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1 IV: SINGLE AUDIT

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4 We noted certain matters that we reported to management of the County in a separate letter dated February 10, This report is intended solely for the information and use of the Pinellas County, Florida Board of County Commissioners, management, and federal and state awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. February 10, 2006 Certified Public Accountants 158

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6 Internal Control Over Compliance The 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 and state projects. In planning and performing our audit, we considered the County s internal control over compliance with requirements that could have a direct and material effect on a major federal program or state project in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A-133 and Chapter , Rules of the Auditor General. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants caused by error or fraud that would be material in relation to a major federal program or state project being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. Schedule of Expenditures of Federal Awards and State Financial Assistance We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Pinellas County, Florida as of and for the year ended September 30, 2005, and have issued our report thereon dated February 10, 2006, which included a reference to the reports of other auditors. Our audit was performed 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 and state financial assistance is presented for purposes of additional analysis as required by OMB Circular A-133 and Chapter , Rules of the Auditor General and is not a required part of the basic financial statements. Such information 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. This report is intended solely for the information and use of the Pinellas County, Florida Board of County Commissioners, management, and federal and state awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. February 10, 2006 Certified Public Accountants

7 Pinellas County, Florida SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2005 CFDA State Federal/State Agency CSFA Contract/Grant Pass-Through Entity/Program Title Number Number Expenditures FEDERAL AWARDS DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Community Development Block Grant $ 4,539,364 Home Investment Partnership ,624,625 Federal Emergency Shelter ,440 Fair Housing Assistance Program FF204K ,574 Gulf Boulevard Improvement B-02-SP-FL ,436 Total Department of Housing and Urban Development $ 6,442,439 U.S. FISH AND WILDLIFE SERVICE Passed through the Florida Fish and Wildlife Conservation Commission Artificial Reef Grant - Indian Shores FWC $ 11,080 Total U. S. Fish and Wildlife Service $ 11,080 DEPARTMENT OF TREASURY Federal Confiscated Property $ 106,498 Total Department of Treasury $ 106,498 FEDERAL AVIATION ADMINISTRATION Airport Development Aid Program AIP - 26 $ 262,122 Airport Development Aid Program AIP ,210 Airport Development Aid Program AIP ,989,000 Airport Development Aid Program AIP ,000 Total Federal Aviation Administration $ 3,337,332 DEPARTMENT OF HOMELAND SECURITY Passed through the Florida Department of Community Affairs Hurricane Charley FEMA-DR-1539-FL $ 22,109 Hurricane Jeanne FEMA-DR-1561-FL 3,401,076 Forensic Response Team CJ-L ,533 Equipment Grant DS-2N ,930 $ 3,498,648 Passed through the Florida Department of Law Enforcement Forensic Response Team CJ-L $ 22,533 LETP Project - Pinellas County CJ-L ,354 $ 166,887 Total Department of Homeland Security $ 3,665,

8 Pinellas County, Florida SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2005 CFDA State Federal/State Agency CSFA Contract/Grant Pass-Through Entity/Program Title Number Number Expenditures ENVIRONMENTAL PROTECTION AGENCY Air Pollution Control A $ 108,302 Consolidated Research Grant BW ,455 National Air Toxics Trends Station XA ,343 PM2.5 Air Monitoring Network Program PM ,606 Brownfields Assessment and Cleanup Cooperative Agreements BF ,028 Fort DeSoto Ecological Enhancement Grant MX ,000 Total Environmental Protection Agency $ 516,734 DEPARTMENT OF HEALTH AND HUMAN SERVICES Health Care for the Homeless H80 CS $ 322,610 Mobile Medical Unit C76 HF ,176 Subtotal Direct Program $ 330,786 Passed through the Center for Disease Control and Prevention STEPS to a Healthier Pinellas Grant $ 85,640 Passed through the Florida Department of Revenue: Family Support Network Enhancement Grant H79 TI $ 453,507 Child Support Enforcement - Sheriff ,845 Child Support Depository CC352 1,021,870 Child Support Incentive - CCC ,964 $ 1,557,186 Passed through the Florida Department of Children and Families: Temporary Assistance For Needy Families QJZ41 $ 522,585 Social Services Block Grant QJZ41 149,610 Temporary Assistance For Needy Families QJZ51 4,011,197 Social Services Block Grant QJZ51 1,148,355 Temporary Assistance For Needy Families QJZ51 1,465,974 Social Services Block Grant QJZ51 419,690 $ 7,717,411 Passed through the Florida Department of Elderly Affairs: Emergency Home Energy Assistance EP005-Pinellas $ 92,967 Subtotal Pass-Through Programs $ 9,453,204 Total Department of Health and Human Services $ 9,783,990 DEPARTMENT OF AGRICULTURE Passed through the Florida Department of Education: Summer Food Program $ 476,493 Total Department of Agriculture $ 476,

9 Pinellas County, Florida SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2005 CFDA State Federal/State Agency CSFA Contract/Grant Pass-Through Entity/Program Title Number Number Expenditures DEPARTMENT OF JUSTICE Local Law Enforcement Block Grant LB-BX-0797 $ 37,988 Local Law Enforcement Block Grant LB-BX ,154 Safe Havens: Supervised Visitation and Safe Exchange Grant CW-BX ,583 BJA Congressionally Mandated Grant DD-BX ,381 BJA Congressionally Mandated Grant DD-BX ,506 State Criminal Alien Assistance Program AP-BX ,122 Laptop Interoperability Project RG-CX ,921 BJA Congressionally Mandated Grant (Predator) DD-BX ,715 Police Athletic League After School and Summer Program FL-KK 249,653 Federal Confiscated Property ,710 Cops Facial Recognition Technology Project CK-WX ,722 Cops Mobile Ticket Writer Technology Project CK-WX ,234 Subtotal Direct Programs $ 3,547,689 Passed through the Office of National Control Policy Central Florida HIDTA-Drug Control PCFP510 43,887 Central Florida HIDTA-Drug Control PCFP ,946 $ 163,833 Passed through the Florida Department of Legal Affairs: Victims of Crime Act - Sheriff V4045 $ 95,085 Passed through the Florida Department oflaw Enforcement: Resident Substance Abuse Treatment CJ-7J $ 85,230 Byrne - Pinellas County Geographic Profiling Project CJ-K ,541 Byrne - Pre-Trial Intensive Supervision CJ-K ,909 Byrne - Formula Grant Program (Intox - Phs II) CJ-5A ,875 Byrne - Formula Grant Program (Intox - Phs III) CJ-J ,287 Byrne - IMPACT - InMate Participation and Accountability CJ-J ,898 Byrne - IMPACT - InMate Participation and Accountability CJ-K ,441 Byrne - Community Placement Intake Service CJ-K ,000 Byrne - Administrative Grant CJ-K ,673 Focused Outreach & Intervention Program CJ-K ,325 Child Abuse Education & Prevention CJ-K ,921 Coverdell National Forensic Science Grant DN-BX ,361 Coverdell National Forensic Science Grant DN-BX ,198 Coverdell National Forensic Science Grant DN-BX ,000 $ 664,659 Subtotal Pass-Through Programs $ 923,577 Total Department of Justice $ 4,471,266 DEPARTMENT OF TRANSPORTATION Passed through the Florida Department of Transportation: DUI Enhancement Project J $ 46,213 49th Street Landscape Project AM ,151 Walsingham Road Sidewalk ANG 27 44,309 Forest Lake Blvd Sidewalk (LAP) AN ,658 Wayfinder Signing Project AM794 2,659 Total Department of Transportation $ 246,

10 Pinellas County, Florida SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2005 CFDA State Federal/State Agency CSFA Contract/Grant Pass-Through Entity/Program Title Number Number Expenditures DEPARTMENT OF COMMERCE Passed through the National Oceanic and Atmospheric Administation Brooker Creek Center Grant $ 27,000 Fort DeSoto Water Recirculation/Reef Construction Grant NA17OZ ,628 Fort DeSoto Habitat Conservation Grant NA17FZ ,000 Adopt-A-Pond ,550 $ 267,178 Passed through the National Fish and Wildlife Foundation Wall Spring Park Ecostem Restoration Grant $ 35,091 Fort DeSoto Bridge Construction Grant NA17AC ,000 $ 285,091 Total Department of Commerce $ 552,269 DEPARTMENT OF INTERIOR Exotic Vegetation Removal Grant G086 $ 31,000 Shell Key Island Australian Pine Removal & Restoration G20 28,503 War Veterans Park Oyster Reef Grant G ,000 Fort DeSoto Recirculation Project Grant G ,271 Total Department Interior $ 153,774 DEPARTMENT OF ENERGY Cooperative Agreement for Economic Development DE-FC04-95AL87471 $ 492,088 Total Department of Energy $ 492,088 OFFICE OF MUSEUM SERVICES Museum Assessment Program IM $ 2,325 Total Office of Museum Services $ 2,325 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE Florida Americorps Promise Fellows Program Grant $ 8,675 Total Corporation for National and Community Service $ 8,675 TOTAL EXPENDITURES OF FEDERAL AWARDS $ 30,267,

11 Pinellas County, Florida SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2005 CFDA State Federal/State Agency CSFA Contract/Grant Pass-Through Entity/Program Title Number Number Expenditures STATE FINANCIAL ASSISTANCE FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION Title V Air Pollution Control Program AQ167 $ 108,302 Ambient Air Monitoring Contract SO159 78,638 Treasure Island Beach Nourishment PI1 288,990 Upham Beach Renourishment PI1 477,391 Solid Waste Innovative Recycling Grant IG ,030 Total Florida Department of Environmental Protection $ 958,351 FLORIDA DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES Mosquito Control State l State Aid $ 37,025 Total Florida Department of Agriculture and Consumer Services $ 37,025 FLORIDA DEPARTMENT OF HEALTH Emergency Medical Services Grant Program -Bureau of Emergency Medical Service C-4052 $ 50,647 Total Florida Department of Health $ 50,647 FLORIDA HOUSING FINANCE AGENCY State Housing Initiative Partnership $ 7,095,599 Total Florida Housing Finance Agency $ 7,095,599 STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION Joint Participation Agreement-Airport AE-555 $ 563,635 Joint Participation Agreement-Airport AL ,886 Joint Participation Agreement-Airport ANO-83 49,265 Airport Realignment - Fairchild AD ,456 CIG - Keene Road ,611 CIG - Nebraska Avenue ,865 Total Florida Department of Transportation $ 1,265,718 FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS Emergency Management Assistance - Trust Fund Base Allocation BG $ 167,379 Hazardous Waste Collection Center CP ,200 Florida Forever Grant CT-8R A ,592,306 Total Florida Department of Community Affairs $ 3,770,

12 Pinellas County, Florida SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2005 CFDA State Federal/State Agency CSFA Contract/Grant Pass-Through Entity/Program Title Number Number Expenditures FLORIDA STATE OFFICE OF THE ATTORNEY GENERAL Crime Stoppers PC19-04 $ 157,194 Total Florida State Office of the Attorney General $ 157,194 FLORIDA DEPARTMENT OF REVENUE Digital Map Conversion Grant Program F75G01 $ 52,451 Total Florida Florida Department of Revenue $ 52,451 FLORIDA DEPARTMENT OF JUVENILE JUSTICE Pinellas Boot Camp Program F7G01 $ 2,032,346 Weekend Boot Camp - ABOUTFACE Q ,414 Total Florida Department of Juvenile Justice $ 2,119,760 FLORIDA OFFICE OF THE GOVERNOR OTTED Grant /9925B $ 1,543,329 Total Florida Office of the Governor $ 1,543,329 FLORIDA DEPARTMENT OF STATE Survey & Planning Grant - Weedon Island S0561 $ 20,000 Historical Museums Grant - Heritage Village ,149 Voter Education Grant ,563 Total Florida Department of State $ 220,712 TOTAL STATE FINANCIAL ASSISTANCE $ 17,271,

13 PINELLAS COUNTY, FLORIDA Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance Year ended September 30, 2005 (1) Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance (Schedule) includes the federal and state grant activity of Pinellas County, Florida, and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter , Rules of the Auditor General. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. (2) Subrecipients Of the federal and state expenditures presented in the Schedule, the County provided federal and state awards to subrecipients as follows: Federal CFDA/ Amount State CFSA provided to Program title number subrecipients Federal programs: Department of Housing and Urban Development: Community Development Block Grant $ 2,670,089 Home Investment Partnership ,658 Federal Emergency Shelter ,457 Department of Justice: Pass-through Program from Florida Department of Community Affairs: IMPACT Inmate Participation and Accountability ,339 Community Placement Intake Service ,000 Focused Outreach and Intervention ,325 Child Abuse Education and Prevention Program ,921 Total federal awards provided to subrecipients $ 3,617,789 State projects: Florida Housing Finance Authority: State Housing Initiative Partnership $ 815,361 Total state financial assistance provided to subrecipients $ 815,

14 PINELLAS COUNTY, FLORIDA Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance Year ended September 30, 2005 (3) Loans Outstanding The following represents loans outstanding for the federal awards and state programs: Program title Federal CFDA/ State CSFA number Federal programs: Department of Housing and Urban Development: Community Development Block Grant $ 1,727,387 Home Investment Partnership ,002,075 State projects: Florida Housing Finance Authority: State Housing Initiative Partnership ,743,957 $ 10,473,419 Only current year loans issued to eligible recipients are included as expenditures on the accompanying schedule. 168

15 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 (1) Summary of Auditor s Results (a) (b) (c) (d) (e) (f) (g) An unqualified opinion was issued on the basic financial statements. There were no reportable conditions or material weaknesses in internal control disclosed by the audit of the basic financial statements. There was no noncompliance which is material to the basic financial statements. There were no reportable conditions or material weaknesses identified in the internal control over major federal programs or state projects. An unqualified opinion was issued on compliance for the major federal programs and state projects. There were 4 audit findings relative to the major federal programs that are required to be reported in accordance with Section 510(a) of Circular A-133. There was 1 audit finding relative to the major state projects that is required to be reported in accordance with Chapter Rules of the Auditor General. Major programs Federal programs: Department of Housing and Urban Development: Community Development Block Grant CFDA # Home Investment Partnership CFDA # U.S. Department of Homeland Security: Disaster Relief Funding Public Assistance Cluster CFDA # Department of Health and Human Services: Temporary Assistance for Needy Families CFDA # Social Services Block Grant CFDA # Family Support Network Enhancement CFDA # Department of Justice: COPS CFDA # State projects: Florida Housing Finance Agency: State Housing Initiative Partnership CSFA # Florida Department of Environmental Protection: Beach Erosion Control CSFA # State of Florida Department of Transportation: Joint Participation Agreements CSFA # Florida Department of Community Affairs: Florida Forever Grant CSFA # Florida Office of the Governor: Economic Transportation OTTED Grant CSFA # (h) (i) A $908,025 and $518,150 threshold was used to distinguish between Type A and Type B programs for major federal programs and major state projects, respectively. The auditee did not qualify as a low-risk auditee under Section 530 of OMB Circular A

16 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 (2) Findings Relating to the Basic Financial Statements Reported in Accordance With Government Auditing Standards: None. (3) Findings and Questioned Costs Relating to Major Federal Programs: Finding Department of Health and Human Services: Temporary Assistance for Needy Families (TANF), CFDA No , Social Services Block Grant, CFDA No ; Award Numbers: QJZ41, QJZ51, QJZ61; Award Years: July 1, 2003 through March 31, 2005, July 1, 2004 through June 30, 2005, July 1, 2005 through June 30, 2006; Passed through Florida Department of Children and Families. Criteria: Grant funds are allowable based upon the laws, rules and provisions of contracts or grant agreements pertaining to the project and are in accordance with the provisions of OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments. Condition: We noted a duplicate insurance payment that was made for Pinellas County Sheriff s Office vehicles, which was charged to the grant, and resulted in overstated expenditures of $150,453. Since discovering this, the Pinellas County Sheriff s Office has requested a refund by the insurance company. Questioned Costs: $150,453 Context/Effect: Of the 30 expenditures selected totaling $257,052, there was only one expenditure identified as duplicate. The finding is considered an isolated instance. Recommendations: The Sheriff should follow through with seeking a refund of the duplicate payment. Management s Response: The Pinellas County Sheriff s Office has sought and received a refund of the duplicate insurance payment in the amount of $150,453. Finding Department of Health and Human Services: Family Support Network Enhancement Grant, CFDA No ; Award Number: H79 TI ; Award Year: September 30, 2004 through March 31, 2006; Passed through Florida Department of Revenue. 170

17 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 Criteria: OMB Circular A-133 requires that a pass-through entity is responsible for monitoring subrecipient activities to provide reasonable assurance that the subrecipient is administering federal awards in compliance with federal requirements, that audits are performed, and that subrecipients take timely and appropriate corrective action on all audit findings. Monitoring activities may take various forms, such as reviewing financial records, interviewing staff and participants, observing operations, arranging for limited scope audits of subrecipient activities and reviewing the subrecipient s single audit results. In addition to subrecipient monitoring, grant recipients should perform internal monitoring of procurements, fiscal activities, and any other significant processes. Condition: Pinellas County monitors the fiscal activities of its subrecipient to ensure that expenditures are appropriate and in compliance with the grant agreements; however, this monitoring is limited to a review of the monthly financial report submitted for reimbursement. The monitoring performed by Human Services consists of agreeing the information included in the monthly financial report to the subrecipient s ADP reports and general ledger on a test basis. The monitoring does not include review of actual invoices or required payroll certifications. Additionally, there was no management review of the subrecipient monitoring being performed by the Program Analyst. Questioned Costs: Unknown Context/Effect: The County has not completely monitored its subrecipients to ensure that the subrecipient has spent pass through funds in accordance with the grant agreement. Cause: Management did not perform sufficient monitoring procedures. Recommendation: We recommend that Pinellas County enforce a more comprehensive monitoring program to ensure that all subrecipients are properly monitored in a timely manner. Each site monitoring that is performed should be clearly documented indicating at a minimum: the date the monitoring occurred, the procedures performed and conclusions reached regarding the subrecipient s use of federal programs for authorized purposes, and if they are in compliance with laws, regulations and the provisions of contracts and the grant agreement. In addition, management should review monitoring procedures performed by program staff to ensure that the procedures performed are sufficient to meet federal compliance requirements. Management s Response: Monitoring activities by the Pinellas County Human Services Department for the Family Support Network Enhancement Grant have included reviewing financial records submitted with reimbursement requests, telephone interviews of program staff, observing operations on-site, reviewing State of Florida 171

18 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 monitoring reports for related programs, and reviewing the subrecipient s single audit results. In addition to these monitoring activities Pinellas County Human Services Department will perform a more comprehensive financial and programmatic monitoring of the Family Support Network Enhancement Grant program prior to filing the grant close-out report for this program and implement controls that ensure future site monitoring are properly documented and reviewed by upper management. Finding U.S. Department of Housing and Urban Development: Home Investment Partnerships Program (HOME), CFDA No ; Award Number: M04-DC ; Award Year: Criteria: HOME regulation (c) states the following: Part (2): HOME funds drawn from the United States Treasury account must be expended for eligible costs within 15 days. Part (3): HOME funds in the local account of the HOME Investment Trust Fund must be disbursed before requests are made for HOME funds in the U. S. Treasury account. The HOME Investment Trust Fund includes program income. Condition: The County drew HOME funds totaling $567,997 from the U.S. Treasury on September 18, 2005 for the Palmetto Park construction project and put this money in an escrow account. None of the funds in the escrow account, however, were disbursed for eligible costs within 15 days. In one instance, HOME funds totaling $129,525 were drawn from the U.S. Treasury when program income was available. Questioned Costs: None. Context/Effect: We observed cash draws for 25 expenditure items totaling $1,661,894 and noted no other instances where funds were not disbursed as required within 15 days. The one draw for $567,997 was an isolated instance as a result of an interpretation issue discussed below. The second condition noted above was due to a spreadsheet error. We recalculated the entire cash draw spreadsheet and noted no other such errors. Cause: Management thought that based on HOME regulation 24 CFR , funds could be advanced and deposited into escrow and not be subject to the 15 day expenditure requirement. A spreadsheet error which did not take into account the draw of CHODO funds caused the draw of excess entitlement funds instead of program income. This was the first time existing housing staff had to draw CHODO funds. 172

19 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 Recommendation: We recommend the County draw HOME funds only if they will be disbursed for eligible costs within the 15-day timeframe. Additionally, we suggest the County correct its cash draw spreadsheet and utilize the $129,525 of program income on its next cash draw. Management s Response: We concur with the auditors recommendation. Although a spreadsheet error was not the cause of this condition, we do concur that $129,525 of program income will be used in the next cash draw and the spreadsheet will accurately reflect this. Staff reinitiated discussions with the U.S. Department of Housing and Urban Development (HUD) on March 13, 2006 and HUD s consultants (ICF) on February 16, 2006 about the preferred method for applying HOME program income given the widely acknowledged shortcomings of HUD s Integrated Disbursement and Information System (IDIS) software as it relates to utilizing HOME program income before drawing down entitlement funds. Finding U.S. Department of Housing and Urban Development: Community Development Block Grant (CDBG), CFDA #14.218; Award Number: B-04-UC ; Award Year: Criteria: Requirements under the Uniform Relocation Act (URA) for a voluntary real property acquisition, set forth in 49 CFR , include the following: (1) the County informs the owner in writing that it will not use its power of eminent domain to acquire the property if negotiations fail to result in an amicable agreement; (2) no specific site is designated for acquisition; and (3) the County gives the owner a written estimate of the fair market value of the property before entering into a contract for sale. Condition: The County acquired a parcel of real property with CDBG funds totaling $35,770. The County did not inform the property owner that it would not use its power of eminent domain if negotiations failed and did not provide a written estimate of the fair market value of the property prior to entering into a contract for sale. Questioned Costs: None. Context/Effect: We observed 4 real property acquisitions totaling $467,423 and noted no other exceptions. This acquisition was somewhat unusual because it involved a property exchange and had been in negotiation for a number of years. Cause: Because of the length of negotiation, staff thought such communication had to take place at the inception of discussions. As the negotiations extended over multiple years, they weren t sure if such communication could subsequently take place and meet the requirements. 173

20 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 Recommendation: We recommend the County develop and utilize a checklist describing all documentation requirements for real property acquisitions. Management level personnel should review and formally approve all significant steps (as described on the checklist) in the property acquisition process. We also recommend sending any future URA letters via certified mail to document compliance with the above noted requirements. Management s Response: We concur with the auditors recommendation. We have revised the existing checklist to include management level review and formal approval of all significant steps. We will document the delivery and receipt of Uniform Relocation Act (URA) letters. (4) Findings and Questioned Costs Relating to Major State Projects: Finding Department of Community Affairs; State Housing Initiatives Partnership (SHIP), CSFA No ; Award Years: , , Criteria: The County must submit an Annual Report or Form SHIP-AR/99-1 to the Florida Housing Finance Corporation by September 15 of each year. This is a report of its affordable housing programs and accomplishments through June 30th of the year immediately preceding submittal of the report. The report requires financial and participant data to be compiled and presented in various manners. A report must be filed for each open SHIP grant year (usually three). Condition: We noted the following: Expenditures for 5 units included in the 2002/2003 SHIP Annual Report were underreported by $11,833 each (total of $59,163). We observed 2 cases where the income classification of a SHIP-assisted unit was reported incorrectly in the SHIP Annual report. In both cases, the actual income level was lower than that reported. We observed 2 instances where funds totaling $178,363 were returned to the SHIP program and were incorrectly recorded in the SHIP Annual Report as Recaptured Funds. These funds should have been recorded as a reduction of expenditures in the general ledger only. There was an increase in program income in the 2002/2003 Annual Report of $121,794 and the 2003/2004 Annual Report of $24,922 (as compared to the prior year reports). The County did not document the reason for these changes prior to filing its Annual Report. We observed errors associated with the reporting of Housing Finance Authority Bond 2003A ($150,000) and Bond 2003B ($100,000). Northside Apartments is a rental project with 24 SHIP-assisted units. The County included 22 very-low and 2 low units in its Annual Report based upon a rent roll received from the developer. The County did not verify documentation associated with this rent roll. When the project 174

21 PINELLAS COUNTY, FLORIDA Schedule of Findings and Questioned Costs Year ended September 30, 2005 was later monitored for compliance with income qualifications, the income classifications of these units differed from those included in the Annual Report (14 very-low, 4 low and 6 moderate income tenants). Questioned Costs: None. Context/Effect: The County is not in compliance with reporting requirements of the SHIP program as specified by the State of Florida. Errors in the SHIP Annual Report could ultimately create issues for the County, because expenditures reported may not equal grant funds received. Cause: The County has not yet completed a system conversion that will enable Community Development to fully document the reconciliation process between the SHIP Annual Report and the general ledger. Recommendations: We recommend the County amend its SHIP Annual Report to correct the reporting errors noted above. We also recommend completion of the system conversion so that reconciliations of expenditures (between the SHIP Annual Report and the general ledger) can be formally documented. Policies and procedures should be written to describe the entire reporting process, including reconciliation controls, the manner in which data is compiled and the documentation to be maintained. An in-depth review of the SHIP Annual Report (along with supporting schedules) should be completed by someone independent of its preparation, and review and approval of the Annual Report should be formally documented. Management s Response: We concur with the auditors recommendation. We are currently revising the SHIP annual report. A staff member from the Information Technology Department has been on-site for the past three weeks overseeing the end stages of the system conversion from Paradox to Oracle. Additionally, at our request, the Florida Housing Coalition (FHC) made an on-site technical assistance visit on March 17, 2006 to review our existing policies and procedures. We will obtain additional technical assistance from the Florida Housing Finance Corporation (FHFC). Utilizing the auditors recommendations, as well as technical assistance from the FHC and FHFC, we will revise our existing policies and procedures to describe the entire reporting process. The Department s Accounting and Contracts Manager will complete an in-depth review of the SHIP Annual Report (along with the supporting schedules). Review and approval of the Annual Report will be formally documented. 175

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29 Distinguished Members of the Board of County Commissioners Pinellas County, Florida February 10, 2006 Page 2 The Rules of the Auditor General, Section (1)(h)(4) state that, if not already reported in the auditors report on internal control over financial reporting and compliance and other matters or in the schedule of findings and questioned costs, the management letter shall include, unless clearly inconsequential, the following: (a) (b) (c) Violations of laws, rules, regulations, and contractual provisions or abuse that have occurred, or were likely to have occurred, and were discovered within the scope of the audit. Improper or illegal expenditures discovered within the scope of the audit that may not materially affect the financial statements. Deficiencies in internal control that are not reportable conditions, including, but not limited to: (1) Improper or inadequate accounting procedures (e.g. the omission of required disclosures from the annual financial statements). (2) Failures to properly record financial transactions. (3) Other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, the auditor. The results of our audit disclosed no violations of laws, rules, regulations or contractual provisions or abuse, no improper or illegal expenditures, or other deficiencies in internal control. The Rules of the Auditor General Section (1)(h)(5) also require that we report on Pinellas County, Florida s name or official title and legal authority for the primary government and each component unit of the reporting entity. In that regard, Pinellas County, Florida was established by Article VII, Sections 1 and 6, of the Constitution of the State of Florida. Additional legal authority was provided by Chapter 125, Florida Statutes, and Chapters of the Laws of Florida. The legal authority for each of the component units of Pinellas County, Florida is listed in Appendix A. As required by the Rules of the Auditor General Section (1)(h)(6)(a), the scope of our audit included a review of the provisions of Section (1) Florida Statutes regarding financial emergencies. In connection with our audit we determined that Pinellas County, Florida is not in a state of financial emergency as a consequence of the conditions described in Section (1), Florida Statutes. As required by the Rules of the Auditor General, Section (1)(h)(6)(b), we determined that the financial report to be filed by Pinellas County, Florida with the Florida Department of Banking and Finance pursuant to Section (1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, As required by the Rules of the Auditor General Section (1)(h)(6)(c) and Section (7), we applied financial condition assessment procedures. It is management s responsibility to monitor Pinellas County, Florida s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. 183

30 Distinguished Members of the Board of County Commissioners Pinellas County, Florida February 10, 2006 Page 3 * * * * * This report is intended solely for the information and use of the Pinellas County, Florida Board of County Commissioners, management, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, February 10,

31 Appendix A LEGAL AUTHORITY FOR COMPONENT UNITS OF PINELLAS COUNTY, FLORIDA September 30, 2005 Entity Blended component units: Pinellas County Mosquito Control District Pinellas County Emergency Medical Services Authority Pinellas County Industrial Development Authority Legal authority Chapter , Laws of Florida Chapter , Laws of Florida Part 3, Chapter 159, Florida Statutes Discretely Presented Component Units: Pinellas County Planning Council Chapter , Laws of Florida Pinellas County Housing Finance Authority Section , Florida Statutes, County Ordinance Pinellas County Metropolitan Planning Organization Chapter , Laws of Florida Pinellas County Health Facilities Authority Section , Florida Statutes, County Ordinance Pinellas County Educational Facilities Authority Section , Florida Statutes 185