West Haven-Fed-State Compliance 6-30-09

8/14/2019 West Haven-Fed-State Compliance 6-30-09

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McGladrey & Pullen, LLP is a member firm of RSM International,an affiliation of separate and independent legal entities.

CITY OF WEST HAVEN, CONNECTICUT

FEDERAL AND STATE FINANCIAL AND COMPLIANCE REPORTFISCAL YEAR ENDED JUNE 30, 2009


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FEDERAL AND STATE FINANCIAL AND COMPLIANCE REPORT

TABLE OF CONTENTS

REPORT REQUIRED BY THE FEDERAL SINGLE AUDIT ACT AND OMB CIRCULAR A-133

Independent Auditors Report on Compliance with Requirements Applicable to Each Major

Program, on Internal Control Over Compliance in Accordance with OMB Circular A-133

and on the Schedule of Expenditures of Federal Awards ................................................... 1-2

Schedule of Expenditures of Federal Awards ........................................................................... 3-4

Notes to Schedule of Expenditures of Federal Awards ............................................................. 5

Schedule of Findings and Questioned Costs ............................................................................ 6-22

Summary of Prior Year Audit Findings ...................................................................................... 23

INDEPENDENT AUDITORS REPORT REQUIRED BY GOVERNMENT AUDITING

STANDARDS

Independent Auditors Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of the Financial Statements

Performed in Accordance with Government Auditing Standards ..................................... 24-25

REPORT REQUIRED BY THE STATE SINGLE AUDIT ACT C.G.S.

SECTION 4-230 TO 4-236

Independent Auditors Report on Compliance with Requirements Applicable to Each Major

Program, on Internal Control over Compliance in Accordance with the State Single

Audit Act and on the Schedule of Expenditures of State Financial Assistance ................ 26-27

Schedule of Expenditures of State Financial Assistance ......................................................... 28-30

Notes to Schedule of Expenditures of State Financial Assistance ........................................ 31-32

Schedule of State Single Audit Compliance Findings and Questioned Costs .......................... 33-35


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INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH REQUIREMENTSAPPLICABLE TO EACH MAJOR PROGRAM, ON INTERNAL CONTROL OVERCOMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 AND ON THE

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

To the Honorable Mayor andMembers of the City Council

City of West Haven, Connecticut

Compliance: We have audited the compliance of the City of West Haven, Connecticut with the types ofcompliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133Compliance Supplement that are applicable to each of its major federal programs for the year ended June30, 2009. The City of West Haven, Connecticut's major federal programs are identified in the summary ofauditor's results section of the accompanying schedule of findings and questioned costs. Compliance withthe requirements of laws, regulations, contracts and grants applicable to its major federal programs is theresponsibility of the City of West Haven, Connecticut's management. Our responsibility is to express anopinion on the City of West Haven, Connecticut'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 AuditingStandards", issued by the Comptroller General of the United States; and OMB Circular A-133, "Audits ofStates, Local Governments, and Non-Profit Organizations". Those standards and OMB Circular A-133require that we plan and perform the audit to obtain reasonable assurance about whether noncompliancewith the types of compliance requirements referred to above that could have a direct and material effect ona major federal program occurred. An audit includes examining, on a test basis, evidence about the City ofWest Haven, Connecticut's compliance with those requirements and performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis forour opinion. Our audit does not provide a legal determination on the City of West Haven, Connecticut'scompliance with those requirements.

In our opinion, the City of West Haven, Connecticut complied, in all material respects, with therequirements referred to above that are applicable to its major federal programs for the year endedJune 30, 2009.


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Internal Control Over Compliance: The management of the City of West Haven, Connecticut isresponsible for establishing and maintaining effective internal control over compliance with requirements oflaws, regulations, contracts and grants applicable to federal programs. In planning and performing ouraudit, we considered the City of West Haven, Connecticut's internal control over compliance withrequirements 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 our opinion on compliance and to test and report oninternal control over compliance in accordance with OMB Circular A-133. Accordingly, we do not expressan opinion on the effectiveness of the City of West Haven, Connecticuts internal control over compliance.

A control deficiency in an entitys internal control over compliance exists when the design or operations ofa control does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent or detect noncompliance with a type of compliance requirement of a federal programon a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,that adversely affects the entitys ability to administer a federal program such that there is more than aremote likelihood that noncompliance with a type of compliance requirement of a federal program that ismore than inconsequential will not be prevented or detected by the entitys internal control

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that material noncompliance with a type of compliance requirement of afederal program will not be prevented or detected by any entitys internal control.

Our consideration of the internal control over compliance was for the limited purpose described in the firstparagraph of this section and would not necessarily identify all deficiencies in internal control that might besignificant deficiencies or material weaknesses. We did not identify any deficiencies in internal control overcompliance that we consider to be material weaknesses, as defined above.

Schedule of Expenditures of Federal Awards: We have audited the basic financial statements of the

governmental activities, each major fund, and the aggregate remaining fund information of the City of WestHaven, Connecticut as of and for the year ended June 30, 2009, and have issued our report thereon datedJanuary 29, 2010. Our audit was performed for the purpose of forming opinions on the financialstatements that collectively comprise the City of West Haven s basic financial statements. Theaccompanying schedule of expenditures of federal awards is presented for purposes of additional analysisas required by OMB Circular A-133 and is not a required part of the basic financial statements. Suchinformation has been subjected to the auditing procedures applied in the audit of the basic financialstatements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financialstatements taken as a whole.

This report is intended solely for the information and use of the management and the City Council of the

City of West Haven, Connecticut, federal and state awarding agencies and pass-through entities and is notintended to be and should not be used by anyone other than these specified parties.

New Haven, ConnecticutJanuary 29, 2010


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SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

For the Year Ended June 30, 2009

Catalog of

FederalDomestic Pass-Through

Federal Grantor/Pass-Through Assistance Grantors Federal

Grantor/Program Title Number Number Expenditures

U.S. Department of Agriculture

Passed Through State Department of Education:

National School Lunch Program 10.555 12060-SDE64370-20560-2008 342,211$

National School Lunch Program 10.555 12060-SDE64370-20560-2009 731,369

School Breakfast Program 10.553 12060-SDE64370-20508-2008 122,459

School Breakfast Program 10.553 12060-SDE64370-20508-2009 222,795

Food Distribution - Non-cash 10.555 N/A 137,755

Total U.S. Department of Agriculture 1,556,589

U.S. Department of Transportation

Passed Through State Department of Transportation

Alcohol Traffic Safety & Drunk Driving Prevention Incentive Grants 20.601 12062-DOT57533-22086 9,972

Intrastate Highway Projects 20.205 13033-DOT57191-41404 22,595

Total U.S. Department of Transportation 32,567

U.S. Department of Housing and Urban Development

Direct Programs

Community Development Block Grant 14.218 N/A 913,497

U.S. Department Environmental Protection

Passed Through State Department of Environmental ProtectionLong Island Study 66.437 12060-DEP43720-21773 777,976

Environmental Quality N/A 12026-DEP43510-40202 100

Consolidated Forestry Programs N/A 12060-DEP44165-22052 1,250

Emergency Spill Response N/A 12026-DEP43950-40198 40

Remediation Clean-up N/A 12060-DEP43750-55050 43,000

822,366

U.S. Department of Education:

Passed Through the State Department of Education:

Special Education - IDEA State Grants 84.027 12060-20977-82032-2008 794,050

Special Education - IDEA State Grants 84.027 12060-20977-82032-2009 1,750,869

Carl D. Perkins Vocational and Applied Technology State Grant 84.048 12060-20742-84010-2008 141,347Title II Part D - Technology 84.318 12060-20826-82079-2008 242

Title II Part D - Technology 84.318 12060-20826-82079-2009 10,547

Special Education - IDEA Preschool Grants 84.173 12060-20983-82032-2009 117,219

Special Education - IDEA Preschool Grants 84.173 12060-20983-82032-2008 1,000

Title V Innovative Education Strategies 84.298 12060-20909-84131-2008 648

Title I Improving Basic Programs 82.070 12060-20679-82070-2008 482,766

The accompanying notes are an integral part of this schedule.


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SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, Continued


Catalog of

FederalDomestic Pass-Through

Federal Grantor/Pass-Through Assistance Grantors Federal

Grantor/Program Title Number Number Expenditures

U.S. Department of Education, Continued:

Title I Improving Basic Programs 82.070 12060-20679-82070-2009 2,038,940

School Improvement 82.071 12060-22223-82071-2009 33,926

Quality Enhancement Grant 82.079 12060-90242-82079-2009 42,019

Adult Education 84.002 12060-20784-84002-2008 40,000

Title II Part A - Teachers 84.367 12060-20858-84131-2008 53,200

Title II Part A - Teachers 84.367 12060-20868-84131-2009 325,365

Title III Part A - English Language 84.365 12060-20868-82075-2009 69,692

Title III Part A - English Language 84.365 12060-20868-82075-2008 17,235

Title IV - Safe & Drug Free Schools and Communities State Grants 84.186 12060-20873-84131-2009 26,531

Total U .S. Department of Education 5,945,596

U.S. Election Assistance Commission

Passed Through the State Secretary Office

Help America Vote Act 9.400 12060-SOS-12500-21465 15,122

U.S. Department of Social Services

SSBG Day Care 93.667 12060-DSS60794-20699 284,408

SSA Vocational Rehabilitation 93.667 12060-DSS60771-20310 1,650

Total U .S. Department of Social Services 286,058

U.S. Department of Homeland Security

School Security Competitive Grant N/A 12060-EHS99530-90516 138,992

Total Federal Awards 9,710,787$

The accompanying notes are an integral part of this schedule.


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NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFor the Year Ended June 30, 2009

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Note 1. Basis of PresentationThe accompanying schedule of expenditures of federal awards includes the federal grant activity of theCity of West Haven and is presented on the modified accrual basis of accounting. The information in thisschedule is presented in accordance with the requirements of OMB Circular A-133, Audits ofStates, LocalGovernments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule maydiffer from amounts presented in, or used in, the preparation of the basic financial statements.

Note 2. ContributionsU.S.D.A. Contributions

The United States Department of Agriculture makes available commodities for donations to schools. Theamount of $137,755, represents the fair value of such commodities used during the period.


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SCHEDULE OF FINDINGS AND QUESTIONED COSTSFor the Year Ended June 30, 2009

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I. SUMMARY OF INDEPENDENT AUDITORS RESULTS

Financial Statements

Type of auditors report issued: unqualified

Internal Control Over Financial Reporting

Material weakness(es) identified? X Yes No

Significant deficiency(ies) identified that are notconsidered to be material weaknesses? X Yes 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

Significant deficiency(ies) identified that are notconsidered to be material weaknesses? Yes X None reported

Type of auditors report issued on compliance for major programs: unqualified

Any audit findings disclosed that are required to bereported in accordance with Section 510(a) of OMBCircular A-133? X Yes No

Identification of Major Programs

CFDA Numbers Program Name or Cluster

10.553/10.555 National School Lunch/Breakfast Cluster84.027/84.173 Special Education Cluster

14.218 CDBG

Dollar threshold used to distinguish betweentype A and type B programs $300,000

Auditee qualified as low-risk auditee? Yes X No


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SCHEDULE OF FINDINGS AND QUESTIONED COSTS, ContinuedFor the Year Ended June 30, 2009

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II. FINDINGS RELATING TO THE FINANCIAL STATEMENT AUDIT AS REQUIRED TO BEREPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS.

A. Deficiencies in Internal Control

SDIC09-1. Criteria:

Generally accepted accounting principles for entities using the modified

accrual basis of accounting use the current financial resources

measurement focus. Under this method of accounting, the City's

General Fund fund deficit is ($4,834,577) as of June 30, 2009.

Condition:

The City has an accumulated fund deficit in the General Fund of

($4,834,577).

Cause:

The City has overestimated budget revenues and overspent

appropriations.

Effect:

The City needs to continue to address the funding for eliminating the

General Fund deficit.

Recommendation:

We recommend the City continue to develop a plan to fund the existing

deficit.

SDIC09-2. Criteria:

The City's tax office should have proper internal control policies in place

to lower the risk of fraud and theft and proper recording of receipts.


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Condition:

There is no daily reconciliation between each of the cashier drawer

deposits to the bank.

The bank reconciliation for the Tax Collector account was not prepared

on a monthly basis throughout the year. One bank reconciliation was

prepared only at year-end.

Tax bills that are returned for insufficient address are not researched in

a timely manner.

There is no tax collector's report that is prepared at any time during the

fiscal year. In addition, there is no reconciliation process between the

Walsh tax system and the general ledger during the year. The proper

reports are not prepared in order to complete monthly reconciliations in

a timely manner.

The reconciliation of the Assessors Grand List to the Tax Collectors

rate book is not done on a timely basis. The reconciliations are done at

year end.

Context:

Controls should be established to ensure the proper recording of tax

receipts.

Cause:

Systemic in nature.

Effect:

When tax transactions and records are not recorded timely or

accurately, the reports used by management and the City Council may

not represent actual amounts needed to make financial decisions and

budget forecasts, and have the risk of misappropriation. In addition, if

reconciliations were done timely, management would be aware of any

issues in a timely manner.


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Recommendation:

It is recommended that a daily reconciliation between the cashiers

drawers and the deposits be done daily. This will reduce the risk of

theft, misappropriation of assets and improper recording of amounts.

In addition, returned tax bills should be researched and resent timely.

This will prevent the loss of revenue to the City and records will be

updated timely.

Polices and procedures should be written and implemented that will

provide guidance to the tax office on the standard reports andreconciliations that should be prepared monthly and annually. For

instance, a grand list to rate book reconciliation should be performed

timely and formally submitted to the Finance Department. A tax

collectors report should be prepared monthly which would then assist in

the reconciliation between the Walsh tax system, the bank, and the

general ledger on a monthly basis. Bank reconciliations should be

prepared monthly with accuracy, they should be reconciled to the

general ledger, and reviewed by the proper individual.

SDIC09-3. Criteria:

To maintain a proper internal control, all bank accounts must be

reconciled on a monthly basis and be reviewed and approved by a

person independent of the cash receipt and disbursement process.

Condition:

Monthly bank reconciliations were not performed in a timely manner

throughout the year.

Context:

Bank reconciliations are not performed on a routine/monthly basis.


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Cause:

The Board of Education and the City have not implemented procedures

which result in reconciliation of all bank accounts on a monthly basis.

Effect:

Transactions may be recorded in error, and fraud can occur.

Recommendation:

All bank accounts should be reconciled on a monthly basis to thegeneral ledger and be properly reviewed.

SDIC09-4. Criteria:

In order to record, reconcile and depreciate the City's capital assets, a

system needs to be in place in which capital asset transactions are

properly recorded on a timely basis.

Condition:

The City does not have a formal system to properly capture, record and

depreciate capital asset transactions as they occur throughout the year.

The assets are recorded and depreciated manually through an excel

spreadsheet, at year end.

Context:

The capital assets are not always identified when purchased, or retired.

Cause:

Systemic in nature.

Effect:

Capital asset transactions may not be reported in accordance with

generally accepted accounting principles.


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Recommendation:

Capital assets should be identified and recorded throughout the year,

not just at year end to ensure proper reporting of City capital assets in

the financial statements.

SDIC09-5. Criteria:

The use of a purchase order system allows management to properly

monitor the budget and forecast future expenditures.

Condition:

The City departments do not use purchase orders properly.

Departments use a voucher system rather than the available purchase

order system. At times when purchase orders are issued, the goods

and services were ordered and received by the issuer of the purchase

order before the purchase order was properly prepared and approved.

Context:

Purchase order system is improperly utilized.

Cause:

Systemic in nature.

Effect:

Expenditures were incurred prior to funds being committed and

approved.


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Recommendation:

Proper internal control over purchases ordinarily should require

purchase orders to be approved prior to the ordering of the goods or

services, include a separation of duties between the purchasing

requisition function and the receiving function.

In addition, procurement procedures in Accounting Polices and

Procedures Manual should be reviewed and revised to ensure proper

procedures exist, are implemented and followed.

SDIC09-6. Criteria:

The City should have an updated accounting and policy procedures

manual.

Condition:

Although the City has an accounting and procedures manual outlining

certain reporting responsibilities and describing the steps involved in

processing certain transactions, it should be reviewed to determine if all

significant transaction and account balances are included. A currentmanual would improve the City's ability to maintain continuity of

operations during any absences of personnel responsible for

accounting and financial administration. It would also be useful in the

training of new personnel. This manual should be updated annually or

when significant changes are made to the processing systems to

document all accounting, administrative and internal control procedures

and all financial reporting requirements. The City should make sure all

departments are included in the manual and all departments have a

copy. This will provide a basis for maintaining continuity of operations

should any key employees be absent for an extended period.

Context:

The policies need to be updated to comply with new GASB's and

accounting rules.


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Cause:

Systemic in nature.

Effect:

Improper documentation of internal controls and functions.

Recommendation:

It is recommended that the manual be updated to include new

accounting rules and GASB pronouncements. In addition, theprocedures should be updated to include modifications to the MUNIS

system and the processing of transactions.

SDIC09-7. Criteria:

In the payable module in MUNIS, the City should have an approved

vendor listing that is periodically reviewed for old vendors. Changes

made to the listing should be approved by the appropriate party.

Condition:

While performing our audit procedures, we noted that no one reviews

the vendors that are entered into the system which could result in

unapproved vendors being used and payments being made to those

vendors.

Context:

There is no approved vendor listing and no policies and procedures for

addition of new vendors.

Cause:

Systemic in nature.

Effect:

Payments can be made to fictitious vendors.


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Recommendation:

It is recommended that any changes to the vendor listing be approved

by Finance. In addition, the vendor listing should be periodically

reviewed to remove any old vendors.

SDIC09-8. Criteria

The City should properly update accounts receivable subsidiary ledgers

when transactions occur and reconcile them to the general ledger on a

monthly or quarterly basis. The City should also analyze allowance fordoubtful accounts periodically throughout the year.

Condition:

The City has various accounts receivable balances on the general

ledger that do not reconcile to the subsidiary ledger throughout the

year. All reconciliations are done at year end. In addition, certain files

could not be found.

Context:

Periodic reconciliations are not being performed on accounts

receivable. Also, a periodic review of the allowance for doubtful

accounts is not being performed.

Cause:

The City does not have procedures in place to properly review accounts

receivable listings, throughout the year.

Effect:

Amounts due to the City from third parties could go uncollected,

resulting in lost revenue to the City.


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Recommendation:

It is recommended that the City use the receivable module to properly

track and record accounts receivable outstanding throughout the year.

In addition, the reserve for uncollectible accounts represents an

estimate of the amount of gross receivables that will not be collected.

This amount is used to reduce receivables to an amount representing

cash to be collected from existing receivables. The reserve for

uncollectible accounts is a significant estimate that requires an analysis

and evaluation of outstanding balances. We recommend the valuation

of accounts receivable be performed monthly and include an analysis ofaged accounts receivable outstanding and estimated collection rates by

payer.

SDIC09-9. Criteria:

Proper documentation should be maintained for all retirees in relation to

distributions made.

Condition:

It was noted that retirees did not have proper support in their files

documenting how their benefit was calculated after the initial year of

retirements.

Context:

Controls should be established to ensure proper documentation is

maintained to ensure retirees are receiving the proper payment

amounts.

Cause:

Systemic in nature.


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Effect:

Police officers could possibly not be receiving appropriate amounts in

accordance with plan documents. The pension plan could become

underfunded.

Recommendation:

It is recommended that the City maintain the proper supporting

documentation of all retirees, to properly support amounts being paid

out.

SDIC09-10. Criteria:

In order to maintain the proper internal controls, the City should have

proper segregation of duties for all material financial activities.

Condition:

Below are listed the department significant internal control weaknesses

noted during the audit and any recommendations developed during the

process; however, we recommend the City conduct an in-depth reviewof its overall processes at each department in order to identify all

weaknesses, determine the cost benefit of improving internal controls

and efficiency, and evaluate the overall structure of the City's policies

and procedures.

City and Board of Education Payroll - The same individual gathers

payroll information from departments, is allowed to make changes to the

payroll, runs the payroll and reviews the final payroll run.

Student Activities - One individual at each school is responsible for allaspects of receipting, disbursing, record keeping and accounting related

to the student activity funds.


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Parks and Recreation Department - The same individual is

responsible for collecting receipts, maintaining the subsidiary ledger for

receipts, maintaining the receipts until deposit, preparing the deposit

slip, making the deposits, processing the checks written, performing

bank reconciliations, and maintaining the accounting of the funds. In

addition, the accounts are not reviewed by the Finance Department and

are not recorded on the City's books.

Police Pension - The same individual prepares the benefit payment

listing and has control over those retiring, with no oversight or review of

the information sent over to Wilmington Trust that is used to process

monthly benefit payments.

Context:

Controls should be established to ensure the proper segregation of

duties within these departments.

Cause:

Systemic in nature.

Effect:

The lack of proper controls and segregation of duties increases the risk

of error, fraud, misappropriation of assets and inaccurate financial

reporting.

Recommendation:

To improve segregation of duties and adequacy of internal controls,

significant responsibilities must be segregated between two unrelatedindividuals. The City's policies should be reviewed to evaluate whether

the responsibilities can be restructured to provide improved controls

with the existing staffing.


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For payroll procedures, one individual should gather the information and

enter it into the system, and another should run the payroll. The payroll

should also be reviewed by an individual in the supervision committee.

The Board of Education should create policies and procedures for the

Student Activity Fund to separate the cash collections from the deposit

function and reconciliation. In addition, the central office should review

the information periodically throughout the year.

All departments performing collections should separate the act of

collection and receipting, custody over collections, performing bank

reconciliations, and making the deposits between two unrelatedindividuals.

In addition, a member of management should review all signed checks

with related supporting documents, before checks are mailed by

another person.


Trial balances must be reviewed and appropriate adjusting journal

entries made on a monthly basis to ensure accurate reporting.

Condition:

There were significant adjustments made to the final trial balance such

as:

Recording of loans and accounts receivable at year-end.

Recording of BOE accounts payable at year-end.

Recording of Police pension fund.

Context:

All closing entries were not recorded.

Cause:

Systemic in nature.


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Effect:

No interim financial statements were available.

Recommendation:

We recommend that the City review its month-end and year-end closing

procedures.


The Board of Education should have formal uniform policies andprocedures for Student Activity funds held at various schools throughout

the City.

Condition:

It was noted that there are no formal policies and procedures for

Student Activity funds, in relation to the use of funds, documentation of

collections, the approval process and the timely completion of bank

reconciliations.

Context:

The Student Activity funds bank reconciliations are not performed

timely, and they do not follow proper internal control procedures.

Cause:

Systemic in nature.

Effect:

Bank reconciliations were not timely performed, proper approvals were

not obtained, and improper items could be purchased.


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Recommendation:

We recommend that the Board of Education adopt and implement

uniform Student Activity policies and procedures. They should include

policies on types of items that can be purchased with the funds,

approval policies, documentation policies, and bank reconciliation

policy. In addition, bank reconciliations should be prepared monthly

and reviewed by appropriate persons.


The City should fund their pension plan at the level recommended bythe actuary.

Condition:

It was noted that the City did not fund their pension plan at the level

recommended by the actuary.

Context:

The pension plan was not funded at the level recommended by theactuary.

Cause:

Systemic in nature.

Effect:

The pension plan could be underfunded in future years.

Recommendation:

We recommend that the City fund their pension plan at the level

recommended by the actuary.


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The City was unable to locate several Community Development Block

Grant loan files.

Condition:

It was noted that the City has no formal process for maintaining their

Community Development Block Grant loan files.

Context:

There were loan files that could not be located.

Cause:

Systemic in nature.

Effect:

Loans receivable could be misstated.

Recommendation:

We recommend that the City implement a process to track loan files.

B. Compliance Findings

CF09-1. Criteria:

The City did not fully address in their 2008/2009 General Fund budget

the accumulated deficit in the General Fund.

Cause:

Budget and economic conditions.


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Context:

Systemic in nature.

Effect:

The City was not in compliance with Section 7-390 of the Connecticut

General Statutes.

Recommendation:

The City should explore all alternatives to the General Fund deficit andincorporate the plan in future budgets.

Corrective Action:

The City will continue to explore all options to eliminate the General Fund

deficit.

III. FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS

A. Internal Control

None reported.

B. Compliance

None reported.


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CITY OF WEST HAVEN, CONNECTICUTSUMMARY OF PRIOR YEAR AUDIT FINDINGS


IC08-1. Repeated.IC08-2. Repeated.IC08-3. Repeated.IC08-4. Repeated.IC08-5. Repeated.

IC08-6. Repeated.IC08-7. Repeated.IC08-8. Repeated.IC08-9. Repeated.IC08-10. Repeated.IC08-11. Repeated.IC08-12. Repeated.


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INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Mayorand Members of the City Council


We have audited the financial statements of the governmental activities, each major fund and theaggregate remaining fund information of the City of West Haven, Connecticut, as of and for the year endedJune 30, 2009, which collectively comprise the City of West Haven, Connecticuts basic financialstatements, and have issued our report thereon dated January 29, 2010. We conducted our audit inaccordance with auditing standards generally accepted in the United States of America and the standardsapplicable to financial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States.

Internal Control Over Financial Reporting: In planning and performing our audit, we considered the City

of West Haven, Connecticut's internal control over financial reporting as a basis for designing our auditingprocedures for the purpose of expressing our opinions on the basic financial statements, but not for thepurpose of expressing an opinion on the effectiveness of the City of West Havens internal control overfinancial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of WestHaven, Connecticuts internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in thepreceding paragraph and would not necessarily identify all deficiencies in internal control over financialreporting that might be significant deficiencies or material weaknesses. However, as discussed below, weidentified certain deficiencies in internal control over financial reporting that we consider to be significantdeficiencies.

A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detect misstatementson a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,that adversely affects the entitys ability to initiate, authorize, record, process, or report financial datareliably in accordance with generally accepted accounting principles such that there is more than a remotelikelihood that a misstatement of the entitys financial statements that is more than inconsequential, will notbe prevented or detected by the entitys internal control. We consider the deficiencies described in the


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accompanying schedule of findings and responses to be significant deficiencies in internal control overfinancial reporting (SDIC09-1 through SDIC09-14.)

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that a material misstatement of the financial statements will not be

prevented or detected by the entitys internal control.

Our consideration of the internal control over financial reporting was for the limited purpose described inthe first paragraph of this section and would not necessarily identify all deficiencies in the internal controlthat might be significant deficiencies and, accordingly, would not necessarily disclose all significantdeficiencies that are also considered to be material weaknesses. However, we consider items SDIC09-1SDIC09-2 described above to be material weaknesses.

Compliance and Other Matters: As part of obtaining reasonable assurance about whether the City ofWest Haven, Connecticut's financial statements are free of material misstatement, we performed tests ofits 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 one instance ofnoncompliance or other matters that are required to be reported under Government Auditing Standards,which is described in the accompanying Schedule of Findings and Questioned Costs as Item CF09-1.

This report is intended solely for the information and use of the City Council, the management of the City ofWest Haven, Connecticut and federal and state awarding agencies and pass-through entities and is notintended to be and should not be used by anyone other than these specified parties.



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INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH

REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM, ON INTERNALCONROL OVER COMPLIANCE IN ACCORDANCE WITH THE STATE SINGLEAUDIT ACT AND ON THE SCHEDULE OF EXPENDITURES OF STATE

FINANCIAL ASSISTANCE

To the Honorable Mayor andMembers of the City Council


Compliance: We have audited the compliance of the City of West Haven, Connecticut with the types ofcompliance requirements described in the "Office of Policy and Management Compliance Supplement that are applicable to each of its major state programs for the year ended June 30, 2009. The major stateprograms are identified in the summary of audit results section of the accompanying schedule of statesingle audit compliance findings and questioned costs. Compliance with the requirements of laws,regulations, contracts and grants applicable to each of its major state programs is the responsibility of theCity of West Haven, Connecticut's management. Our responsibility is to express an opinion on compliancebased on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained in "Government Auditing

Standards", issued by the Comptroller General of the United States; and the State Single Audit Act. Thosestandards and the State Single Audit Act require that we plan and perform the audit to obtain reasonableassurance about whether noncompliance with the types of compliance requirements referred to above thatcould have a direct and material effect on a major state program occurred. An audit includes examining,on a test basis, evidence about the City of West Haven, Connecticut's compliance with those requirementsand performing such other procedures as we considered necessary in the circumstances. We believe thatour audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination onthe City of West Haven, Connecticut's compliance with those requirements.

In our opinion, the City of West Haven, Connecticut complied, in all material respects, with therequirements referred to above that are applicable to each of its major state programs for the year ended

June 30, 2009.


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Internal Control Over Compliance: The management of the City of West Haven, Connecticut isresponsible for establishing and maintaining effective internal control over compliance with requirements oflaws, regulations, contracts and grants applicable to state programs. In planning and performing our audit,we considered the internal control over compliance with requirements that could have a direct and material

effect on a major state program in order to determine our auditing procedures for the purpose ofexpressing our opinion on compliance but not for the purpose of expressing an opinion on theeffectiveness of internal control over compliance. Accordingly, we do not express an opinion on theeffectiveness of the City of West Haven, Connecticuts internal control over compliance.

A control deficiency in an entitys internal control over compliance exists when the design or operation of acontrol does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent or detect noncompliance with a type of compliance requirement of a state program ona timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, thatadversely affects the entitys ability to administer a state program such that there is more than a remotelikelihood that noncompliance with a type of compliance requirement of a state program that is more than

inconsequential will not be prevented or detected by the entitys internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that material noncompliance with a type of compliance requirement of astate program will not be prevented or detected by an entitys internal control.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and would not necessarily identify all deficiencies in internal control that might besignificant deficiencies or material weaknesses. We did not identify any deficiencies in internal control overcompliance that we consider to be material weaknesses, as defined above.

Schedule of Awards/Expenditures of State Financial Assistance : We have audited the financialstatements of the governmental activities, each major fund, and the aggregate remaining fund informationof the City of West Haven, Connecticut as of and for the year ended June 30, 2009, and have issued ourreport thereon dated January 29, 2010. Our audit was performed for the purpose of forming opinions onthe financial statements that collectively comprise the City of West Havens basic financial statements.The accompanying schedule of awards/expenditures of state financial assistance is presented forpurposes of additional analysis as required by the State Single Audit Act and is not a required part of thebasic financial statements. Such information has been subjected to the auditing procedures applied in theaudit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relationto the basic financial statements taken as a whole.

This report is intended solely for the information and use of the City Council, management of the City ofWest Haven, Connecticut, the Office of Policy and Management and state awarding agencies and is notintended to be and should not be used by anyone other than these specified parties.



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SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE


State Grant Program

State Grantor/Pass-Through CORE-CT

Grantor/Program Title Number Expenditures

Office of Policy & Management:Property Tax Disability Exemption 11000-OPM20600-17011 7,351$

Payment in Lieu of Taxes (PILOT) on Private Colleges and

General/Chronic Disease Hospitals 11000-OSC15910-17006 2,023,177

Property Tax Relief for Manufacturing, Machinery,

Equipment and Commercial Vehicles 11000-OPM20600-17031 288,598

Property Tax Relief for Elderly and Totally

Disabled Homeowners 11000-OPM20600-17018 415,540

Property Tax Relief for Elderly Homeowners -

Freeze Program 11000-OPM20600-17021 20,000

Property Tax Relief for Veterans 11000-OPM20600-17024 148,942

Local Capital Improvement 12050-OPM20600-40254 493,885

Municipal Video Competition 12060-OPM20600-35362 3,710Heating Assistance Schools 11000-OPM20600-17096 76,099

Total Office of Policy and Management 3,477,302

Department of Education:

Adult Education 11000-SDE64370-17030 345,749

Health Services 11000-SDE64370-17034 192,002

Bilingual Education 11000-SDE64370-17042 27,402

Youth Services Bureau 11000-SDE64370-17052 43,134

Youth Services Enhancement 11000-SDE64370-16201 7,550

School Breakfast Program 11000-SDE64370-17046 41,569

Interdistrict Cooperative Grant 11000-SDE64370-17045 766,733

School Readiness & Child Care 11000-SDE64370-17043 1,489,221

Magnet School Transportation 11000-SDE64370-17057 115,457

School Readiness Quality Enhancement 12060-SDE64370-90242 42,019

Healthy Foods Grant 12060-SDE64370-16072 26,120

Family Resource Centers 11000-SDE64370-16110 97,200

School Accountability 11000-SDE64480-12453 3,000

School Improvement 11000-SDE64370-22223 72,500

Web Based Adult Diploma 12060-BAA77200-20137 2,600

Total Department of Education 3,272,256

Department of Environmental Protection:

Environmental Quality 12026-DEP43510-40202 100

Clean Water Fund 21015-OTT14230-42318 759,678

759,778

Department of Transportation:

Town Aid Road Grant - Transportation Fund 12001-DOT57000-17036 305,346

Improvement State Bridge/Railroad 13033-DOT57124-43115 21,483

Capital Resurfacing-Related Imp 13033-DOT57191-41404 4,550

Total Department of Transportation 331,379

See Notes to Schedule. Continued


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SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE, Continued


State Grant Program



Board of Education Services to the Blind:Education of Handicapped Blind Children 11000-ESB65000-12060 74,598

Office of the State Comptroller:

Mashantucket Pequot/Mohegan Fund 12009-OSC15910-17005 1,068,794

PILOT on State Owned Property 11000-OSC15910-17004 10,407

Boat Grant 12027-OSC15910-40211 10,411

Total Office of the State Comptroller 1,089,612

Department of Social Services:

General Assistance 11000-DSS60439-10020 42,843

Child Day Care Local Governments 11000-DSS60794-17022 227,786

Services to the Elderly 11000-DSS60782-16123 13,450Total Department of Social Services 284,079

Department of Emergency Homeland Security:

State Homeland Security 12060-EHS99530-21877 5,800

Emergency Management Perform Grant 11000-EHS99660-21881 3,155

Total Department of Emergency Homeland Security 8,955

Department of Public Health:

Local & District Dept. of Health 11000-DPH44558-17009 126,015

Preparedness & Resp Bioterrorism 12060-DPH48557-21096 40,145

Prevention Health Services Block Grant 12060-DPH48558-21530 8,257

X-Ray Screen 11000-DPH48666-16112 15,640

Vaccination Assistance 12060-DPH48664-20911 50,664

Other expenses 11000-DPH48664-10020 30,639

Total Department of Public Health 271,360

Department of Revenue Services:

Funds Awaiting Distribution 34003-DSR18309-42350 11,169

Department of Agriculture

Shell Fish Taxes 34003-DAG42660-42337 7,859

Connecticut Grown Food PA 05228 12060-DAG42710-90458 800

Total Department of Agriculture 8,659

Department of Public Safety:Drug Assets Forfeiture Funds 12060-DPS32155-35142 10,331

Enhanced 911 Telecommunication 12060-DPS32740-35190 107,891

Total Department of Public Safety 118,222

See Notes to Schedule. (Continued)


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SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE, Continued


State Grant Program



Department of Fire Prevention and ControlFire School Training and Education Extension 12060-FPC36520-35180 300

Fire School Auxiliary Services 12060-FPC36510-35192 2,790

Total Fire Prevention and Control 3,090

Department of Children and Families:

Individualized Family Supports 11000-DCF91178-16140 11,781

Caseworker Visits PSSF Program 12060-DCF91147-22147 600

Total Department of Children and Families 12,381

Judicial Branch:

Nonbudgeted Operating 34001-JUD95162-40001 8,207

Total State Financial Assistance Before

Exempt Programs 9,731,047

EXEMPT PROGRAMS

Education Cost Sharing 11000-SDE64000-17041 41,319,451

Transportation of School Children 11000-SDE64000-17027 1,048,940

School Construction Progress Payment 13009-SDE64000-40896 1,570,601

School Construction - Interest 11000-SDE64000-17002 123,201

Excess Cost - Student Based 11000-SDE64000-17047 2,197,306

Non-Public School Transportation 11000-SDE64000-17049 70,590

Total Exempt Programs 46,330,089

Total State Financial Assistance 56,061,136$

See Notes to Schedule.


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NOTES TO SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCEFor the Year Ended June 30, 2009

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Various departments and agencies of the State of Connecticut have provided financial assistance to theCity of West Haven through grants and other authorizations in accordance with the General Statutes of theState of Connecticut. The financial assistance programs fund several programs including education, publicworks, social services, education, property tax relief and public safety.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the City of West Haven, Connecticut conform to accounting principlesgenerally accepted in the United States of America as applicable to governments. The following is

a summary of the more significant policies relating to the aforementioned grant programs.

Basis of Accounting

The financial statements for the Governmental funds contained in the City of West Haven's basicfinancial statements are prepared on the modified accrual basis of accounting.

The Schedule of Expenditures of State Financial Assistance, contained in this report, is alsoprepared on the modified accrual basis of accounting and on regulations established by the Stateof Connecticut Office of Policy and Management. In accordance with these regulations, certaingrants are not dependent on expenditure activity, and accordingly, are considered to be expended

in the fiscal year of receipt. These grant program receipts are reflected as awards in theexpenditures column of the Schedule of Expenditures of State Financial Assistance.

As a result, certain classifications of revenues and expenditures under accounting principlesgenerally accepted in the United States of America differ from classifications utilized for theSchedule of Expenditures of State Financial Assistance.


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NOTES TO SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE, Continued For the Year Ended June 30, 2009

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2. LOAN PROGRAMS

In accordance with Section 4-23623(a)(4)(F) of the Regulations to the State Single Audit Act, thenotes to the Schedule of Expenditures of State Financial Assistance shall include loans and loanactivities. The following is a summary of the various loan program activity for the year endedJune 30, 2009:

Department of Environmental Protection

Clean Water Fund 6864-3105-999

Balance

July 1, 2008 Issued Retired

Balance

June 30, 2009

$14,488,783 $ - $1,494,649 $12,994,134

Interim Clean Water Fund Financing

Balance

July 1, 2008 Issued Retired

Balance

June 30, 2009

$521,055 $567,479 $ - $1,088,534


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SCHEDULE OF STATE SINGLE AUDIT COMPLIANCE FINDINGS AND QUESTIONED COSTSFor the Year Ended June 30, 2009

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I. SUMMARY OF AUDIT RESULTS

Financial Statements

Type of auditors report issued: unqualified.

Internal control over financial reporting:

Material weakness(es) identified? X Yes No

Significant deficiency(ies) identified that are notconsidered to be material weaknesses? X Yes None reported

Noncompliance material to financial statements

noted? Yes X No

State Financial Assistance

Internal control over major programs:

Material weakness(es) identified? Yes X No

Significant deficiency(ies) identified that are notconsidered to be material weaknesses? Yes X None reported

Type of auditors report issued on compliance for major programs: unqualified.

Any audit findings disclosed that are required to

be reported in accordance with Section 4-236-24

of the Regulations to the State Single Audit Act? Yes X No


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SCHEDULE OF STATE SINGLE AUDIT COMPLIANCE FINDINGS AND QUESTIONED COSTS, ContinuedFor the Year Ended June 30, 2009

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The following schedule reflects the major state programs included in the State compliance audit:

State CORE-CT

State Grantor and Program Number Expenditures

Office of Policy and Management

Payment in Lieu of Taxes (PILOT) on Private Colleges and

General/Chronic Disease Hospitals 11000-OSC15910-17006 2,023,177$

Property Tax Relief for Manufacturing, Machinery, Equipment

and Commercial Vehicles 11000-OPM20600-17031 288,598

Property Tax Relief for Elderly and Totally Disabled Homeowners 11000-OPM20600-17018 415,540

Property Tax Relief for Veterans 11000-OPM20600-17024 148,942

Local Capital Improvement 12050-OPM20600-40254 493,885

Department of Education

Adult Education 11000-SDE64000-17030 345,749

Health Services 11000-SDE-64000-17034 192,002

Interdistrict Cooperative Grant 11000-SDE-64000-17045 766,733

School Readiness & Child Care 11000-SDE64000-17043 1,489,221

Magnet Schools/Transportation 11000-SDE64000-17057 115,457

Department of Environmental Protection

Clean Water Fund Loan 21015-OTT14230-42318 759,678

Department of Transportation

Town Aid Road Grant - Transportation Fund 12001-DOT57000-17036 305,346

Office of the State Comptroller

Mashantucket Pequot/Mohegan Fund 12009-OSC15910-17005 1,068,794

Department of Social Services

Child Daycare Center (CDC) 11000-DSS60000-17022 227,786

Department of Public HealthLocal & District Dept. of Health 11000-DPH44558-17009 126,015

Department of Public Safety

Enhanced 911 Telecommunication 12060-DPS3270-35190 107,891


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SCHEDULE OF STATE SINGLE AUDIT COMPLIANCE FINDINGS AND QUESTIONED COSTS, ContinuedFor the Year Ended June 30, 2009

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II. SUMMARY OF FINDINGS RELATED TO FINANCIAL STATEMENTSREQUIRED UNDER GOVERNMENT AUDITING STANDARDS

We issued reports, dated January 29, 2010, on internal control over financial reporting andcompliance and other matters based on an audit of the basic financial statementsperformed in accordance with Government Auditing Standards.

Our report on compliance indicated one reportable instance of noncompliance.

Our report on internal control over financial reporting noted two matters that we considerto be material weaknesses and twelve matters that we consider to be significantdeficiencies.

III. FINDINGS AND QUESTIONED COSTS FOR STATE FINANCIAL ASSISTANCE

A. Deficiencies in Internal Controls

None reported.

B. Compliance Findings

None reported.


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West Haven-Fed-State Compliance 6-30-09

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