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 STAND
Trang 1Self- Equipment insurance Replacement Total
OPERATING REVENUES
Maintenance services $ - $ 1,320,200 $ 1,320,200 Insurance premiums 1,256,279 - 1,256,279 Miscellaneous 14,011 2,645 16,656 Total operating revenues 1,334,211 1,258,924 2,593,135
OPERATING EXPENSES
Personnel services - 175,302 175,302 Miscellaneous services - 168,953 168,953 Administrative fees 521,766 - 521,766 Repairs and maintenance - 62,104 62,104 Supplies - 249,252 249,252 Insurance claims and expenses 687,959 - 687,959 Depreciation 306,524 - 306,524 Total operating expenses 962,135 1,209,725 2,171,860
NON-OPERATING REVENUES (EXPENSES)
Interest and investment revenue 3,864 14,879 18,743 Interest expense 5,447) - ( 5,447) ( Total non-operating revenue (expenses) 9,432 3,864 13,296
TOTAL NET ASSETS, BEGINNING ( 2,112,324 117,360) 1,994,964
TOTAL NET ASSETS, ENDING $( 2,493,832 64,297) $ 2,429,535 $
FOR THE YEAR ENDED SEPTEMBER 30, 2007
CITY OF TERRELL, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS
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Trang 2Equipment Self-insurance Replacement Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers and users $ 1,258,924 $ 1,334,211 $ 2,593,135 Cash paid for services and insurance claims ( 1,246,234) - ( 1,246,234) Cash paid to suppliers for goods and services - ( 473,756) ( 473,756) Cash paid to employees for services 180,604) - ( 180,604) ( Net cash provided by operating activities 679,851 12,690 692,541
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash received from other funds ( 376) 376) - ( Net cash used for noncapital financing activities ( 376) 376) - (
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets - ( 199,254) ( 199,254) Principal paid on long-term debt - ( 192,121) ( 192,121) Interest and fiscal charges paid on debt 5,447) - ( 5,447) ( Net cash used for capital and related financing activities 396,822) - ( 396,822) (
CASH FLOWS FROM INVESTING ACTIVITIES
Investment earnings 14,879 3,864 18,743 Net cash provided by investing activities 14,879 3,864 18,743
CASH AND CASH EQUIVALENTS, BEGINNING 551,678 - 551,678
CASH AND CASH EQUIVALENTS, ENDING $ 849,586 16,178 $ 865,764 $
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income $ 49,199 $ 372,076 $ 421,275 Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation - 306,524 306,524 Increase (decrease) in accounts payable ( 36,509) 6,553 ( 29,956) Increase (decrease) in accrued liabilities - ( 3,912) ( 3,912) Increase (decrease) in compensated absences 1,390) - ( 1,390) ( Net cash provided by operating activities $ 679,851 12,690 $ 692,541 $
CITY OF TERRELL, TEXAS
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007
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Trang 3SINGLE AUDIT SECTION
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Trang 5REPORT 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 City Council
City of Terrell, Texas
We have audited the financial statements of the governmental activities, business-type activities, each major fund and the aggregate remaining fund information of the City of Terrell, Texas, as of and for the year ended September 30, 2007, which collectively comprise the City of Terrell, Texas’ basic financial statements and have issued our report thereon dated April 7, 2008 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 City’s internal control over financial reporting as a basis for designing our auditing procedures 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 City’s internal control over financial reporting Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses However,
as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies
A control deficiency 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 misstatements on a timely basis A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there
is more than a remote likelihood that a misstatement of the City’s financial statements that is more than inconsequential will not be prevented or detected by the City’s internal control We consider the deficiencies described in the accompanying Schedule of Findings and Questioned Costs to be significant deficiencies in internal control over financial reporting, Items 2007-01 through 2007-04
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401 WEST HIGHWAY 6 g P O BOX 20725 g WACO, TX 76702-0725 g (254) 772-4901 g FAX: (254) 772-4920 g www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 g HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 g WHITNEY, TX (254) 694-4600 g ALBUQUERQUE, NM (505) 266-5904
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A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not
be prevented or detected by the City’s internal control
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 that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses However, of the significant deficiencies described above, we consider Items 2007-01 through 2007-04 to be a material weakness
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’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 City in a separate letter dated April 7, 2008
The City’s response to the findings identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs We did not audit the City’s response and, accordingly, we express no opinion on it
This report is intended solely for the information and use of the management, the City’s Council, others within the entity, and federal awarding agencies and pass-through entities, and is not intended to
be used and should not be used by anyone other than these specified parties
April 7, 2008
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Trang 7REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH
MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE
IN ACCORDANCE WITH OMB CIRCULAR A-133
To the Honorable City Council
City of Terrell, Texas
Compliance
We have audited the compliance of the City of Terrell, Texas, 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
September 30, 2007 The City of Terrell, Texas’ major federal programs are identified in the summary
of auditors’ 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 City of Terrell, Texas’ management Our responsibility is to express an opinion on the City of Terrell, Texas’ 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 Nonprofit 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 City of Terrell, Texas’ 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 City of Terrell, Texas’ compliance with those requirements
In our opinion, the City of Terrell, Texas, 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 September 30, 2007
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401 WEST HIGHWAY 6 g P O BOX 20725 g WACO, TX 76702-0725 g (254) 772-4901 g FAX: (254) 772-4920 g www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 g HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 This is trial versiong WHITNEY, TX (254) 694-4600 g ALBUQUERQUE, NM (505) 266-5904
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Trang 8Internal Control Over Compliance
The management of the City of Terrell, Texas, 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 City’s internal control over compliance with the requirements 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, 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 the City’s internal control over compliance
A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of compliance requirement of a
federal program on a timely basis A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control
Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control that might
be significant deficiencies or material weaknesses as defined below We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above
This report is intended solely for the information and use of the City Council, management, 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
April 7, 2008
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Trang 9Federal Pass-through Federal Grantor/Pass-through Grantor/ CFDA Entity Identifying Federal
U S Department of Housing and Urban Development
Passed through Office of Rural Community Affairs:
Community Development Block Grant's State Program 14.228 724012 $ 233,500 Total Passed through Office of Rural
Direct Programs:
HOME Investment Partnerships Program 14.239 N/A 83,472
Passed through Department of Housing and
Community Affairs:
Section 8 Housing Choice Vouchers Program 14.871 TX493 2,982,429 Total Passed through Department of Housing
Total U S Department of Housing and
Total Expenditures of Federal Awards $ 3,299,401
CITY OF TERRELL, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2007
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CITY OF TERRELL, TEXAS
NOTES TO SCHEDULE OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2007
BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity
of the City of Terrell 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 States, Local
Governments, and Nonprofit Organizations Therefore, some amounts presented in this schedule
may differ from amounts presented in, or used in the preparation of, the basic financial statements
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