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FY 2018/19 Single Audit Reporteidebailly.com Single Audit Report For the Year Ended June 30, 2019 City of La Quinta, California City of La Quinta, California Single Audit Report For the Fiscal Year Ended June 30, 2019 Table of Contents Page 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 1 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 3 Schedule of Expenditures of Federal Awards 6 Notes to Schedule of Expenditures of Federal Awards 7 Schedule of Findings and Questioned Costs I. Summary of Auditor’s Results 8 II. Financial Statement Findings 9 III. Federal Award Findings and Questioned Costs 10 Summary Schedule of Prior Audit Findings 11 What inspires you, inspires us. | eidebailly.com 19340 Jesse Ln., Ste. 260 | Riverside, CA 92508-5079 | T 951.367.3000 | F 951.367.3010 | EOE 1         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      The Honorable Mayor and Members of City Council  City of La Quinta, California      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 City of La Quinta, California (City), as of and for the year ended June 30, 2019, and the related  notes to the financial statements, which collectively comprise the City’s basic financial statements and  have issued our report thereon dated February 7, 2020.    Internal Control over Financial Reporting   In planning and performing our audit of the financial statements, we considered the City’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 City’s internal control.  Accordingly, we do not express an opinion on the effectiveness of the City’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 and therefore, material weaknesses or significant deficiencies may  exist that were not identified. Given these limitations, during our audit we did not identify any  deficiencies in internal control that we consider to be material weaknesses.   2 Compliance and Other Matters  As part of obtaining reasonable assurance about whether the City’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 no instances of noncompliance or other matters that  are required to be reported under Government Auditing Standards.    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.          Riverside, California  February 7, 2020    What inspires you, inspires us. | eidebailly.com 19340 Jesse Ln., Ste. 260 | Riverside, CA 92508-5079 | T 951.367.3000 | F 951.367.3010 | EOE 3         Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal  Control over Compliance; and Report on the Schedule of Expenditures of Federal Awards  Required by the Uniform Guidance      The Honorable Mayor and Members of City Council  City of La Quinta, California    Report on Compliance for Each Major Federal Program  We have audited the City of La Quinta, California’s (City) compliance with the types of compliance  requirements described in the OMB Compliance Supplement that could have a direct and material effect  on each of the City’s major federal programs for the year ended June 30, 2019. The City’s major federal  programs are identified in the summary of Auditor’s results section of the accompanying schedule of  findings and questioned costs.    Management’s Responsibility  Management is responsible for compliance with federal statutes, regulations, and the terms and  conditions of its federal awards applicable to its federal programs.    Auditor’s Responsibility  Our responsibility is to express an opinion on compliance for each of the City’s major federal program  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 the audit requirements of Title 2 U.S. Code of Federal  Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for  Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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’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 City’s compliance.       4 Opinion on Each Major Federal Program  In our opinion, the City 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 program for  the year ended June 30, 2019.    Report on Internal Control over Compliance  Management of the City 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 City’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 the Uniform Guidance, 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 City’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. 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.    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 material weaknesses or significant deficiencies and therefore, material  weaknesses or significant deficiencies may exist that have not 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  the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.     5 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance  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 City, as of and for the year ended  June 30, 2019, and the related notes to the financial statements, which collectively comprise the City’s  basic financial statements. We issued our report thereon dated February 7, 2020, which contained  unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming  opinions on the financial statements that collectively comprise the basic financial statements. The  accompanying schedule of expenditures of federal awards is presented for purposes of additional  analysis as required by the Uniform Guidance and is not a required part of the basic 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 basic 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 basic financial statements  or to the basic 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 basic financial  statements as a whole.          Riverside, California  March 23, 2020  City of La Quinta, California Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2019 See accompanying notes to Schedule of Expenditures of Federal Awards 6 Federal Pass-Through Amount CFDA Identification Federal Provided to Number Number Expenditures Subrecipients U.S. Department of Housing and Urban Development Community Development Block Grants/Entitlement Grants Cluster: Passed through the County of Riverside Economic Development Agency: 14.218 4.LQ.30-17 64,331$ 18,105$ Total Community Development Block Grants/Entitlement Grants Cluster 64,331 18,105 Total U.S. Department of Housing and Urban Development 64,331 18,105 U.S. Department of Transportation Highway Planning and Construction Cluster: Passed through the State of California, Department of Transportation: 20.205 BRLKS-5433(014)341,431 - 20.205 HSIPL-5433(015)760,276 - 20.205 HSIPL-5433(017)29,142 - 20.205 BMPL-5433(018) 1,121 - Total Highway Planning and Construction Cluster 1,131,970 - Total U.S. Department of Transportation 1,131,970 - U.S. Department of Homeland Security Passed Through California Governor's Office of Emergency Services: 97.042 2017-0007 10,500 - 97.067 2015-SS-00078 6,032 - Total U.S. Department of Homeland Security 16,532 - Total Federal Expenditures 1,212,833$ 18,105$ Highway Planning and Construction (Dune Palms) Highway Safety Improvement Program (HSIP) Emergency Management Performance Grants (EMPG) State Homeland Security Grant Program Highway Bridge Preventative Maintenance Program Highway Safety Improvement Program (HSIP) Federal grantor / pass-through Community Development Block Grant/Entitlement Grants grantor / program or cluster title City of La Quinta, California Notes to Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2019 7 Note 1 – Summary of Significant Accounting Policies A. General The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the City under programs of the federal government for the year ended June 30, 2019. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. B. Basis of Accounting The accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of accounting for the governmental funds and the accrual basis of accounting for the proprietary funds, which is described in Note 1 of the City’s financial statements. Such expenditures are recognized following, as applicable, either the cost principles in Office of Management and Budget Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as to reimbursement. C. Relationship to Federal Financial Reports Amounts reported in the accompanying Schedule of Expenditures of Federal Awards agree with the amounts reported in the related federal financial reports. However, certain federal financial reports are filed based on cash expenditures. As such, certain timing differences may exist in the recognition of revenues and expenditures between the Schedule of Expenditures of Federal Awards and the federal financial reports. D. Indirect Cost Rate The City has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. City of La Quinta, California Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2019 I. Summary of Auditor’s Results 8 FINANCIAL STATEMENTS Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Material Weakness(es) identified? No Significant Deficiency(ies) identified? None Reported Noncompliance material to financial statements noted? No FEDERAL AWARDS Internal control over major federal programs: Material Weakness(es) identified? No Significant Deficiency(ies) identified? None Type of auditor's report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR Section 200.516(a)? No Identification of major federal programs: CFDA Number Name of Federal Program or Cluster 20.205 Highway Planning and Construction Cluster Dollar threshold used to distinguish between Type A and Type B programs: 750,000$ Auditee qualified as low-risk auditee? No City of La Quinta, California Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2019 II. Financial Statement Findings 9 None noted. City of La Quinta, California Schedule of Findings and Questioned Costs For the Year Ended June 30, 2019 III. Federal Award Findings and Questioned Costs 10 None noted. City of La Quinta, California Summary Schedule of Prior Audit Findings For the Fiscal Year Ended June 30, 2019 11 Financial Statement Findings None reported. Federal Findings 2018-001 Highway Planning and Construction Cluster 20.205 Allowable Costs/Cost Principles, Cash Management 2018-002 Highway Planning and Construction Cluster 20.205 Procurement, Suspension, Debarment Implemented Finding No. Compliance Requirement Status of Corrective Action Implemented Program Name CFDA No.