HomeMy Public PortalAboutBrewster 2013 - Auditor's Report as Required by OMB Circular A-133 June 30 2013 1 1 � ' '
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TOWN OF BREWSTER, MASSACHUSETTS
INDEPENDENT AUDITORS ' REPORT AS REQUIRED BY OMB CIRCULAR A- 133
AND GO VERNMENTA UDITING STANDARDS AND RELATED INFORMATION
FOR THE YEAR ENDED JUNE 303 2013
INDEX
PAGE
Independent Auditors Report on Compliance for each Major Federal Program and on
Internal Control over Compliance ; and Report on Schedule of Expenditures of
Federal Awards Required by OMB Circular A- 133 1 - 3
Schedule of Expenditures of Federal Awards 4
Notes to Schedule of Expenditures of Federal Awards 5
Independent Auditors Report on Internal Control over Financial Reporting and on i
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 6 - 7
Schedule of Findings and Questioned Costs 8 - 11
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R. E . BROWN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
25 CEMETERY STREET — P.O. Box 230
Mendon, Massachusetts 01756
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Phone : (508) 478 -3941 Fax: (508) 4784779
INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH
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MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE ; AND
REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED
BY OMB CIRCULAR A433 j
To the Honorable Board of Selectmen
Town of Brewster, Massachusetts
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Report on Compliance for Each Major Federal Program
We have audited the Town of Brewster, Massachusetts' compliance with the types of compliance requirements a
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described in the OMB Circular A433 Compliance Supplement that could have a direct and material effect on each
of the Town of Brewster, Massachusetts ' major federal programs for the year ended June 30, 2013 . The Town of
Brewster, Massachusetts ' major federal programs are identified in the summary of auditor' s results section of the f
accompanying schedule of findings and questioned costs .
Management' s Responsibility p'
Management is responsible for compliance with the requirements of laws, regulations , contracts, and II
grants applicable to its federal programs .
Auditor' s Responsibility j
Our responsibility is to express an opinion on compliance for each of the Town of Brewster, Massachusetts ' 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 financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States ; and OMB Circular A433 , Audits of States, Local Governments,
and Non-Profit Organizations . Those standards and OMB Circular A- 133 require that we plan and perform the II
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' 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 on compliance for each major federal
program. However, our audit does not provide a legal determination of the Town of Brewster, Massachusetts ' s
compliance. � )
Opinion on Each Major Federal Program
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In our opinion, the Town of Brewster, 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 major federal
programs for the year ended June 30, 2013 .
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Other Matters
The results of our auditing procedures disclosed instances of noncompliance, 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 2013 -001 , 2013 -002 and 2013 -003 . Our opinion on each major federal program is not
modified with respect to these matters .
Town of Brewster, Massachusetts ' s responses to the noncompliance findings identified in our audit are described
in the accompanying schedule of findings and questioned costs . Town of Brewster, Massachusetts ' s responses
were not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no
opinion on the responses .
Report on Internal Control over Compliance
Management of the Town of Brewster 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 of Brewster, Massachusetts ' 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 OMB Circular A433 , 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
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Brewster, Massachusetts ' s internal control over compliance . jl
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 . 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 .
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Our consideration of internal control over compliance was for the limited purpose described in the first paragraph
of this section and not designed to identify all deficiencies in internal control over compliance that might be
material weaknesses or significant deficiencies . We did not identify any deficiencies in internal control over
compliance that we consider to be a material weakness. However, material weaknesses may exist that have not
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been identified.
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 OMB Circular A- 133 .
Accordingly, this report is not suitable for any other purpose .
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Report on Schedule of Expenditures of Federal Awards Required by OMB A433
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, 2013 , and have issued our report thereon dated May 12, 2014, which contained an
unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming our
opinions on the financial statements that collectively comprise the Town of Brewster, Massachusetts ' financial
statements . The accompanying schedule of expenditures of federal awards is presented for purposes of additional
analysis as required by OMB Circular A433 and is not a required part of the 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 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 financial statements or to the 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 financial
statements as a whole .
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May 12, 2014
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TOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED NNE 30, 2013
GRANTOR/
PASS-THROUGH
FEDERAL ENTITY
PROGRAM GRANTOR/PASS-THOUGH GRANTOR/PROGRAM OR CFDA IDENTIFYING FEDERAL _
CLUSTERTITLE NUMBER NUMBER EXPENDITURES
U,S, DEPARTMENT OF EDUCATION
PASS-THROUGH PROGRAM FROM: MASSACHUSETTS EXECUTIVE OFFICE OF EDUCATION -
DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION
STATE FISCAL STABILIZATION FUNDS, RACE-TO-THE-TOP INCENTIVE GRANTS: FY 2013 84.395 201-000294.2013-0041 5,999
TOTAL U,S DEPARTMENT OF EDUCATION 55999
U.S. DEPARTMENT OF AGRICULTURE
DIRECT PROGRAM: NATURAL RESOURCES CONSERVATION SERVICE ,4
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ARRA . WATERSHED PROTECTION & FLOOD PREVENTION - FREEMAN'S POND 10.904 BR-SM-4 218,127
TOTAL DIRECT PROGRAM: NATURAL RESOURCES CONSERVATION SERVICE 218, 127
PASS-THROUGH PROGRAMS FROM: MASSACHUSETTS EXECUTIVE OFFICE OF EDUCATION
DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION: BUREAU OF NUTRITION
SCHOOL BREAKFAST PROGRAM 10,553 01441 71062
NATIONAL SCHOOL LUNCH PROGRAM 10,555 01-141 60,742
TOTAL PASS-THROUGH PROGRAMS FROM: MASSACHUSETTS EXECUTIVE OFFICE OF EDUCATION
DEPARTMENT OF ELEMENTARY AND SECONDARY EDUCATION: BUREAU OF NUTRITION 67.804 ,III
931
TOTAL U.S, DEPARTMENT OF AGRICULTURE 285, Ih,
U.S. DEPARTMENT OF COMMERCE
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DIRECT PROGRAM - NATIONAL OCEANIC & ATMOSPHERIC ADMINISTRATION
ARRA - HABITAT CONSERVATION 11.463 NA09NW4630301 269,243
TOTAL U,S, DEPARTMENT OF COMMERCE 269,243
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U.S. DEPARTMENT OF HOMELAND SECURITY
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PASS-THROUGH PROGRAM FROM: MASSACHUSETTS EMERGENCY MANAGEMENT AGENCY if
DISASTER GRANT - PUBLIC ASSISTANCE 97.036 FEMA 4028 38,572 II
TOTAL U.S DEPARTMENT OF HOMELAND SECURITY 38,572
TOTAL EXPENDITURES OF FEDERAL AWARDS $ 5991,745
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SEE ACCOMPANYING NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
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TOWN OF BREWSTER, MASSACHUSETTS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED JUNE 305 2013
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 activity of the
Town of Brewster, Massachusetts under programs of the federal government for the year ended June 30,
2013 . The information in this schedule is presented on the modified accrual basis of accounting. The
information in this schedule is presented in accordance with the requirements of the Office of Management
and Budget (OMB) A433 , Audits of States, Local Governments and Non for Profit Organizations. Because
the schedule presents only a selected portion of the operations of the Town of Brewster, Massachusetts, it is
not intended to and does not present the financial position, changes in net position or cash flows of the
Town of Brewster, Massachusetts .
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 Commerce and Department of Homeland Security), 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 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, 2013 .
IV. SCHOOL LUNCH PROGRAM
The Town accounts for local, state and federal expenditures of the National School Lunch and School Breakfast
programs in one combined fund. Program expenditures in the accompanying Schedule of Expenditures of Federal
Awards represent federal reimbursements for meals provided during fiscal year 2013 . 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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R. E . BROWN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
25 CEMETERY STREET — P.O. Box 230
Mendon, Massachusetts 01756
Phone : (508) 478-3941 Fax: (508) 4784779
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 Board of Selectmen
Town of Brewster, 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 Brewster,
Massachusetts as of and for the year ended June 30, 2013 , and the related notes to the financial statements, which
collectively comprise Town of Brewster' s basic financial statements, and have issued our report thereon dated
May 12, 2014.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town of Brewster' 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 of Brewster' s internal control . Accordingly, we do not
express an opinion on the effectiveness of the Town of Brewster' 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 of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies . Given these limitations, 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.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Brewster' 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 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 2013-001 , 2013 -002 and 2013 -003 .
Town of Brewster's Response to Findings
Town of Brewster' s responses to the findings identified in our audit are described in the accompanying schedule
of findings and questioned costs . Town of Brewster' s responses were not subjected to the auditing procedures
applied in the audit of the financial statements and, accordingly, we express no opinion on them.
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 considering the entity' s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose .
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May 12, 2014
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TOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 309 2013
A . SUMMARY OF AUDITOR' S RESULTS
Financial Statements
Type of Auditors ' Report Issued: Unmodified Opinion
Internal Control over Financial Reporting: I_
• Material Weakness(es) Identified? Yes X No
• Significant Deficiency(ies) Identified? Yes X No
Noncompliance Material to the Financial Statements Noted? Yes X No
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Federal Awards
Internal Control over Major Programs :
• Material Weakness(es) Identified? Yes X No
• Significant Deficiency(ies) Identified? Yes X No
Type of Auditors' Report Issued on Compliance for Major Programs : Unmodified Opinion
Any Audit Findings Disclosed that are Required to be
Reported in Accordance with Section 510(a) of OMB Circular A433 ? Yes X No
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Identification of Major Programs :
CFDA No. Name of Federal Programs j
10 , 904 ARRA - Watershed Protection & Flood Prevention 1
11 .463 ARRA - Habitat Conservation
Dollar Threshold used to Distinguish Between Type A and
Type B Programs : $ 300,000
Auditee Qualified as Low-Risk Auditee? Yes X No
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TOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 309 2013
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B . FINDINGS — BASIC FINANCIAL STATEMENT AUDIT — NONE .
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C . CURRENT YEAR FINDINGS AND QUESTIONED COSTS — MAJOR FEDERAL AWARD
PROGRAMS AUDIT
Finding 2013-001 — ARRA - Watershed Protection & Flood Prevention — CFDA No . ' s 10 . 904 ; Grant period :
Year Ended June 30, 2013
Criteria : Pursuant to the grant agreement between the Town of Brewster and the Natural Resources Conservation
Service (MRCS), United States Department of Agriculture per requirement #21 the Town "Annually until the
expiration of this agreement, prepare and submit the SF Form 425 , Financial Status Report, to the NRCS technical
contact.".
Condition : During our test of compliance as it relates to reporting requirements, the SF Form 425 that would have
been filed in FY 2013 could not be obtained.
Questioned Costs: None
Context: Upon review of the clients documentation related to the Watershed Protection & Flood Prevention grant
it was noted that the client did not have a copy of the SF Form 425 that would have been required to be filed in
FY 2013 . The client was unable to provide a copy of this form for our review, the client then contacted NRCS
directly and they as well were unable to provide a copy of the SF Form 425 .
Effect: The Town of Brewster was not able to provide evidence to support that the Town was in
compliance with the Reporting requirement set forth in the grant agreement with NRCS .
Cause: The Federal Reporting website was inaccessible as to produce the required reports filed.
Recommendation : We recommend that the Town of Brewster prepare and retain all documentation that
is required per the grant agreement in order to provide sufficient audit evidence that the Town was in
compliance with the grant agreement.
Management 's Response: The Town will prepare and retain all documentation that is required per the
Grant Agreements to assure compliance .
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TOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2013
C . CURRENT YEAR FINDINGS & QUESTIONED COSTS —
.Finding 2013402 — ARRA - Watershed Protection & Flood Prevention — CFDA No. ' s 10.904; Grant period:
Year Ended June 30, 2013
Criteria : Pursuant to the grant agreement between the Town of Brewster and the Natural Resources Conservation
Service (NRCS), United States Department of Agriculture per requirement #2 the Town "This agreement is
funded under the American Recovery and Reinvestment Act of 2009 (Public Law 111 -5)(ARRA) . The Town
must comply with ARRA reporting requirements as outlined in Attachment A. The Town must sign Attachment A
along with the Agreement signature page . Noncompliance with reporting requirements will result in termination
of the agreement.” Per Attachment A "ARRA Recipient Reporting" the Town was required to submit quarterly
reports no later than 10 days after the end of each quarter.
Condition : During our test of compliance as it relates to reporting requirements, only 2 of the 4 quarter end
reports were provided for our review.
Questioned Costs: None
Context: Upon review of the clients documentation related to the Watershed Protection & Flood Prevention grant
it was noted that the client did not have copies of the ARRA quarterly reports that would have been required to be
filed in FY 2013 . The client was unable to provide a copy of the four quarter forms for our review, the client then
contacted NRCS directly and they as were able to provide copies of the 3/31 /13 and 6/30/ 13 ARRA quarter ended
reports. Unfortunately NRCS did not retain copies of the 9/30/ 12 and 12/31 / 12 ARRA quarter ended reports filed.
Per NRCS these reports were stored electronically on the FederalReporting.gov website, however both the Town
and NRCS no longer have access to that web site as the web site has been shut down.
Effect: The Town of Brewster was not able to provide evidence to support that the Town was in
compliance with the Reporting requirement set forth in the grant agreement with MRCS .
Cause: The Federal Reporting website was inaccessible as to produce the required reports filed.
Recommendation : We recommend that the Town of Brewster retain all documentation that is required per
the grant agreement in order to provide sufficient audit evidence that the Town was in compliance with
the grant agreement.
Management 's Response: The Town will prepare and retain all documentation that is required per the
Grant Agreements to assure compliance.
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TOWN OF BREWSTER, MASSACHUSETTS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 305 2013
C . CURRENT YEAR FINDINGS & QUESTIONED COSTS —
Finding 2013403 — ARRA — Habitat Conservation Grant — CFDA No . ' s 11 .463 ; Grant period : Year Ended June
3012013
Criteria : Pursuant to the grant agreement between the Town of Brewster and the National Oceanic and
Atmospheric Administration (NOAA), United States Department of Commerce per Amendment #2 "The Town
shall report the information (expenses & revenues) using Standard Form 425 and using the reporting instructions
and data elements that are provided online at httta : H Yrajitsonl .ijie ..rdc.aioaa. ov/ and ensure that any information
that is pre-filled is corrected or updated as needed . ".
Condition : During our test of compliance as it relates to reporting requirements we noted that the SF Form 425
for the periods ending 3/31 / 13 and 6/30/ 13 had an error in expense reporting.
Questioned Costs: None
Context: During our recalculation of the SF Form 425 and insuring that they agree with the Town' s general
ledger it was noted that the quarter ending 3/31 / 13 showed the grant fully spent at $245 ,765 . 86 and thus resulted
in the quarter ending 6/30/13 reporting $0 in expenditures . Per the Town' s general ledger quarter ending 3/31 / 13
should have reported $ 105 ,816 . 90 and quarter ending 6/30/ 13 should have reported $ 81 ,927 .21 in grant
expenditures .
Effect: The Town of Brewster filed 2 inaccurate SF Form 425 reports with NOAA and thus resulting in a
compliance finding.
Cause : Clerical error.
Recommendation : We recommend that the Town of Brewster review all documentation that is required
per the grant agreement in order to provide the federal agency with the accurate grant information.
Management 's Response: The Town resubmitted the two (2) inaccurate SF Form 425 ' s with NOAA to be
in compliance with accurate reporting requirements .
D . PRIOR YEAR FINDINGS & QUESTIONED COSTS — NONE
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