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HomeMy WebLinkAboutAUDIT INDEPENDENT 06-30-2000TOWN OF NORTH ANDOVER, MASSACHUSETTS Independent Auditors' Reports Pursuant to Governmental Auditing Standards and The Single Audit Act Amendments of 1996 For the Year Ended June 30, 2000 I I I I I I I I I I I I I I I I I TABLE OF CONTENTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Schedule of Findings Status of Prior Year Findings Schedule of Expenditures of Federal Awards PAGE 3 5 7 8 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Selectmen Town of North Andover, Massachusetts We have audited the financial statements of the Town of North Andover, Massachusetts, as of and for the year ended June 30, 2000, and have issued our report thereon dated November 7, 2000. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to finan- cial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Town's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, 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 that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Town's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted a certain matter involving the internal control over financial reporting and its operation I I I I I that we consider to be a material weakness. This issue is reported in Part B of the accompanying schedule of findings. We also noted other matters involving the internal control over financial reporting that we have reported to the management of the Town in a separate letter dated November 7, 2000. This report is intended for the information of the Board of Selectmen, management, and federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. Andover, Massachusetts November 7, 2000 2 I I I I I I 1 i I I I I I REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 To the Board of Selectmen Town of North Andover, Massachusetts Compliance We have audited the compliance of the Town of North Andover, Massachusetts with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2000. The Town's major federal program is identified in the summary of audit results section of the accompanying Schedule of Findings. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the Town's management. Our responsibility is to express an opinion on the Town's compliance based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Govern- ment 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 the Town'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 on the Town's compliance with those requirements. In our opinion, the Town complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2000. Internal Control Over Compliance The management of the Town is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, 3 I I I I I I contracts and grants applicable to federal programs. In planning and performing our audit, we considered the Town's internal control over compliance with require- ments that could have a direct and material effect on a major federal program in order to determine our 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. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards We have audited the general purpose financial statements of the Town as of and for the year ended June 30, 2000, and have issued our report thereon dated November 7, 2000. Our audit was performed for the purpose of forming an opinion on the general purpose 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 general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. This report is intended for the information of the Board of Selectmen, management and federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited. Andover, Massachusetts January 24, 2001 Town of North Andover, Massachusetts Schedule of Findings For the Year Ended June 30, 2000 SUMMARY OF AUDIT RESULTS 1. The auditors' report expresses a qualified opinion on the general purpose financial statements of the Town of North Andover for the following reason: · General fixed asset acquisitions are not capitalized in a general fixed asset group of accounts. · Enterprise funds-are reported on a modified accrual basis of accounting instead of the required accrual basis. 2. No instances of noncompliance material to the financial statements of the Town of North Andover were disclosed during the audit. 3. A material reportable condition was noted in the internal control over financial reporting. This issue is reported in Part B of this schedule. 4. The auditors' report on compliance for the major federal award programs for the Town of North Andover expresses an unqualified opinion. 5. Audit findings relative to the major federal award programs for the Town of North Andover are reported in Part C of this Schedule. 6. The program tested as a major program was Title VIB (84.027). 7. The threshold for distinguishing Type A programs was $ 300,000. 8. The Town of North Andover is a Iow risk auditee. B. FINDINGS - FINANCIAL STATEMENTS AUDIT Improve Timeliness of Bank Reconciliations (Reportable Condition) Throughout the fiscal year, the Treasurer's Office was several months behind in recon- ciling monthly bank statement balances to cash book balances. The timely reconciling of the Treasurer's cash is a critical internal control procedure necessary to assure that the Town's cash balances are properly reported and controlled. The lack of timely bank statement reconciliations makes it impossible to prove interim general ledger cash balances to the bank balances. Without this measure of checks and balances, there is an increased risk that errors or irregularities could occur and go undetected. We recommend the Treasurer's Office take steps to assure a timely reconciliation of cash balances occurs throughout the year. Typically, the reconciliation of all bank statements should be completed by the third or fourth week of the subsequent month. We recommend that the bank reconciliations be documented on a preprinted form that provides for a space for the preparer and reviewer to sign and date. This will provide assurance that all cash activity was properly reported in the general ledger, thereby creating a system of checks and balances and increasing the reliability of Town- prepared financial reports. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAMS AUDIT There were no findings or questioned costs in fiscal year 2000. 6 I I i I I I I I I I I I i I I Town of North Andover, Massachusetts Status of Prior Year Findings For the Year Ended June 30, 1999 There were no findings reported in the prior year. I I I I ! i I I I I I I I I I I I I TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2000 Department of Agriculture Passed Through MA. Department of Education: National School Lunch Total Department of Agriculture Department of Education Passed Through the MA. Department of Education: Title I Programs Drug Free Schools Discretionary Safe & Drug Free Technical Lit. Challenge - CONSORTIA Focused Instruction Improvement Emergency Immigration Title VI Block Grant SPED 94-142 Allocation SPED Early Childhood IEP Training SPED Curriculum Frameworks Eisenhower Exemption Teacher Training - Math & Science Total Passed Th rough the MA. Department of Education Department of Justice Passed Through Department of Public Safety Community Policing Total Department of Justice Total Federal Expenditures Federal CFDA Number 10.555 84.010 84.186 84.186 84.318 84.276 84.162 84.151 84.027 84.173 84.027 84.027 84.164 84.164 16.729 This schedule is prepared on the modified accrual basis of accounting. See Auditors' Report on Schedule of Expenditures of Federal Awards. 8 Federal Expenditures 101,567 101,567 125,820 18,169 15,741 22,335 8,907 765 9,312 268,094 24,264 1,655 16,168 7,807 4,419 523,456 62,777 62,777 687,800