9. Independent Auditor's Reports and Schedule of Expenditures of Federal AwardsINDEPENDENT AUDITOR'S
REPORTS AND SCHEDULE OF
EXPENDITURES OF FEDERAL
AWARDS
AS REQUIRED BY U.S. OFFICE OF MANAGEMENT AND
BUDGET CIRCULAR A-133, AUDITS OF STATE AND
LOCAL GOVERNMENTS AND NON-PROFIT
ORGANIZATIONS
w
W
Federal Grantor/Pass-Through
Grantor/Proeram Title
U.S. Department of Housine and Urban Development
Passed through the State Dept. of Commerce
Community Development Block Grants/State's program
Community Development Block Grants/State's program
Community Development Block Grants/State's program
Total U. S. Department of Housing and Urban Development
U. S. Department of Transportation
Passed through the State Department of Transportation
Highway Planning and Construction
Highway Planning and Construction
Highway Planning and Construction
Alcohol Impaired Driving Countermeasures Incentive Grants I
Alcohol Impaired Driving Countermeasures Incentive Grants I
Alcohol Impaired Driving Countermeasures Incentive Grants I
Total U. S. Department of Transportation
U. S. Department of Justice
Direct:
Bulletproof Vest Partnership Program
Passed through Flathead County:
Edward Byrne Memorial Justice Assistance Grant Program
Edward Byrne Memorial Justice Assistance Grant Program
Total U. S. Department of Justice
U. S. Department of the Interior/National Park Service
Direct:
Save America's Treasurers
Total U. S. Department of the Interior/National Park Service
U.S. Department of Homeland Security
Passed through the Department of Military Affairs:
Assistance for Firefighters Grant
Homeland Security Grant Program
Total U. S. Department of Homeland Security
Environmental Protection Auencv
Direct:
Brownfields Assessment and Cleanup Cooperative Agreements
Brownfields Assessment and Cleanup Cooperative Agreements
Total Environmental Protection Agency
Executive Office of the President
Passed through State of Montana -Board of Crime Control:
High Intensity Drug Trafficking Areas Program
Total Executive Office of the President
Total Federal Assistance
City of Kalispell, Flathead County, Montana
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For Fiscal Year Ended June 30, 2014
Ending
Federal
Pass -Through
Award
Beginning Bal
Federal
Match/Other
Federal
Match/Other
Balance
CFDA #
Grantor's #
Amount
July 1, 2013
Revenue
Revenue
Expenditures
Expenditures
June 30, 2014
14.228
MT-NSP-007-01-001
$ 4,000,000
$
$ 33,056
$
$ 33,056
$
$ -
14.228
MT-NSP-12-007-01-001
1,500,000
700,018
700,018
14.228
MT-CDBG-ED-13-01
273,945
258,155
258,155
991,229
991,229
20.205
n/a
160,546
160,546
71,330
160,546
71,330
20.205
6770-110
151,111
151,111
23,422
151,111
23,422
20.205
STPE6799(32,33)
152,378
152,378
11,672
152,378
11,672
20.601
107278
20,000
28,409
-
28,409
-
20.601
106727
20,000
7,203
-
7,203
-
20.601
CTS 106687
130,462
3,003
326
3,003
326
502,650
106,750
502,650
106,750
16.607
n/a
8,789
3,848
682
3,848
682
16.738
2013-DJ-BX-0803
12,704
12,704
-
12,704
-
16.738
11-GO1-91260
26,472
26,472
26,472
43,024
682
43,024
682
15.929
PIOAP00105
75,000
12,568
12,568
12,568
12,568
12,568
12,568
12,568
12,568
97.044
EMW-2011-SS-00052,2010-SS-TO-0089
198,500
105,820
-
105,820
-
97.067
2009-SJ-T9-0002
97,548
4,622
4,622
110,442
110,442
66.818
BF-96807701-0
1,000,000
127,561
127,561
66.818
BF-97863001
400,000
145,066
145,066
272,627
272,627
95.001
GURM0035A, G12R, G13R
7,708
7,708
7,708
7,708
7,708
$
$ 1,940,248
$ 120,000
$ 1,940,248
$ 120,000
$
CITY OF KALISPELL
NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2014
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.
139
171I.-GEST.
GALUSHA
HIGGINS
& GALUSHArc19x9
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
910 N. Last Chance Gulch, Helena, MT 59601
P.O. Box 1699, Helena, MT 59624
Phone (406) 442-5520
Fax (406)-443-1017
www.ghg-cpa.com
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 GOVERNMENTAUDITING
STANDARDS
To the City Council Members
City of Kalispell, Montana
We have audited, in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the
business -type activities, the aggregate discretely presented component units, each major fund, the aggregate
remaining fund information, and budgetary comparisons (for major funds) of the City of Kalispell as of and
for the year ended June 30, 2014, and the related notes to the financial statements, which collectively
comprise the City of Kalispell's basic financial statements, and have issued our report thereon dated
December 29, 2014.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of Kalispell's
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but
not for the purpose of expressing an opinion on the effectiveness of the City of Kalispell's internal control.
Accordingly, we do not express an opinion on the effectiveness of the City of Kalispell's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity's
financial statements will not be prevented, or detected and corrected on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
financial reporting that might be material weaknesses or significant deficiencies. Given these limitations,
during our audit we did not identify any deficiencies in internal control over financial reporting that we
consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
140
Billings • Bozeman • Havre • Helena • Missoula • Idaho Falls
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Kalispell's financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or
on compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity's internal control and compliance. Accordingly, this communication is
not suitable for any other purpose.
GALUSHA, HIGGINS & GALUSHA, PC
Certified Public Accountants and Advisors
Helena, Montana
December 29, 2014
141
1v"GEST.
GALUSHA
(3
HIGGINS
B& GALUSHAvc19x9
A PROFESSIONAL CORPORATION OF
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
910 N. Last Chance Gulch, Helena, MT 59601
P.O. Box 1699, Helena, M f 59624
Phone (406) 442-5520
Fax (406)-443-1017
www.ghg-cpa.com
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR
PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A-133
City Council Members
City of Kalispell, Montana
Report on Compliance for Each Major Federal Program
We have audited the City of Kalispell's compliance with the types of compliance requirements described in
the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have
a direct and material effect on each of the City of Kalispell's major federal programs for the year ended June
30, 2014. The City of Kalispell's major federal programs are identified in the summary of auditor's results
section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants
applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the City of Kalispell's major federal
programs based on our audit of the types of compliance requirements referred to above. We conducted our
audit of compliance in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States; and 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 of Kalispell's
compliance with those requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal
program. However, our audit does not provide a legal determination of the City of Kalispell's compliance.
Opinion on Each Major Federal Program
In our opinion the City of Kalispell complied, in all material respects, with the compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
year ended June 30, 2014.
142
Billings • Bozeman • Havre • Helena • Missoula • Idaho Falls
Report on Internal Control over Compliance
Management of the City of Kalispell is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and performing
our audit of compliance, we considered the City of Kalispell's internal control over compliance with the
types of requirements that could have a direct and material effect on each major federal program as a basis
for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing an
opinion on compliance for each major federal program and to test and report on internal control over
compliance in accordance with 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 the City of Kalispell's internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct noncompliance with a type of compliance requirement of a federal
program on a timely basis. A material weakness in internal control over compliance is a deficiency, or
combination of deficiencies in internal control over compliance, such that there is a reasonable possibility
that material noncompliance with a type of compliance requirement of a federal program will not be
prevented, or detected and corrected on a timely basis. A significant deficiency in internal control over
compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type
of compliance requirement of a federal program that is less severe than a material weakness in internal
control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over compliance
that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal
control over compliance that we consider to be material weaknesses. However, material weaknesses may
exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of
internal control over compliance and the results of that testing based on the requirements of OMB Circular
A-133. Accordingly, this report is not suitable for any other purpose.
GALUSHA, HIGGINS & GALUSHA, PC
Certified Public Accountants and Advisors
Helena, Montana
December 29, 2014
143
CITY OF KALISPELL
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the year ended June 30, 2014
SECTION I - SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? yes x no
Significant deficiency(ies) identified not
considered to be material weaknesses? yes x none reported
Noncompliance material to financial
statements noted? yes x no
Federal Awards
Internal Control over major programs:
Material weakness(es) identified? yes x no
Reportable condition(s) identified not
considered to be material weaknesses? yes x none reported
Type of auditor's report issued on compliance for major programs: Unmodified
Any audit findings disclosed that are
required to be reported in accordance with
Circular A-133, Section .510(a)? yes x no
Identification of major programs:
CFDA Numbers(s) Name of Federal Program or Cluster
U.S. Department of Housing and Urban Development
14.228 Community Development Block Grant Program
U.S. Department of Transportation
20.205 Highway Planning and Construction
Environmental Protection Agency
66.818 Brownsfield Programs
Dollar threshold used to distinguish between
Type A and Type B programs: $300,000
Auditee qualified as low -risk auditee? yes x no
144
City of Kalispell
SUMMARY OF AUDIT FINDINGS AND PRIOR AUDIT FINDINGS
For the year ended June 30, 2014
SECTION II — FINANCIAL STATEMENT FINDINGS
There were not findings related to the financial statements required to be reported in accordance with
Government Auditing Standards.
SECTION III — FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS
There were no findings related to compliance with grant requirements that are required to be reported in
accordance with Government Auditing Standards.
SECTION IV — CURRENT STATUS OF PRIOR YEAR FINDINGS
Prior Audit Recommendation
Finding 2013-001 Deferred Revenue, Loan Receivable:
The City implemented an annual review process for all significant transactions and balances to
insure that proper accounting principles have been applied.
145