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57 a a
CITY OF KALISPELL
FLATHEAD COUNTY, MONTANA
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2009
Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of City
of Kalispell, Flathead County, Montana, 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. Therefore, some amounts presented in
this schedule may differ from amounts presented in, or used in preparation of, the basic financial
statements.
58
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59
CITY OF KALISPELL
FLATHEAD COUNTY, MONTANA
SCHEDULE OF FUNDING PROGRESS — OTHER POST -EMPLOYMENT HEALTHCARE BENEFITS
Fiscal Year Ended June 30, 2009
Because the year ended June 30, 2009 was the year of transition for GASB Statement No. 45, requirements of GASB
Statement No. 45 have been implemented prospectively. Therefore, the below illustration does not reflect similar
information respective of years preceding June 30, 2009. The annual OPEB costs, the percentage of OPEB cost
contributed to the plan, and the net OPEB obligation for June 30, 2009 for the Retiree Health Plan are as follows:
ANNUAL OPEB COST
Retiree Health Plan
Year
Ended
Annual OPEB
Cost
Percent
age of
Net OPEB
Obligation
6/30/2009
$ 282,232
0.0%
$ 282,232
The Funded status of the plan was as follows:
SCHEDULE OF FUNDING PROGRESS
Actuarial
Actuarial
UAAL as a
Actuarial
Value of
Accrued
Unfunded
Funded
Covered
Percentage of
Valuation
Assets
Liability (AAL)
AAL (UAAL)
Ratio
Payroll (
Covered Payroll
Retiree Medical Plan
Date
(b)
(a)
(a - b)
(a / b)
c)
((a- b) / c )
7/1/2008
$ - 1
$ 3,008,915
$ 3,008,915
1 0.0%
Not Available
Not Available
Changes in plan provisions
There were no benefit changes for the 2008-2009 plan year.
Inc
ennin, Downey & Associates, P. C.
CERTIFIED P UBLIC A CCO UNTANTS
1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING
STANDARDS
Mayor and City Council
City of Kalispell
Flathead County
Kalipsell, Montana
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 City of Kalispell, Flathead County, Montana, as of and
for the year ended June 30, 2009, which collectively comprise the City of Kalispell's basic
financial statements and have issued our report thereon dated February 15, 2010. We conducted
our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City of Kalispell internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of expressing
our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City of Kalispell's internal control over financial reporting. Accordingly, we
do not express an opinion on the effectiveness of the City of Kalispell's internal control over
financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed below, we identified certain deficiencies in internal control
over financial reporting that we consider to be significant deficiencies.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affects the City of Kalispell's ability to initiate, authorize,
record, process, or report financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a misstatement of the
entity's financial statements that is more than inconsequential will not be prevented or detected
by the entity's internal control. We consider the deficiencies described in the accompanying
schedule of findings and questioned costs to be significant deficiencies in the internal control
over financial reporting.
61
Robert K. Denning, CPA • Kim M. Downey, CPA
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in the internal control that might be significant deficiencies and, accordingly, would not
necessarily disclose all significant deficiencies that are also considered to be material
weaknesses. However, we do not believe that the significant deficiency described above is a
material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Kalispell'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 did not audit City of Kalispell's response to the findings and, accordingly, we express no
opinion on it.
This report is intended solely for the information and use of the Mayor and City Council,
management, the Montana Department of Administration, and federal awarding agencies and
pass -through entities and is not intended to be and should not be used by anyone other than these
specified parties.
UP
February 15, 2010
3%
Denning, Downey & Associates, P.C.
CERTIFIED PUBLIC A CCO UNTANTS
1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH
MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A-133
Mayor and City Council
City of Kalispell
Flathead County
Kalipsell, Montana
Compliance
We have audited the compliance of City of Kalispell, Flathead County, Montana, with the types
of compliance requirements described in the U.S. Office of Management and Budget (OMB)
Circular A-133 Compliance Supplement that are applicable to each of its major federal programs
for the year ended June 30, 2009. The City's major federal programs are identified in the
summary of auditor's results section of the accompanying schedule of findings and questioned
costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to
each of its major federal programs is the responsibility of the City's management. Our
responsibility is to express an opinion of the City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted
in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and
OMB Circular A-133, Audits of States, Local Governments and 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 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. Our audit
does not provide a legal determination on the City's compliance with those requirements.
In our opinion, City of Kalispell 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, 2009.
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts and grants applicable
to federal programs. In planning and performing our audit, we considered the City's internal
control over compliance with 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 an opinion on compliance but not for the purpose of expressing an opinion on the
63
Robert K. Denning, CPA • Kim M. Downey, CPA
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 control deficiency in an entity's internal control over compliance exists when the design or
operation of a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect noncompliance with a type of
compliance requirement of a federal program on a timely basis. A significant deficiency is a
control deficiency, or combination of control deficiencies, that adversely affects the entity's
ability to administer a federal program such that there is more than a remote likelihood that
noncompliance with a type of compliance requirement of a federal program that is more than
inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a federal program will not be prevented or detected by the entity's internal
control.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in internal
control that might be 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 for the information of the audit committee, management, the Mayor and
City Council, the Montana Department of Administration, and federal awarding agencies and
pass -through entities and is not intended to be and should not be used by anyone other than these
specified parties.
4X�7, 66Un7 d,� Q,�
February 15, 2010
CITY OF KALISPELL
FLATHEAD COUNTY, MONTANA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Fiscal Year Ended June 30, 2009
Section I — Summary of Auditor's Results
Financial Statements
Type of auditor's report issued Unqualified
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(s) identified
not considered to be material weaknesses Yes
Noncompliance material to financial statements
noted? No
Federal Awards
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(s) identified
not considered to be material weaknesses None Reported
Type of auditor's report issued on compliance
for major programs: Unqualified
Any audit findings disclosed that are required
to be reported in accordance with
Circular A-133, Section .510(a)? No
Identification of major programs:
CFDA Number Name of Federal Program or Cluster
14.228 Community Development Block Grants, States Program
16.710 Public Safety Partnership and Community Policing Grants
97.067 Homeland Security Grant Program
Dollar threshold used to distinguish
between Type A and Type B programs: $ 300,000
Auditee qualified as low -risk auditee? No
65
SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued)
Section II — Financial Statement Findings
09-1 City Court Segregation of Duties
Condition:
The City Court has three clerks that receipt money. All three clerks have the ability to
void or adjust cash receipts. In addition all three clerks have the ability to void or amend
citations that have been entered into the system.
Criteria:
The City Court clerks have access to both cash and the ability to change accounting
entries. A good internal control system should minimize the risk that cash could be taken
and the original accounting entry (receipt or citation) voided or modified to cover the
theft.
Effect:
Controls over City Court cash receipts are weak.
Cause:
Prior to the City offices moving down the street from the City Court, the City Clerk
receipted all money of the Court. This provided an adequate segregation between cash
handling and Court accounting. After the move of the. City offices the Court has began
collecting their own receipts.
Recommendation:
We recommend that the City Court take action to implement a review procedure for all
void or modifications of original accounting entries to both receipts and citations.
Auditee Response:
The City court will review it's procedures in relation to voids and modifications of
citations and receipts.
Section III — Federal Award Findings and Questioned Costs
There were no federal award findings or questioned costs reported.
Denning, Downey & Associates, P.C.
CERTIFIED PUBLICACCOUNTANTS
1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957
REPORT ON OTHER COMPLIANCE, FINANCIAL, AND INTERNAL ACCOUNTING
CONTROL MATTERS
Mayor and City Council
City of Kalispell
Flathead County
Kalipsell, Montana
There were no other compliance, financial, or internal accounting matters.
&X�7' 10�7 Opp t1.2e.
February 15, 2010
67
Robert K. Denning, CPA - Kim M. Downey, CPA
enning, Downey & Associates, P. C.
CERTIFIED PUBLIC A CCO UNTANTS
1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957
REPORT ON PRIOR AUDIT REPORT RECOMMENDATIONS
Mayor and City Council
City of Kalispell
Flathead County
Kalipsell, Montana
The prior audit report contained no recommendations.
, l 7a„4
February 15, 2010
68
Robert K. Denning CPA - Kim M Downey, CPA