Single Audit Report FY 2020/21��`
Federal Awards Reports in Accordance
with the Uniform Guidance
Fiscal Year Ended June 30, 2021
City of La Quinta, California
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City of La Quinta, California
Table of Contents
Fiscal Year Ended June 30, 2021
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 the 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
Section I - Summary of Auditor's Results 8
Section II - Financial Statement Findings 9
Section III - Federal Award Findings and Questioned Costs 11
Summary Schedule of Prior Audit Findings 13
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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 Mayor and Members of City Council
City of La Quinta, California
We have audited, 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, 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 then ended June 30, 2021, and the
related notes to the financial statements, which collectively comprise the City's basic financial
statements and have issued our report thereon dated June 30, 2022.
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) as a basis for designing 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 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 material weaknesses or significant deficiencies and therefore,
material weaknesses or significant deficiencies may exist that have not been identified. We did identify
certain deficiencies in internal control, described in the accompanying schedule of findings and
responses as item 2021-001 that we consider to be a material weakness.
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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 statements. 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.
City's Response to Findings
The City's response to the finding identified in our audit is described in the accompanying Schedule of
Findings and Responses. The City's response was not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on it.
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.
Rancho Cucamonga, California
June 30, 2022
2
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Independent Auditor's Report on Compliance for the Major Federal Program; Report on
Internal Control Over Compliance; and Report on the Schedule of Expenditures of
Federal Awards Required by the Uniform Guidance
To the Honorable Mayor and Members of the City Council
City of La Quinta, California
Report on Compliance for the 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 the City's major federal program for the year ended June 30, 2021. The City's major federal program
is 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 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 the major
federal program. However, our audit does not provide a legal determination of the City's compliance.
Opinion on the 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 its major federal program for the year
ended June 30, 2021.
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Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is required to be
reported in accordance with the Uniform Guidance and which is described in the accompanying
schedule of findings and questioned costs as item 2021-002. Our opinion on the major federal program
is not modified with respect to this matter.
The City's response to the noncompliance finding identified in our audit is described in the
accompanying schedule of findings and questioned costs and corrective action plan. The City's response
was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we
express no opinion on the response.
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 the major federal program to determine
the auditing procedures that are appropriate in the circumstances for the purpose of expressing an
opinion on compliance for the 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 a 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 and significant deficiencies may exist that have not been identified. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
we identified a deficiency in internal control over compliance, described in the accompanying schedule
of findings and questioned costs as item 2021-002 that we consider to be a significant deficiency.
The City's response to the internal control over compliance findings identified in our audit is described in
the accompanying schedule of findings and questioned costs and corrective action plan. The City's
response was not subjected to the auditing procedures applied in the audit of compliance and,
accordingly, we express no opinion on the response.
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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.
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, 2021, and the related notes to the financial statements, which collectively comprise the City's
basic financial statements. We issued our report thereon dated June 30, 2022, 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.
Rancho Cucamonga, California
September 15, 2022
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City of La Quinta, California
Schedule of Expenditures of Federal Awards
Fiscal Year Ended June 30, 2021
Federal Grantor/Pass-Through
Grantor/Program or Cluster Title
U.S. Department of Housing and Urban Development
Community Development Block Grants/Entitlement Grants Cluster
Passed through the County of Riverside- Economic Development Agency
Community Development Block Grants/Entitlement Grants
Program/Project
Federal or Pass -through
Financial Assistance Identifying Total
Listing Number Expenditures
14.218 4.LQ.41.20/4.LQ.38.19 $ 294,719
Total Community Development Block Grants/Entitlement Grants Cluster 294,719
Total U.S Department of Housing and Urban Development 294,719
U.S. Department of Transportation
Highway Planning and Construction Cluster
Passed through the State of California - Department of Transportation
Highway Planning and Construction (Dune Palms Bridge) 20.205 BRLKS-5433(014) 95,662
Highway Planning and Construction- Highway Safety Improvement Program (HSIP) 20.205 HSIPL-5433(017) 4,234
Highway Planning and Construction- Highway Bridge Program 20.205 BR-NBIL(547) 2,363
Total Highway Planning and Construction Cluster 102,259
Total U.S. Department of Transportation 102,259
U.S. Department of Treasury
Passed through the California Department of Treasury
COVID-19 - Coronavirus Relief Fund
21.019
N/A 502,034
Total U.S. Department of Treasury 502,034
U.S. Department of Homeland Security
Passed through the California Governor's Office of Homeland Security
Emergency Management Performance Grants (EMPG)
State Homeland Security Program (SHSP) Grant
Total U.S. Department of Homeland Security
Total Federal Financial Assistance
97.042
2017-0007 38,832
97.067 2015-SS-00078 6,018
44,850
$ 943,862
See Notes to Schedule of Expenditures of Federal Awards 6
City of La Quinta, California
Notes to Schedule of Expenditures of Federal Awards
Fiscal Year Ended June 30, 2021
Note 1- Basis of Presentation
The accompanying schedule of expenditures of federal awards (the "Schedule") includes the federal award
activity of the City of La Quinta, California (City) under programs of the federal government for the year ended
June 30, 2021. 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.
Note 2 - Summary of Significant Accounting Policies
Expenditures reported in the Schedule are reported on 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. No federal financial assistance has been provided to a subrecipient. When
applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance,
wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Note 3 - Indirect Cost Rate
The City has not elected to use the 10-percent de minimis indirect cost rate.
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City of La Quinta, California
Schedule of Findings and Questioned Costs
Fiscal Year Ended June 30, 2021
Section I — Summary of Auditor's Results
FINANCIAL STATEMENTS
Type of auditor's report issued Unmodified
Internal control over financial reporting:
Material weaknesses identified Yes
Significant deficiencies identified not considered
to be material weaknesses None Reported
Noncompliance material to financial statements noted? No
FEDERAL AWARDS
Internal control over major program:
Material weaknesses identified No
Significant deficiencies identified not considered
to be material weaknesses Yes
Type of auditor's report issued on compliance
for major programs: Unmodified
Any audit findings disclosed that are required to be reported in
accordance with Uniform Guidance 2 CFR 200.516: Yes
Identification of major programs:
Federal Financial Assistance
Name of Federal Program Listing/CFDA Number
Coronavirus Relief Fund
Dollar threshold used to distinguish between type A
and type B programs:
Auditee qualified as low -risk auditee?
21.019
$750,000
Yes
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City of La Quinta, California
Schedule of Findings and Questioned Costs
Fiscal Year Ended June 30, 2021
Section II — Financial Statement Findings
2021-001 Financial Reporting
Material Weakness
Criteria:
In order to fairly present year-end financial statements in accordance with accounting principles
generally accepted in the United States of America, management must perform a year-end
closing process to accumulate, reconcile, and summarize information for inclusion in the trial
balance and financial report. The closing process should include the review of all balances.
Condition:
During our audit, we noted the following:
• An adjustment was proposed and posted by management to correct the cash held with
the Riverside County Fire Department and the Fire Service Credit Revenue received by
the Riverside County Fire Department.
• An adjustment was proposed and posted by management to correct cash balances
incorrectly reduced as part of an accounts payable correcting entry posted by the City.
• An adjustment was proposed and posted by management to record the interest and
extraordinary gain related to the Successor Agency advance from the General Fund and
Housing Authority Fund.
Context:
The condition noted above was identified during testing over various accounts and balances.
Effect:
Due to the above condition, adjustments were necessary to fairly present the financial
statements.
Cause:
Cash held with the Riverside County Fire Department and the Fire Service Credit revenues, Cash
and Accounts Payable, and the Interest and extraordinary gain related to the Successor Agency
Advance between the General Fund and the Housing Authority Fund were not appropriately
reconciled and recorded as part of the City's year end closing process.
Recommendation:
We recommend the City strengthen its year-end closing process to ensure all account balances
are reconciled appropriately recorded.
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City of La Quinta, California
Schedule of Findings and Questioned Costs
Fiscal Year Ended June 30, 2021
View of Responsible Officials:
The City concurs that the year-end closing process and preparation for the Annual
Comprehensive Financial Report (ACFR) can be strengthened, as it is something we continually
strive to evaluate and improve upon. However, while the City acknowledges this finding and
understands the continued need to ensure proper reporting of financial statements, the City
would like to ensure the audit record reflects the factors that we believe led to this finding.
As a result of the turnover of key staff responsible for year-end closing processes, several new
staff members and vacancies in the Finance Department, along with the unprecedented
challenges due to COVID-19, the Department was faced with limited resources necessary to
perform additional reviews and allow for sufficient training during the period under review.
Management has confidence that the existing internal accounting controls have been and
continue to be sufficient to ensure the safeguarding of the City's assets, control of its liabilities,
and the internal reporting of revenues and expenditures. We do agree that resources employed
by the City for the preparation of the June 30, 2021 Annual Comprehensive Financial Report
(ACFR) were not adequate and are actively working on developing a succession plan, which
includes continuing education and cross -training, to mitigate risk.
We wish to address the significant item that led to this finding referencing the Riverside County
Fire Department entry (noted under "Conditions" in the preceding section):
• The City and audit team reviewed the entry and relevant documentation, and requested
further confirmation from the County to substantiate the ending cash balance for the
fiscal year.
• Funds are sent to the Riverside County Treasurer and allocated to the various agencies
by the Riverside County Auditor -Controller, who then provides reports to the Riverside
County Fire Department, prolonging their posting of revenue entries and updates to the
balance sheet.
• The reporting and posting of accounting entries at the County level resulted in a delay in
updating of their Trust Fund balance sheet until the first quarter of the following fiscal
year.
As previously stated, to improve the accuracy of reporting and ensure procedures are in place to
help mitigate potential errors in the future, the Finance Department will increase cross -training
efforts, continuing education opportunities, and documenting of procedures for year-end
processes to be better equipped to deal with unforeseen circumstances.
In addition, the City will work closely with the Riverside County Fire Department and similar
external agencies to ensure we have a clearer understanding of their reports and information, as
well as to streamline quarterly and year-end reconciliation processes.
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City of La Quinta, California
Schedule of Findings and Questioned Costs
Fiscal Year Ended June 30, 2021
Section III — Federal Award Findings and Questioned Costs
2021-002
Program: COVID-19 — Coronavirus Relief Fund
CFDA Number: 21.019
Federal Agency: U.S. Department of Treasury
Pass -through: California Department of Treasury
Award No. and Year: (2021)
Compliance Requirement: Allowable Costs/Cost Principles
Type of Finding: Significant Deficiency, Instance of Non -Compliance
Criteria:
2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal
control over the federal award that provides assurance that the entity is managing the federal
award in compliance with federal statutes, regulations, and the terms and conditions of the
federal award.
2 CFR 200.430(i) establishes the standards for documentation of personnel expenses, including
the requirement that when budget estimates are used to allocate personnel expenses. The
auditee must have a system of controls in place to review after -the -fact interim charges made to
the program based on budget estimates and all necessary adjustments must be made such that
the final amount charged to the federal award is accurate, allowable, and properly allocated.
Condition:
We identified that the City charged personnel expenses based on estimated costs for 12
employees whose services for the City were diverted to a substantially different use during the
COVID-19 pandemic in 3 of 15 pay periods of time charged to the program. The estimates for
the 3 pay periods were based on the average actual time of the previous 12 pay periods. An
after -the -fact review was not performed prior to the program audit to compare the estimated
costs charged to the program against the actual costs incurred. The City subsequently
performed an after -the -fact review of the estimated costs to actual expenses based on time
records. The variance between estimated and actual costs was $3,894. Additionally, it was noted
the amount charged to the program was below actual expenses incurred.
Cause:
Management's policies and procedures did not include performing an after -the -fact review of
personnel expenses charged to the program based on estimated costs.
Effect:
By not performing timely after -the -fact reviews of personnel expenses charged to the program
based on estimates, this could result in inaccurate or ineligible expenses charged to the
program.
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City of La Quinta, California
Schedule of Findings and Questioned Costs
Fiscal Year Ended June 30, 2021
Questioned Costs:
No questioned costs were identified as a result of our procedures.
Context/Sampling:
A nonstatistical sample of 30 employee charges out of 153 charges over 15 pay periods were
selected for testing.
Repeat Finding from Prior Year(s):
No
Recommendations:
We recommend that the City strengthen its policies and procedures to ensure that an after -the -
fact review of personnel expenses be performed on a timely basis when allocated based on
estimated amounts.
View of Responsible Officials:
Management agrees with the recommendation to strengthen policies and procedures related to
a review of all expenses for awards allocated based on estimated amounts. As noted under the
"Condition" section above, actual expenses incurred exceeded the amount awarded and no
questioned costs were identified. We recognize that staff failed to prepare a formal
reconciliation report of Budget to Actual expenses for the file.
City staff will continue to review compliance requirements for all grants to ensure compliance
with applicable regulations. Additionally, staff has updated their procedures to incorporate and
document a periodic analysis in future years for all awards.
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City of La Quinta, California
Summary Schedule of Prior Audit Findings
Fiscal Year Ended June 30, 2021
None Reported.
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