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Controller's auditors report clean opinions; recommend payroll guidance and stronger subrecipient award notices
Summary
External auditors reported unmodified (clean) opinions on the City's CAFR and single audit, flagged one current-year single-audit compliance finding (timing of communicating CFDA/subaward information to subrecipients) and recommended Controller—s Office issue Image Peoplesoft-specific payroll guidelines following a systems conversion.
Annie Louie, a director on the City—s external audit team, told the Government Audit and Oversight Committee that auditors issued unmodified opinions on the City—s Comprehensive Annual Financial Report and on the single audit of federal awards for fiscal year 2012–13.
Louie said auditors covered 16 major federal programs across 15 departments and found one current-year compliance issue: departments that pass federal funding to subrecipients did not include federal award identifiers (including the CFDA number) at the time of award as required. "The corrective action plan is to include that information going forward at the time of the award to the subrecipients," Louie said.
Auditors also followed up on three prior single-audit findings and reported departments had implemented corrective actions. Those prior findings included gaps in subrecipient monitoring for HIV programs, use of a proposed indirect cost rate rather than an approved rate for an EECBG grant, and a reporting-control weakness for the Homeland Security grant program; Louie said testing this year showed the departments had corrected the issues.
The audit team identified one operational recommendation related to the City—s recent payroll conversion. Louie said the City implemented a new HR/payroll system (Image Peoplesoft) during the audit period and many department procedures still reflected prior systems. "Our recommendation is for the Controller's Office as the oversight department to issue new guidelines that are applicable to the [new] system and for the departments to follow those different guidelines," Louie said.
KPMG senior manager Jamie Cavan presented KPMG—s 2014 audit plan and timeline, noting the firm will perform planning and interim work in mid-2014 and target financial statement issuance in late October 2014, with single-audit deliverables by January 2015. Cavan emphasized audits provide reasonable (not absolute) assurance and described KPMG—s communication responsibilities for any material weaknesses or significant deficiencies discovered during testing.
The committee discussed logistics for public access to the reports and the presenters confirmed documents and PowerPoint slides would be provided electronically for the public record.
