetts’ management. Our responsibility is to express an opinion on the Town of
Brewster, Massachusetts’ 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. 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 the
Town of Brewster, Massachusetts’ 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 the Town of Brewster, Massachusetts’ compliance
with those requirements.
In our opinion, the Town of Brewster, Massachusetts complied, in all material respects, with the compliance
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. However, the results of our auditing procedures disclosed instances of
noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-
133 and which are described in the accompanying schedule of findings and questioned costs as items, 2010-1 and
2010-2.
DRAFTInternal Control Over Compliance
Management of the Town of Brewster, Massachusetts 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 the Town of Brewster, Massachusetts’
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,
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 the Town of Brewster, Massachusetts’ 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 the material
noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected or
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.
The Town of Brewster Massachusetts’ responses to the findings indentified in our audit are described in the
accompanying schedule of findings and questioned costs. We did not audit the Town of Brewster, Massachusetts’
responses and, accordingly, we express no opinion on the responses.
This report is intended solely for the information and use of management, the Board of Selectmen, 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.
Schedule of Expenditures of Federal Awards
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 Brewster, Massachusetts , as of and for the
year ended June 30, 2010, and have issued our report thereon dated December 21, 2010 . Our audit was
performed for the purpose of forming our opinions on the financial statements that collectively comprise the
Town of Brewster, Massachusetts’ basic financial statements. 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 basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
R. E. Brown & Company
December 21, 2010
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DRAFTSEE ACCOMPANYING NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
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TOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2010
GRANTOR/
PASS-THROUGH
FEDERAL ENTITY
PROGRAM GRANTOR/PASS-THOUGH GRANTOR/PROGRAM OR CFDA IDENTIFYING FEDERAL
CLUSTER TITLE NUMBER NUMBER EXPENDITURES
U.S. DEPARTMENT OF EDUCATION
PASS-THROUGH PROGRAMS FROM:
COMMONWEALTH OF MASSACHUSETTS - DEPARTMENT OF EDUCATION
ARRA - IDEA STIMULUS GRANT 84.391 760-197-0-0041-K 40,355
TOTAL U.S DEPARTMENT OF EDUCATION 40,355
U.S. DEPARTMENT OF AGRICULTURE
PASS-THROUGH PROGRAMS FROM: COMMONWEALTH OF MASSACHUSETTS -
DEPARTMENT OF EDUCATION - BUREAU OF NUTRITION
SCHOOL BREAKFAST 10.553 01-141 8,248
NATIONAL SCHOOL LUNCH PROGRAM 10.555 01-141 57,060
TOTAL U.S. DEPARTMENT OF AGRICULTURE 65,308
U.S. DEPARTMENT OF COMMERCE
DIRECT PROGRAM - NATIONAL OCEANIC & ATMOSPHERIC ADMINISTRATION
ARRA - HABITAT CONSERVATION 11.463 NA09NMF4630301 309,884
TOTAL U.S. DEPARTMENT OF HOMELAND SECURITY 309,884
U.S. ENVIRONMENTAL PROTECTION AGENCY
PASS-THROUGH PROGRAM FROMS: MASSACHUSETTS DEPARTMENT OF ENVIRONMENTAL PROTECTION
PERFORMANCE PARTNERSHIP GRANT 66.605 PROJECT #2008-01/319 224,580
ARRA - WATER QUALITY MANAGEMENT PLANNING 66.454 PROJECT #2009-03/604 50,061
TOTAL U.S. ENVIRONMENTAL PROTECTION AGENCY 274,641
TOTAL EXPENDITURES OF FEDERAL AWARDS 690,188$
DRAFTTOWN OF BREWSTER, MASSACHUSETTS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 30, 2010
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting policies and financial reporting practices permitted for municipalities in Massachusetts are prescribed
by the Uniform Municipal Accounting System (UMAS) promulgated by the Commonwealth of Massachusetts
Department of Revenue. The significant accounting policies followed by the Town are as follows:
A. Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the Federal grant transactions
of the Town. The receipts and proceeds from Federal grants are recorded on the modified accrual basis
whereby revenue is recognized when it becomes available and measurable. Disbursements of Federal
grant funds are recorded on the accrual basis.
II. SCOPE OF AUDIT
The Town of Brewster, Massachusetts (the Town) is a governmental agency established by the laws of the
Commonwealth of Massachusetts. All operations related to the Town's Federal grant programs, (the Department
of Agriculture, Department of Education, Department of Environmental Protection, and Department of
Transportation), are included in the scope of the OMB Circular A-133 Audit Requirements for audits of state and
local governments (the Single Audit). The U.S. Department of Commerce – National Oceanic and Atmospheric
Administration has been designated as the Town's oversight agency for the Single Audit.
III. PERIOD AUDITED
Single audit testing procedures were performed for Town Federal grant transactions during the year ended June
30, 2010.
IV. SCHOOL LUNCH PROGRAM
The Town accounts for local, state and federal expenditures of the National School Lunch program in one
combined fund. Program expenditures in the accompanying Schedule of Expenditures of Federal Awards
represent federal reimbursements for meals provided during fiscal 2010. Non-cash contributions of commodities
under the Food Distribution program are received under a State distribution formula and are valued at federally
published wholesale prices for purposes of this schedule.
V. SUBRECIPIENTS
The Town of Brewster, Massachusetts passed no federal awards through to sub-recipients during the period under
audit.
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DRAFTR. E. BROWN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
25 CEMETERY STREET – P.O. Box 230
Mendon, Massachusetts 01756
Phone: (508) 478-3941 Fax: (508) 478-1779
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 Board of Selectmen
Town of Brewster, Massachusetts
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 Brewster, Massachusetts, as of and for the
year ended June 30, 2010, which collectively comprise the Town of Brewster, Massachusetts’ basic financial
statements and have issued our report thereon dated December 21, 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 Town of Brewster, Massachusetts’ 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 Town of
Brewster, Massachusetts’ internal control over financial reporting. Accordingly, we do not express an opinion on
the effectiveness of the Town of Brewster, Massachusetts’ 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 combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the Town of Brewster,
Massachusetts’ financial statements will not be prevented, or detected or 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 was not designed to 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.
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DRAFTCompliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Brewster, Massachusetts’ 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 instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as
items 2010-1 and 2010-2.
We noted certain matters that we reported to management of the Town of Brewster, Massachusetts in a separate
letter dated December 21, 2010.
The Town of Brewster Massachusetts’ responses to the findings indentified in our audit are described in the
accompanying schedule of findings and questioned costs. We did not audit the Town of Brewster, Massachusetts’
responses and, accordingly, we express no opinion on the responses.
This report is intended solely for the information and use of management, the Board of Selectmen, 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.
R. E. Brown & Company
December 21, 2010
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DRAFTTOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF CURRENT YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2010
A. SUMMARY OF AUDITOR’S RESULTS
1. The auditor’s report expresses an unqualified opinion on the basic financial statements of the Town of
Brewster, Massachusetts.
2. No significant deficiencies relating to the audit of the basic financial statements are reported in the report
on the basic financial statements.
3. No instances of noncompliance material to the basic financial statements of the Town of Brewster,
Massachusetts were disclosed during the audit.
4. No significant deficiencies relating to the audit of major federal award programs are reported in the report
on compliance with requirements applicable to each major program and on internal control over
compliance in accordance with OMB Circular A-133.
5. The auditor’s report on compliance for the major federal award programs for the Town of Brewster,
Massachusetts expresses an unqualified opinion on all major federal programs.
6. Audit findings relating to the major federal award programs for the Town of Brewster, Massachusetts are
described in Note C on the following pages.
7. The programs tested as major programs included:
Name CFDA No.
ARRA - Habitat Conservation Grant 11.463
Performance Partnership Grant 66.605
8. The threshold used for distinguishing between Type A and B programs was $300,000.
9. The Town of Brewster, Massachusetts did not qualify as a low-risk auditee.
B. FINDINGS – BASIC FINANCIAL STATEMENT AUDIT – NONE.
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DRAFTC. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT
Environmental Protection Agency
Finding 2010-1: Performance Partnership Grant – CFDA No. 66.605 – Grant period: Year Ended June 30, 2010
Condition: In two instances, the Town received reimbursements from the Massachusetts Department of
Environmental Protection (DEP) [as the pass-through agency] in excess of actual expenditures recorded in the
accounting system for this grant. The following table analyzes how the requests for reimbursement exceeded
actual expenditures recorded to the grant:
Invoice
Amount
Town's
Match
Federal
Allocation
Applied for in
Reimbursement
Request
Federal
Reimbursements
in excess of
Federal Cost
Allocation
18,957.98$ 18,957.98$ -$ 11,374.79$ (11,374.79)$
160,550.00 160,550.00 - 96,330.00 (96,330.00)
120,412.50 7,050.00 113,362.50 72,247.50 41,115.00
35,778.98 - 35,778.98 21,466.91 14,312.07
Subtotal - Request #1 335,699.46$ 186,557.98$ 149,141.48$ 201,419.20$ (52,277.72)$
Invoice
Amount
Town's
Match
Federal
Allocation
Applied for in
Reimbursement
Request
Amount of
Federal
Reimbursements
in excess of
Federal Cost
Allocation
97,338.89$ 36,212.00$ 61,126.89$ 61,126.89$ -$
41,566.35 41,566.35 - - -
20,829.00 20,829.00 - - -
27,192.14 27,192.14 - 27,192.14 (27,192.14)
Subtotal - Request #3 186,926.38$ 125,799.49$ 61,126.89$ 88,319.03$ (27,192.14)$
Total Requests 522,625.84$ 312,357.47$ 210,268.37$ 289,738.23$ (79,469.86)$
Request for Reimbursement #3 - Submitted 7/14/2010
Request for Reimbursement #1 - submitted January 14, 2010
Criteria: A cost is allowable for Federal reimbursement only to the extent of benefits received by Federal awards
and its conformance with the general policies and principles stated in OMB Circular A-87, Attachment A.
Effect: Federal pass-through grant reimbursements were in excess of actual program expenditures recorded in the
Town’s accounting system. The Town of Brewster received federal reimbursements for costs which were also
reimbursed from a non-federal source (Massachusetts Highway Department: Chapter 90 Funds).
Questioned Costs: $79,469.86
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DRAFTFINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT
Environmental Protection Agency
Finding 2010-1: Performance Partnership Grant – CFDA No. 66.605 – Grant period: Year Ended June 30, 2010 –
(continued)
Cause: Management did not adequately review or monitor its requests for reimbursement to ensure accuracy and
that only those costs which were reimbursable under the program were not already reimbursed under another
funding source.
Recommendation: We recommend that management closely review and monitor the preparation of all requests
for reimbursement to ensure accuracy and that only those costs attributable to the federal reimbursement are
reported on the request.
Management’s Response: Management will comply with the Auditors Recommendations.
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DRAFTC. FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT
Environmental Protection Agency
Finding 2010-2: Performance Partnership Grant – CFDA No. 66.605 – Grant period: Year Ended June 30, 2010
Condition:
One of the three requests for reimbursement was submitted prior to paying for costs with Town funds.
Criteria:
Treasury regulations at 31 CFR part 205 requires that when entities are funded on a reimbursement basis,
program costs must be paid for by entity funds before reimbursement is requested from the federal government
through the pass-through agency.
Effect: Advances of funds may result in interest being earned. Interest earned may be in excess of Treasury limits
which would need to be returned to Treasury.
Questioned Costs: None
Cause: Management did not adequately review or monitor its requests for reimbursement to ensure that costs
were paid with Town funds prior to submitting the request for reimbursement.
Recommendation: We recommend that management closely review and monitor the preparation of all requests
for reimbursement to ensure accuracy and that costs for which reimbursement is requested have been paid with
Town funds prior to submitting the request.
Management’s Response: Management will comply with the Auditors Recommendations.
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DRAFTTOWN OF BREWSTER, MASSACHUSETTS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
YEAR ENDED JUNE 30, 2010
The Town of Brewster, Massachusetts was not subject to the requirements of OMB Circular A-133 for the year
ended June 30, 2009 as it did not expend at least $500,000 in federal awards. Consequently, there were no
uncorrected prior year findings that affect the current audit.
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