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External auditors issue clean opinion; single-audit finds grant compliance and control deficiencies
Summary
External auditors told the Government Audit & Oversight Committee they issued an unqualified opinion on the city's financial statements but identified control deficiencies (timesheet approvals, cash controls) and single-audit problems in some HUD/Recovery Act grants, prompting departmental corrective steps.
San Francisco ' External auditors presented the City and County of San Francisco's comprehensive annual financial report to the Government Audit and Oversight Committee on April 14 and issued an unqualified (clean) opinion on the city's financial statements, while also reporting control deficiencies and single-audit findings that departments must address.
Caroline Walsh, partner at the city's principal auditor, reported a clean opinion on the basic financial statements and said auditors did not identify any material weaknesses in internal control over financial reporting. "We issued an unqualified opinion on the city's financial statements," Walsh told the committee, while noting several control deficiencies such as missing supervisory timesheet approvals at the Fine Arts Museums and the Mayor's Office of Housing and cash-control weaknesses at the Film Commission.
The single-audit review of federal award programs identified a qualified finding for the Lead Hazard Control Program in the Mayor's Office of Housing because salaries and benefits charged to the grant were based on budgeted estimates rather than supported time-and-effort documentation required under federal cost principles. Auditors also flagged instances of cash-management errors and reporting mistakes tied to Recovery Act quarterly reports and cited Davis-Bacon prevailing-wage compliance exceptions at the Port and the airport.
Department representatives described corrective actions: the Fine Arts Museums implemented timesheets for managers, the Film Commission revised deposit and verification steps and reduced cash exposures, the Port of San Francisco said it is part of a data-center consolidation plan to address an IT backup/hot-site deficiency, and the airport and MTA described steps to correct grant-reporting and certified-payroll processes.
Carmen Lafrank of the controller's office and Monique Zamuda said the controller's staff will continue training and provide assistance to departments to strengthen controls, and the committee filed the auditors' reports without objection.
What's next: departments must implement corrective measures described in response letters and auditors will assess remediation in the next audit cycle; the committee asked the controller to circulate management responses and to monitor progress on prior-year recommendations.
