COUNTY OF SANTA CLARA. Single Audit Reports. Basic Financial Statements with Federal Compliance Section. For the Fiscal Year Ended June 30, 2009

Transcription

1 COUNTY OF SANTA CLARA Single Audit Reports Basic Financial Statements with Federal Compliance Section For the Fiscal Year Ended June 30, 2009

2 COUNTY OF SANTA CLARA Single Audit Reports For the Fiscal Year Ended June 30, 2009 Table of Contents FINANCIAL SECTION: Page(s) Independent Auditors Report... 1 Management s Discussion and Analysis (Required Supplementary Information Unaudited)... 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets Statement of Activities Fund Financial Statements: Governmental Funds: Balance Sheet Reconciliation of the Governmental Funds Balance Sheet to the Governmentwide Statement of Net Assets Governmental Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-wide Statement of Activities Governmental Activities Proprietary Funds: Statement of Fund Net Assets Statement of Revenues, Expenses, and Changes in Fund Net Assets Statement of Cash Flows Fiduciary Funds: Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to the Basic Financial Statements Required Supplementary Information (other than MD&A): Schedule of Funding Progress Budgetary Comparison Schedule - General Fund - Budgetary Basis Notes to Required Supplementary Information

3 COUNTY OF SANTA CLARA Single Audit Reports For the Fiscal Year Ended June 30, 2009 Table of Contents (Continued) COMPLIANCE SECTION: Page(s) 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 Independent Auditor s Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance In Accordance with OMB Circular A Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Summary Schedule of Prior Audit Findings

4 The Honorable Members of the Board of Supervisors of the County of Santa Clara San Jose, California Independent Auditor s Report We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the County of Santa Clara, California, (the County), as of and for the fiscal year ended June 30, 2009, which collectively comprise the County s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the FIRST 5 Santa Clara County; the County Sanitation District 2 3 of Santa Clara County; the Santa Clara County Vector Control District; the Silicon Valley Tobacco Securitization Authority; the Santa Clara County Tobacco Securitization Corporation; and the Santa Clara County Central Fire Protection District, the South Santa Clara County Fire District, and Los Altos Hills County Fire District (collectively, Fire Districts ), which represent the following percentages of assets, net assets and revenues as of and for the fiscal year ended June 30, 2009: Opinion Unit Assets Net Assets Revenues Governmental activities 3.2% 4.3% 4.2% Business-type activities 0.7% 1.5% 0.3% Aggregate discretely presented component units and remaining fund information 3.5% 4.1% 1.2% Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for those entities, is based on the reports of the other auditors. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. 1

5 In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the County as of June 30, 2009, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1(o) to the financial statements, the County adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2009, on our consideration of the County s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management s discussion and analysis, schedules of funding progress and budgetary comparison schedule General Fund as listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County s basic financial statements. The accompanying schedule of expenditures of federal awards (SEFA) is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. In addition, the SEFA does not include expenditures of federal awards received by the Housing Authority of the County of Santa Clara (Housing Authority). The Housing Authority s federal expenditures are separately audited in accordance with OMB Circular A-133. The SEFA has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Certified Public Accountants Walnut Creek, California December 18,

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112 The Honorable Members of the Board of Supervisors of the County of Santa Clara San Jose, California 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 We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information of the County of Santa Clara, California, (the County), as of and for the fiscal year ended June 30, 2009, which collectively comprise the County s basic financial statements, and have issued our report thereon dated December 18, Our report includes a reference to other auditors. Our report also includes an explanatory paragraph indicating that the County adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. 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. Other auditors audited the financial statements of the FIRST 5 Santa Clara County; the County Sanitation District 2 3 of Santa Clara County; the Santa Clara County Vector Control District; the Silicon Valley Tobacco Securitization Authority; the Santa Clara County Tobacco Securitization Corporation; and the Santa Clara County Central Fire Protection District, the South Santa Clara County Fire District, and Los Altos Hills County Fire District (collectively, Fire Districts ), as described in our report on the County s financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by those other auditors. Internal Control Over Financial Reporting In planning and performing our audit, we considered the County 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 County s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the County s internal control over financial reporting. 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. 109

113 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 deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs as items 2009-A and 2009-B that we consider to be significant deficiencies in internal control over financial reporting. 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the County 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 County in a separate letter dated December 18, The County s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the County s responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the Board of Supervisors, County management, 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. Certified Public Accountants Walnut Creek, California December 18,

114 The Honorable Members of the Board of Supervisors of the County of Santa Clara San Jose, California Compliance Independent Auditor s Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 We have audited the compliance of the County of Santa Clara, California (the County), 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 fiscal year ended June 30, The County s major federal programs are identified in the summary of auditor s 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 County s management. Our responsibility is to express an opinion on the County s compliance based on our audit. The County s basic financial statements include the operations of the Housing Authority of the County of Santa Clara (Housing Authority), which expended $232,236,967 in federal awards, which is not included in the schedule of expenditures of federal awards (SEFA) for the fiscal year ended June 30, Our audit, described below, did not include the operations of the Housing Authority because we audited and reported on the Housing Authority in accordance with OMB Circular A-133 as a separate engagement. 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 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 County 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 of the County s compliance with those requirements. In our opinion, the County 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,

115 Internal Control Over Compliance Management of the County 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 County 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 and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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 County 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. 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 deficiencies, significant deficiencies, or material weaknesses. 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 Board of Supervisors, County management, 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. Certified Public Accountants Walnut Creek, California March 23,

116 COUNTY OF SANTA CLARA Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2009 Federal Pass Through Federal Grantor/Pass Through Entity/Grant Name CFDA No. Entity Number Expenditures U.S. Department of Agriculture Passed Through State Department of Social Services Supplemental Nutrition Assistance Program n/a $ 103,635,071 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ,280 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ,434 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ,926 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ,855 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program n/a 18,035,996 Subtotal State Administrative Matching Grants for the Supplemental Nutrition Assistance Program 19,282,491 Subtotal Pass Through State Department of Social Services 122,917,562 Passed Through State Department of Public Health Special Supplemental Nutrition Program for Women, Infants, and Children ,293,102 Passed Through State Department of Agriculture Inspection Grading and Standardization ,169 Passed Through State Department of Education Child Nutrition Cluster: School Breakfast Program ,999 National School Lunch Program ,552 Subtotal of Child Nutrition Cluster 591,551 Subtotal Passed Through State Department of Education 591,551 Total U.S. Department of Agriculture 126,803,384 U.S. Department of Housing and Urban Development Direct Programs Community Development Block Grants/Entitlement Grants n/a 1,629,796 HOME Investment Partnerships Program n/a 11,104,108 Total U.S. Department of Housing and Urban Development 12,733,904 U.S. Department of Interior Direct Programs Save America's Treasures n/a 38,422 Passed Through State Department of Parks and Recreation Cooperative Endangered Species Conservation Fund P ,928 Total U.S. Department of Interior 430,350 U.S. Department of Justice Direct Programs Juvenile Accountability Block Grants n/a 160,649 Community Capacity Development Office n/a 150,747 State Criminal Alien Assistance Program n/a 1,568,071 Public Safety Partnership and Community Policing Grants n/a 1,262,655 Forensic DNA Backlog Reduction Program n/a 306,480 Subtotal Direct Programs 3,448,602 Passed Through California Emergency Management Agency Crime Victim Assistance VW ,160 Edward Byrne Memorial Justice Assistance Grant Program DC ,181 Paul Coverdell Forensic Sciences Improvement Grant Program CQ ,360 Paul Coverdell Forensic Sciences Improvement Grant Program CQ ,744 Subtotal Paul Coverdell Forensic Sciences Improvement Grant Program 51,104 Subtotal Passed Through California Emergency Management Agency 711,445 Total U.S. Department of Justice 4,160,047 See accompanying notes to the Schedule of Expenditures of Federal Awards. 113

117 COUNTY OF SANTA CLARA Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Federal Pass Through Federal Grantor/Pass Through Entity/Grant Name CFDA No. Entity Number Expenditures U.S. Department of Transportation Direct Program Airport Improvement Program n/a 856,406 Passed Through State Department of Transportation Highway Planning and Construction STPL 5937(108) 1,539,763 Highway Planning and Construction STPLZ 5937(033) 155,848 Highway Planning and Construction STPLZ-5937(087) 33,100 Highway Planning and Construction STPLZ-5937(088) 35,368 Highway Planning and Construction BHLO 5937(093) 373,271 Highway Planning and Construction BHLO 5937(096) 7,987 Highway Planning and Construction BRLS 5937(077) 1,265,705 Highway Planning and Construction BRLS 5937(107) 73,610 Highway Planning and Construction BRLS 5937(109) 51,569 Highway Planning and Construction BRLO 5937(106) 24,558 Highway Planning and Construction STPLZ 5937(058) 59,944 Highway Planning and Construction BPMP 5937(105) 21,442 Highway Planning and Construction STPL 5937(115) 646,302 Highway Planning and Construction STPL 5937(125) 90,191 Highway Planning and Construction STPL 5937(126) 81,238 Highway Planning and Construction TCSPLO (128) 108,199 Highway Planning and Construction HPLUL 5937 (116) 808,031 Highway Planning and Construction CML 5937 (130) 10,151 Highway Planning and Construction HSIPL 5937 (117) 45,581 Highway Planning and Construction BRL-NBIS (508) 88,353 Subtotal Highway Planning and Construction 5,520,211 Subtotal Passed Through State Department of Transportation 5,520,211 Passed Through State Department of Parks and Recreation Recreational Trails Program RT ,340 Subtotal Passed Through State Department of Parks and Recreation 63,340 Passed Through State Office of Traffic Safety State and Community Highway Safety n/a 79,180 State and Community Highway Safety AL ,630 State and Community Highway Safety AL ,985 State and Community Highway Safety n/a 294,665 State and Community Highway Safety n/a 169,347 Subtotal State and Community Highway Safety 653,807 Subtotal Passed Through State Office of Traffic Safety 653,807 Total U.S. Department of Transportation 7,093,764 U.S. Department of Energy Direct Programs Fossil Energy Research and Development n/a 822,626 Total U.S. Department of Energy 822,626 U.S. Department of Education Passed Through State Department of Alcohol and Drugs Safe and Drug-Free Schools and Communities_State Grants n/a 8,916 Total U.S. Department of Education 8,916 See accompanying notes to the Schedule of Expenditures of Federal Awards. 114

118 COUNTY OF SANTA CLARA Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Federal Pass Through Federal Grantor/Pass Through Entity/Grant Name CFDA No. Entity Number Expenditures U.S. Department of Health and Human Services Direct Programs Consolidated Health Centers (Community Health Center, Migrant Health Centers, Health Care for the Homeless, Public Housing Primary Care, and School Based Health Centers) n/a 1,241,297 Enhance the Safety of Children Affected By Parental Methamphetamine or Other Substance Abuse n/a 1,046,240 Child Support Enforcement Demonstrations and Special Projects n/a 67,070 ARRA Health Center Integrated Services Development Initiative n/a 15,444 Subtotal Direct Programs 2,370,051 Passed Through Council on Aging Silicon Valley Aging Cluster: Special Programs for the Aging_Title III, Part C_Nutrition Services AP ,332,231 Nutrition Services Incentive Program AP ,681 Subtotal Aging Cluster 2,031,912 Subtotal Passed Through Council on Aging Silicon Valley 2,031,912 Passed Through State Department of Education Child Care Mandatory and Matching Funds of the Child Care and Development Fund ,709,417 Subtotal Passed Through State Department of Education 1,709,417 Passed Through State Department of Health Services Public Health and Social Services Emergency Fund n/a 1,906,747 Project Grants and Cooperative Agreements for Tuberculosis Control Programs n/a 527,197 Projects for Assistance in Transition from Homelessness (PATH) n/a 224,956 Immunization Grants ,302 Centers for Disease Control and Prevention _ Investigations and Technical Assistance n/a 1,032,919 Refugee and Entrant Assistance_Discretionary Grants n/a 24,909 Refugee and Entrant Assistance_Discretionary Grants ,000 Refugee and Entrant Assistance_Discretionary Grants ,000 Refugee and Entrant Assistance_Discretionary Grants ,347 Subtotal Refugee and Entrant Assistance_Discretionary Grants 452,256 Medical Assistance Program n/a 4,673,143 National Bioterrorism Hospital Preparedness Program PS ,396 HIV Emergency Relief Project Grants n/a 2,493,883 HIV Care Formula Grants n/a 414,006 Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease n/a 763,511 HIV Prevention Activities_Health Department Based n/a 1,421,342 Public Health Traineeships MCH 124,365 Public Health Traineeships BIH 217,499 Public Health Traineeships AFLP 251,364 Subtotal Public Health Traineeships 593,228 Maternal and Child Health Services Block Grant to the States BIH 255,327 Maternal and Child Health Services Block Grant to the States AFLP 97,792 Maternal and Child Health Services Block Grant to the States MCH 230,201 Subtotal Maternal and Child Health Services Block Grant to the States 583,320 Subtotal Passed Through State Department of Health Services 16,743,206 Passed Through State Department of Child Support Services Child Support Enforcement IV ,690,413 ARRA - Child Support Enforcement IV-356 3,287,695 Subtotal Child Support Enforcement 23,978,108 Subtotal Passed Through State Department of Child Support Services 23,978,108 See accompanying notes to the Schedule of Expenditures of Federal Awards. 115

119 COUNTY OF SANTA CLARA Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Federal Pass Through Federal Grantor/Pass Through Entity/Grant Name CFDA No. Entity Number Expenditures U.S. Department of Health and Human Services (Continued) Passed Through State Department of Social Services Substance Abuse and Mental Health Services_Projects of Regional and National Significance n/a 237,279 Promoting Safe and Stable Families n/a 1,185,455 Temporary Assistance for Needy Families n/a 120,985,916 Refugee and Entrant Assistance_State Administered Programs n/a 1,061,300 Refugee and Entrant Assistance_Targeted Assistance Grants n/a 361,266 Child Welfare Services_State Grants n/a 1,502,095 Foster Care_Title IV-E n/a 39,072,584 ARRA - Foster Care_Title IV-E n/a 872,819 Subtotal Foster Care_Title IV-E 39,945,403 Adoption Assistance n/a 11,605,807 ARRA - Adoption Assistance n/a 977,868 Subtotal Adoption Assistance 12,583,675 Social Services Block Grant n/a 9,994,198 Chafee Foster Care Independence Program n/a 502,473 Medical Assistance Program n/a 63,142,372 Subtotal Passed Through State Department of Social Services 251,501,432 Passed Through State Department of Mental Health Block Grants for Community Mental Health Services n/a 725,929 Passed Through State Department of Alcohol and Drugs Block Grants for Prevention and Treatment of Substance Abuse n/a 11,396,013 Total U.S. Department of Health and Human Services 310,456,068 U.S. Department of Homeland Security Passed Through the City and County of San Francisco Urban Areas Security Initiative ,352 Passed Through the California Emergency Management Agency Homeland Security Grant Program ,841,766 Homeland Security Grant Program n/a 137,052 Subtotal Homeland Security Grant Program 1,978,818 Pre-Disaster Mitigation Competitive Grants OES # PJ55 73,137 Pre-Disaster Mitigation Competitive Grants OES # PJ37 203,938 Pre-Disaster Mitigation Competitive Grants OES # PJ45 25,342 Subtotal Pre-Disaster Mitigation Competitive Grants 302,417 Subtotal Passed Through California Emergency Management Agency 2,281,235 Total U.S. Department of Homeland Security 3,197,587 Total Expenditures of Federal Awards $ 465,706,646 See accompanying notes to the Schedule of Expenditures of Federal Awards. 116

120 COUNTY OF SANTA CLARA Notes to the Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2009 Note 1 General The accompanying Schedule of Expenditures of Federal Awards (SEFA) presents the expenditures of all federal award programs of the County of Santa Clara, California (the County), for the fiscal year ended June 30, 2009, except for the Housing Authority of the County of Santa Clara (Housing Authority) (see Note 4). The County s reporting entity is defined in Note 1 to the County s basic financial statements. All federal awards received directly from federal agencies, as well as federal awards passed through other government agencies, are included on the SEFA. Expenditures funded by the American Recovery and Reinvestment Act of 2009 are denoted by the prefix ARRA in the federal or pass-through grantor title. Note 2 Basis of Accounting The accompanying SEFA is presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1 to the County s basic financial statements. In addition, the outstanding balance of prior year s loans that have significant continuing compliance requirements has been included in the total federal expenditures for the HOME Investment Partnerships program (note 7) and the total federal expenditures for the State Criminal Alien Assistance Program (SCAAP) includes the awarded funds as a one-time payment that is expended as of the date received pursuant to the SCAAP Guidance and Application. Note 3 Relationship to the Financial Statements Expenditures of federal awards are reported in the County s basic financial statements as expenditures in the General Fund and nonmajor special revenue funds and as expenses in the Airport enterprise fund. Note 4 Housing Authority (Discrete Component Unit) Federal Expenditures The Housing Authority federal expenditures are excluded from the SEFA because the Housing Authority s federal expenditures are separately audited. Expenditures for the programs of the Housing Authority listed below are taken from the separately issued single audit report. The programs of the Housing Authority are as follows: Grantor Identifying Federal Federal Grantor/Pass-through Grantor/Program Title CFDA Number Number Expenditures U.S. Department of Housing and Urban Development Pass-through the City of San Jose: Community Development Block Grants/Entitlement Grants HTF $ 65,764 Direct: Shelter Plus Care n/a 2,769,139 Public and Indian Housing n/a 1,023,428 Section 8 Project Based Cluster: Lower Income Housing Assistance Program - Section 8 New Construction/Substantial Rehabilitation -Huff Gardens n/a 12,217 Lower Income Housing Assistance Program - Section 8 Moderate Rehabilitation n/a 2,003,063 Subtotal Section 8 Project Based Cluster 2,015,280 Section 8 Housing Choice Vouchers n/a 225,893,510 Public Housing Capital Fund n/a 469,846 Total Federal Expenditures $ 232,236,

121 COUNTY OF SANTA CLARA Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Note 5 Supplemental Nutrition Assistance The County issued supplemental nutrition assistance benefits valued at $103,635,071 for the year ended June 30, 2009, which is included in the SEFA (CFDA No ). This amount is for information only as receipts and issuances of supplemental nutrition assistance benefits are not recorded in the County s financial records. Note 6 Amounts Provided to Subrecipients Of the federal expenditures presented in the SEFA, the County provided federal awards to subrecipients as follows: Amount Provided to Program Title CFDA Number Subrecipients Special Supplemental Nutrition Program for Women, Infants, and Children $ 36,010 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program ,178 Community Development Block Grants/Entitlement Grants ,139,762 Juvenile Accountability Block Grants ,953 Crime Victim Assistance ,160 Edward Byrne Memorial Justice Assistance Grant Program ,567 Special Programs for the Aging_Title III, Part C_Nutrition Services ,332,231 Nutrition Services Incentive Program ,681 Project Grants and Cooperative Agreements for Tuberculosis Control Programs ,000 Projects for Assistance in Transition from Homelessness (PATH) ,047 Substance Abuse and Mental Health Services_Projects of Regional and National Significance ,352 Immunization Grants ,455 Center for Disease Control and Prevention _ Investigations and Technical Assistance ,856 Temporary Assistance for Needy Families ,022,651 Refugee and Entrant Assistance_State Administered Programs ,128 Refugee and Entrant Assistance_Discretionary Grants ,909 Refugee and Entrant Assistance_Targeted Assistance Grants ,051 Chafee Foster Care Independence Program ,082 Medical Assistance Program ,167 National Bioterrorism Hospital Preparedness Program ,523 HIV Emergency Relief Project Grants ,661 HIV Care Formula Grants ,922 HIV Prevention Activities_Health Department Based ,631 Block Grants for Community Mental Health Services ,168 Block Grants for Prevention and Treatment of Substance Abuse ,160,240 Public Health Traineeships ,017 Maternal and Child Health Services Block Grant to the States ,400 Urban Areas Security Initiative ,099 Homeland Security Grant Program ,805 Total $ 18,792,

122 Note 7 Loans Outstanding COUNTY OF SANTA CLARA Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 The County participates in certain federal award programs that sponsor revolving loan programs, which are administered by the County. These programs maintain servicing and trust arrangements with the County to collect loan repayments. The funds are returned to the programs upon repayment of the principal and interest. The federal government has imposed certain continuing compliance requirements with respect to the loans rendered under the HOME Investment Partnerships Program (HOME). During the fiscal year 2009, the County incurred $160,000 in expenditures related to new loans under this program. As of June 30, 2009, the total amount of HOME loans outstanding subject to continuing compliance requirements was $10,293,104, which is included in the SEFA. Note 8 California Department of Aging (CDA) Grant The terms and conditions of agency contracts with CDA require agencies to display state-funded expenditures discretely along with the related federal expenditures. The following schedule is presented to comply with these requirements. Federal Grantor/ Pass-through Grantor/ Program Title CFDA Grant/ Contract Expenditures Number Number State Federal U.S. Department of Health & Human Services Pass through the Council on Aging Silicon Valley Special Programs for the Aging_Title III, Part C Nutrition Services AP $ 134,962 $ 1,332,231 Pass through the Council on Aging Silicon Valley Nutrition Services Incentive Program AP ,681 Total Expenditures of State and Federal Awards $ 134,962 $ 2,031,912 Note 9 Program Totals The following table summarizes programs funded by various sources or grants whose totals are not shown on the SEFA. The following table summarizes these programs: Program Title / Federal Grantor or Pass-Through Grantor Federal Expenditures Highway Planning and Construction Cluster CFDA Number Hghway Planning and Construction $ 5,520,211 Passed Through State Department of Transportation CFDA Number Recreational Trails Program 63,340 Passed Through State Department of Parks and Recreation Total Highway Planning and Construction Cluster $ 5,583,551 CFDA Number Medical Assistance Program Passed Through State of California, Department of Social Services $ 63,142,372 Passed Through State of California, Department of Health Services 4,673,143 Total CFDA Number Medical Assistance Program $ 67,815,

123 COUNTY OF SANTA CLARA Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Note 10 Homeland Security Cluster The County is a recipient of 2007 and 2008 Urban Areas Security Initiative (UASI) grant awards (CFDA No ). Per the 2009 A-133 Compliance Supplement, UASI grant awards for the specified grant years listed above are part of the Homeland Security Cluster. In addition, the County incurred federal expenditures under the Homeland Security Grant Program (HSGP) (CFDA No ), which are also part of the Homeland Security Cluster program. The following table summarizes these programs by CFDA numbers: Program Title / Federal Grantor or Pass-Through Grantor Federal Expenditures CFDA Number Urban Area Security Initiative Passed through the City and County of San Francisco $ 916,352 CFDA Number Homeland Security Grant Program Passed through the California Emgergency Management Agency 1,978,818 Total Homeland Security Cluster $ 2,895,

124 COUNTY OF SANTA CLARA Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Note 11 - Schedules of the California Emergency Management Agency (Cal EMA) and California Victims Compensation & Government Claims Board California Emergency Management Agency grant expenditures: The following represents grant expenditures for Department of Justice grants passed through the California Emergency Management Agency for the fiscal year ended June 30, Grant Award Actual Actual Actual Program Title and Expenditure Category Number/Period Budget Non-match Match Total Variance Victim Witness Assistance - Cal EMA VW Operating Expenses 7/1/08 to 6/30/09 $ 250,160 $ 250,160 $ - $ 250,160 $ - Total $ 250,160 $ 250,160 $ - $ 250,160 $ - Anti-Drug Abuse Enforcement Program DC Personal Services 7/1/08 to 6/30/09 $ 105,614 $ 105,614 $ - $ 105,614 $ - Operating Expenses 251, , ,164 - Equipment 53,403 53,403-53,403 - Total $ 410,181 $ 410,181 $ - $ 410,181 $ - Paul Coverdell Forensic Sciences Improvement CQ Operating Expenses 1/1/08 to 12/31/08 $ 44,746 $ 13,360 $ - $ 13,360 $ 31,386 Total $ 44,746 $ 13,360 $ - $ 13,360 $ 31,386 Paul Coverdell Forensic Sciences Improvement CQ Operating Expenses 10/1/08 to 8/31/10 $ 101,229 $ 37,744 $ - $ 37,744 $ 63,485 Equipment 6, ,121 Total $ 107,350 $ 37,744 $ - $ 37,744 $ 69,606 (Note: The non-match expenditure of $250,160, $410,181, $13,360 and $37,744 for grants VW , DC , CQ , and CQ , respectively, are reported as federal expenditures in the SEFA under the following CFDA numbers: , , and ) 121

125 COUNTY OF SANTA CLARA Notes to the Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended June 30, 2009 Note 11 - Schedules of the California Emergency Management Agency (Cal EMA) and California Victims Compensation & Government Claims Board (Continued) California Emergency Management Agency grant expenditures (continued): The following represents the California Emergency Management Agency summary grant expenditures for the fiscal year ended June 30, This information is included in the County's single audit report at the request of the California Emergency Management Agency Grant Award Actual Actual Actual Program Title and Expenditure Category Number/Period Budget Non-match Match Total Variance Victim Witness Assistance - Cal EMA VW Operating Expenses 7/1/08 to 6/30/09 $ 348,295 $ 348,295 $ - $ 348,295 $ - Total $ 348,295 $ 348,295 $ - $ 348,295 $ - Child Abuser Vertical Prosecution Program VB Personal Services 7/1/08 to 6/30/10 $ 695,776 $ 317,573 $ - $ 317,573 $ 378,203 Total $ 695,776 $ 317,573 $ - $ 317,573 $ 378,203 High Technology Theft Apprehension & Prosecution HT Personal Services 7/1/08 to 6/30/10 $ 2,412,941 $ 587,987 $ 355,173 $ 943,160 $ 1,469,781 Operating Expenses 1,994, , ,704 1,162,000 Total $ 4,407,645 $ 1,420,691 $ 355,173 $ 1,775,864 $ 2,631,781 High Technology Theft Apprehension & Prosecution HD Personal Services 7/1/08 to 6/30/09 $ 286,776 $ 201,091 $ 85,685 $ 286,776 $ - Operating Expenses 222, ,931 16, ,002 - Total $ 508,778 $ 407,022 $ 101,756 $ 508,778 $ - California Victims Compensation & Government Claims Board grant expenditures: The following represents the California Victims Compensation & Government Claims Board grant expenditures for the fiscal year ended June 30, This information is included in the County's single audit report at the request of the California Victims Compensation & Government Claims Board. Grant Award Actual Actual Actual Program Title and Expenditure Category Number/Period Budget Non-match Match Total Variance Victim Witness Assistance - BOC VCGC9059 Personal Services 7/1/08 to 6/30/09 $ 925,391 $ 760,730 $ - $ 760,730 $ 164,661 Operating Expenses 178, , ,120 14,217 Equipment 2,075 2,075-2,075 - Total $ 1,105,803 $ 926,925 $ - $ 926,925 $ 178,878 Victim Witness Restitution for Crime Victims VCGC7077 Personal Services 7/1/08 to 6/30/09 $ 219,008 $ 219,008 $ - $ 219,008 $ - Operating Expenses 5,436 5,436-5,436 - Total $ 224,444 $ 224,444 $ - $ 224,444 $ - Santa Clara County Parole Advocacy program PA Operating Expenses 11/1/06 to 9/30/09 $ 158,828 $ 15,793 $ - $ 15,793 $ 143,035 Equipment 27, ,250 Total $ 186,078 $ 15,793 $ - $ 15,793 $ 170,

126 Section I Summary of Auditor s Results Financial Statements: COUNTY OF SANTA CLARA Schedule of Findings and Questioned Costs For the Fiscal Year Ended June 30, 2009 Type of auditor s report issued: Unqualified Internal control over financial reporting: Material weaknesses identified? No Significant deficiencies identified that are not considered to be material weaknesses? Yes Noncompliance material to financial statements noted? No Federal Awards: Internal control over major programs: Material weaknesses identified? No Significant deficiencies identified that are not considered to be material weaknesses? None reported Type of auditor s report issued on compliance for major programs: Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? Unqualified No Identification of major programs: 1. CFDA No Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) 2. CFDA No HOME Investment Partnership Program 3. Highway Planning and Construction Cluster CFDA No Highway Program Construction CFDA No Recreational Trails Program 4. CFDA No Temporary Assistance for Needy Families (TANF) 5. CFDA No Child Support Enforcement 6. CFDA No Foster Care Title IV-E 7. CFDA No Adoption Assistance 8. CFDA No Medical Assistance Program 9. Homeland Security Cluster CFDA No Urban Areas Security Initiative CFDA No Homeland Security Grant Program Dollar threshold used to distinguish between Type A and Type B programs: $3,000,000 Auditee qualified as low-risk auditee? No 123

127 Section II Financial Statement Findings Significant Deficiency #1 Item 2009-A Accounting for Securities Lending Transactions COUNTY OF SANTA CLARA Schedule of Findings and Questioned Costs (Continued) For the Fiscal Year Ended June 30, 2009 Criteria Governmental Accounting Standards Board (GASB) Statement No. 28, Accounting and Financial Reporting for Securities Lending Transactions, established accounting and financial reporting standards for securities lending transactions. Under GASB Statement No. 28, governmental entities should report securities lent (the underlying securities), cash received as collateral, and investment made with the cash received as assets in their statement of net assets/balance sheet and the related collateral due to borrowers should be reported as liabilities. In addition, the cost of securities lending transactions, such as interest costs and agent fees, should be reported as expenditures or expenses, and should not be netted with interest revenues or income from the investment of cash collateral, loan premiums or fees. In December 2006, the County amended its investment policy to include securities lending as a permitted investment. During fiscal year 2009, the County entered into securities lending transactions with its custodian bank, Bank of New York Mellon Corporation (BNY). The County lent investments from its County Commingled and Retiree Health Investment Portfolios to borrowers under securities lending agreements and received cash collateral in return. As of June 30, 2009, the County s underlying securities loaned from its County Commingled and Retiree Health Investment Portfolios totaled $88.8 million and $48.9 million, respectively. Condition During our audit, we noted that the County did not report the collateral received and collateral due to borrowers on its statement of net assets/balance sheets nor did the County segregate the interest revenues and the cost of the securities lending transactions on its operating statements. As a result, the County s assets and liabilities were understated by $139.9 million, interest earnings from securities lending transactions were understated by $0.4 million and the cost of securities lending transactions were understated by $0.4 million. The County subsequently recorded an adjustment to correct these misstatements in the June 30, 2009 financial statements. Cause The County s finance staff was unfamiliar with the application of the securities lending accounting standards. Recommendation As the County enters into non-routine complex transactions, the County staff should obtain additional understanding of the background and nature of the transactions, perform extensive research, and document the County s accounting treatment on the transactions to ascertain proper accounting and disclosure of these transactions. Management Response County finance staff noted the security lending transactions during the fiscal year and recorded interest income net of expenditures. County staff planned to record the assets, liabilities, and gross interest income and expenditures. County staff subsequently brought this to the attention of the auditors. After discussions with the auditors, these transactions were recorded. Finance staff will ensure that all significant accounting transactions are recorded during the year-end closing process. 124

128 COUNTY OF SANTA CLARA Schedule of Findings and Questioned Costs (Continued) For the Fiscal Year Ended June 30, 2009 Section II Financial Statement Findings (Continued) Significant Deficiency #2 Item 2009-B Controls over Year-End Capital Projects Payable Accruals Criteria 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. Under generally accepted accounting principles, the SCVHHSEF s capital outlay expenditures are to be recorded when a liability is incurred. As such the SCVHHSEF should record all expenditures related to its capital project programs in the period when a liability is incurred. Condition Throughout the year, the SCVHHSEF utilizes Fund 059 Capital Projects Subfund to capture its capital project expenditures. During our audit, we noted the SCVHHSEF did not accrue project costs in the amount $12.2 million rendered during the current fiscal year related to the Capital Projects Subfund project. Cause An adequate control over the review of the project payments and contract status with the individual contracts was not effectively performed at year-end to capture all year-end transactions for project costs incurred. Recommendation We recommend the SCVHHSEF perform an expenditure and accrual analysis during its year-end financial reporting process in order to properly record expenditures in the period when a liability is incurred. Management Response SCVHHSEF has always performed an expenditure and accrual analysis during its monthly and year-end financial reporting process in order to properly record expenses in the period when a liability is incurred. At year end the analysis is updated during the various stages of financial statement preparation. The initial analysis is performed in July, with subsequent analyses following in August and September. Fund 59 was not included in the SCVHHSEF follow-up analyses due to SCVHHSEF s understanding that additional project entries could not be recorded in SAP after the July close. SCVHHSEF Finance will make every effort to submit available capital project accruals before the SAP close in the future. If subsequent analyses provide additional capital project accruals, they will be submitted to the Controller/Treasurer s Office and the Auditors regardless of the ability to record the entries in SAP. Section III Federal Award Findings and Questioned Costs No matters were reported. 125