Ad-Hoc Stadium Audit Committee - Regular Meeting

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Right. So, on our agenda, we have hold on. I don't appear to have additional. K. So, call to order. We did that to know when we have the consent calendar. We have the one item for the minutes. Can I get a motion to

Yeah? Okay. I guess I would need to make that motion. I'll make a motion to approve the minutes.

Thank you. And I will second that. Which you can do. In favor, say aye. Aye. Any opposed? Any abstentions? So that motion carries. Two to zero. And audit member Shahar is not present. So now we want to our general business, which is review the single audit report and recommendation. I think we have a oh, we have a support for this.

So I'll say a few words, and then we have our external auditor, Amy Meyer, on that will give the presentation. So this is part of the year where we report back to the audit committee, and we're targeting next Tuesday's council meeting for if if the committee, moves forward with the report. We have a report on our single audit. This is a, an audit for federal grant funds. And so what our auditor does is they select a specific one or two audit areas, and and the federal government looks at that audit as kind of a single audit over all their kind of different grant funds.

So every year, we bring back to, the committee a report from Mays based on their their view and findings, if any, from that analysis. And so, with it, I'll turn it over to Amy Meyer. She has a short presentation and available for questions as well.

Alright. Great.

Amy? Great.

Thank you. Good morning, everyone. And, yes, if you if you have any questions along the way, feel free to stop me. I have you're very tiny on my screen, but yeah. So just say something, and I'll and I'll stop as we go along. Alright. So am I sharing my screen, or are you gonna advance the slides?

I can advance the slide.

Okay. Great. Alright. So we can dig in. So this is the results.

As Ken mentioned, the the results of the single audit, which is the audit of the federal award programs. So the overall purpose or or reason for a single audit is to ensure that the city as a recipient of federal funds is in compliance with the federal program requirements. So the grantor's requirements and some overall what are called uniform guidance requirements for each grant program. And each federal agency outlines specific items it wants us as the auditors of the program to audit each year, and they can always come in and do what's called a program specific audit or monitoring visit to monitor how the expenditures are are being spent in different different components. But then they also dictate areas that they want us to audit when a program is considered what's called a major program.

And there's a mathematical calculation and that goes into determining which programs we're going to test each or in in each year. So just so you know the reason it's called a single audit is prior to 1986, their each federal agency could and would come in and audit the program. So a city could have multiple agencies in any one year coming in and auditing the program, and then that's when the single audit act was established or passed, which consolidated into one audit with rules and regulations around how the audit is conducted and how programs will be tested as a major or a or tested program each year. And when it's require it's required when when your federal grant expenditures across all programs exceed $750,000 in any one year. So city of Santa Clara, you have a number of federal grant programs.

So it's gonna be very, very rare that you would not have a single audit each year. So, so we expect that would would continue. Alright. And the next slide. So the uniform guidance that I mentioned, that provides the overall rules. Now as you can see from this, this is just a snip of the the table of contents of the uniform guidance. It really isn't you know, it's not for us as the auditor. There is a component that tells us what needs to go in the audit report, but really it is for the city. It it tells all the guidelines what can and cannot be charged to any grant program across all programs. And then within that or excuse me, outside of that, each grantor can then narrow it down.

You know, because if the if the grant program allows I'll be broad. It allows payroll costs, but then the grantor for this particular program says you can't charge any payroll. You know? So it's it can be more specified by the grantor, but uniform guidance is exactly what it says. Uniform guidance across all federal programs have to adhere to these rules when you when you expend the funds, but then you also look to the grant agreement for any more specific laws, rules, and regulations related to the program.

So you can see the part here that we're talking about is subpart f, audit requirements. That is the preparation of the single audit report, how to determine which programs or major programs or tested programs in any particular year, what needs to go on the schedule of expenditures of federal awards, and in the notes to the to the, to the CIFA schedule that schedule of expenditure of federal awards or CIFA, and and and why we're here today. So, the next slide.

Just a quick question. As far as, we see maybe some changes or some newer requirements or things that maybe the the new administration has tried to implement. These would these be captured in an audit as well? Or because it it seems like it things shift fairly quickly over there in DC. So

Right. It usually takes time before things get into the awards. There there is a new so there's we call it the new and the old of uniform guidance. There's a new uniform guidance that is effective for grants issued after 10/01/2024. So for 2025, you didn't have any you weren't impacted that by that, if I remember correctly, very dramatically.

The the the rules, it's was interesting. There's a change, but as far as our audit programs, there wasn't a a dramatic change in that that we saw. But there is one change that goes into effect next year, which actually raises the threshold for the requirement for the single audit, and we'll change that when I talk about the major program calculation. Changes the threshold to a million dollars or more as far as when, an entity is required to have a single audit. And some of that is reflected in or or just acknowledges that when entities receive very little funding, it can be harder to comply with some of these laws' rules.

And it doesn't mean, again, like I mentioned, that it doesn't mean that the grantor won't come in and do the audit, audit their particular program, but it doesn't require this single audit. Because when a city is required to undergo a single audit, it doesn't just change the federal award grant report. It also changes the overall city report. You're become subject to what we call yellow book or the government auditing standards. And so, you know, those changes can be cumbersome price wise on the on the audit and the and what goes into that type of audit when you're subject to a yellow book.

As I mentioned, you're always gonna be subject to that type of audit, just build your structure and the type of funding and and the different, items that you have as part of your financial statements. So, but as far as the federal government, also, there's a lot more federal funding coming through. Right? Because just now starting in, think it started in '25 is when we started to see the infrastructure bill funding coming into the federal award program. So there are a lot more.

We're we're tailing off of the ARPA. You know, ARPA has done most of that fund funding. Even though there's still some entities have time to spend the the end of the money up until 12/31/2026, really, the bulk of that has has fallen off for more most entities, but there are other funding programs coming through. And so they're gonna have different rules, and so that could be where you're thinking of there might be different rules for those programs that are new that we haven't really encountered yet.

K. Thank you. Sure.

Alright. So, so in the uniform guidance, the in the overall rules as the auditee, that would be used the city in section five zero eight, It includes, again, the the requirement to have this single audit to prepare appropriate financial statements. And when the uniform guidance refers to financial statements, which you think of that as your annual comprehensive financial report as your financial statements, It also includes the CFIR, the scheduled expenditure of federal awards. And so we as the audit auditor are supposed to test, does it conform to section five ten? Are all programs listed?

And does it identify direct or indirect programs? And that means directly from the federal government or indirectly through another entity. So a a federal grant program is considered a federal grant until it is paid to a vendor. You know? And sometimes the city could function as a vendor, very rare, but but but until it is paid to a vendor, it's considered a grant all the way through.

Even if it's passed through 50 different agencies, it's considered a grant until it is paid out to a vendor. And so all those agencies, depending on their expenditures overall in federal awards, in theory, are you know, they're subject to uniform guidance and potentially need a single audit until that. So that's why we have the direct or indirect. You'll see that, in the single audit report where some programs say direct and then others say pass through from and then the which agency you received the funding through. And so, again, this is the auditee's responsibilities to ensure that this information is included in the in the financial statements.

And then identify cluster programs. That's an interesting component of the uniform guidance. There are some programs that are so similar that they are clustered together. And even though they'll have different assistance listing numbers, which is how the federal government tracks the grant programs, they have different assistance listing numbers, but they're clustered together and considered one program. So you could have two or three different programs such as the, oh my goodness, the the one you get from the OT office of traffic safety through the California I'm dry the highway highway safety grant program, the 20 dot 600 series.

They're individual grants, but they're clustered together. And if they happen to be a major program for us, we have to test them as one even if they're even though there may be three or four, assistance listing numbers, they're clustered together. Alright. So next. So, again, the overall objectives I mentioned at the beginning, but just to to boil it down again, you know, the overall objectives is a single audit. Were expenditures in accordance with the grant limitations and allowable activities? You know, did you spend it right? Did you spend it in accordance with the grant limitations and need informed guidance? Was your reporting accurate and timely? Were procurement standards follows followed?

Those can vary. There are procurement standards in the uniform guidance. But sometimes, the grant agreement will say, you just have to follow your own procurement policy, your own purchasing policy. And then we're subrecipients monitor for the same. When I said funding can be passed through, direct or passed through, as the city, you are also a pass through agency to other entities in your you know?

And so, again, if you give the, for example, the funding to a nonprofit entity, then you're required to monitor that they are spending the funding in accordance with what you told them because you'll have a subrecipient agreement that tells them it's federal funding. Here's what you need to do with it, and then you have to monitor them to make sure that they are spending it. And one of the easiest even though there is actual monitoring that takes place where city staff will meet with or talk with and look at a group look at a documentation. One of the other easy ways is if they have a single audit, get a copy of that, look at that single audit, see what the results are, other findings related to the program that the city's in that the city is funding. Alright.

Next. So the results. So the city expended in fiscal twenty five over $11,000,000, nearly 11 and a half million dollars over 15 programs, And that can be found on this on the CIFA, which is on page four of the report or page nine of the PDF depending on how you're looking at the report. So a lot of funding, a little I don't remember if it was higher or lower than last year, but, again, you're you're done spending the the ARPA funding, and so the expenditures were a little bit less if I remember correctly. Alright.

Then next. So there were so after, as I mentioned, there is a mathematical calculation and some risk assessments that go into determining which programs are major programs for the year or tested programs. And so for fiscal twenty five, there were two tested programs, sixteen dot seven one o, which is the public safety partnership and community policing grants, also known as the COPS program, and then the 97 o eight three, which is the staffing for adequate fire and emergency response grant or SAFR grant. One you used for some equipment and purchases, and then the SAFR grant is the payroll for, for certain fire employees fire firefighters, I should say. Alright.

So the results. So for the this year, from those two programs, from from the testing that we were required to complete, we had no federal compliance findings, and you'll see that in the report. Now as part of the audit, we are also required to follow-up on the status of prior audit findings. And there is one prior audit prior year audit finding related to the CDBG program from, I believe, two or three years ago related to compliance with timely spending requirements. And that's one that it's not fully implemented, but there was an implementation plan that you can see in the summary status of prior audit findings.

And based on what city staff has has indicated, you're on track for implementing in time with what HUD re expects, but it was one that was not expected to be implemented until if I remember correctly, I believe it's '26 is when you're gonna be completing implementation or fully in compliance with that timely spending requirement. Alright. Then, within the report so the first part of the report is kind of the results. You see the the notes to this the CIFA, the notes to the CIFA. And then after that, you'll see you know, if there were findings, they would be in the report as well, but we didn't have any this year as I mentioned.

And then then you'll see the our audit reports, the our opinions on the reports. And there are two opinions because there are a lot of things that we have to opine on. And we could they can be multiple opinions, even more than the two that we've included, but we we were we are able to consolidate them into two opinions, but they do include opinions on multiple items. So one, the first is the internal control over financial reporting and on compliance and other matters. That's what we call the the the gas or government auditing standards opinion, the yellow book opinion, which is based on the financial statements.

Then the second opinion is compliance for each major program and and on internal control over compliance. So for each of those major programs that we tested, if there were any findings, we would report them in that opinion. And then also, sometimes along the way, you know, when we're testing the CIFA, when we're doing other work, we may stumble upon a finding for a program that's not a major program. And if we did, that would also be included in the report as well, but we didn't have any any of that those types of findings this year. Alright. Then next, any questions? I didn't realize I thought I had one more slide. Nope. That's it. So that's it if you have any other questions.

And, Marty?

So far, really, really clear. Thank you. I appreciate it. Helping me understand what triggers some different audits because that's not our forte necessarily. I did see in there one material concern. Was that the one you were reporting back on the CGGB?

No. It's not. And sorry. I didn't think to include that in here because so when we did the the ACT for presentation so that was a financial statement finding. And when we did the ACT for presentation, that is actually the finding related to, the, stadium authority. So it's not the city director. The city city authority.

The Yeah. SBLs. Okay. That's right.

Exactly. The SBLs. Yes. Exactly.

K. Yep. Yeah. Now I'm remembering them. Alright. Lots of work.

And usually, I ask for audits, I ask a question. You know, was our staff responsive? Did you get all the everything you needed to to run the audit? And obviously, it was it's pretty clean. So Yeah. Very so

Exactly. Yeah. I'll just say, yeah, there were there were no no no stumbling blocks, no trouble. Everybody was very responsive and provided everything we need. Because, yes, this one, you know, is if there aren't enough questions for the regular city audit. This one, there are a lot of questions, and they could be weird. You know what I mean? Because the grant agreement says this since we're asking for for lots of documentation for for different things to to test the for the compliance. We test for what we call direct to material. So there could be certain components of the of the grant agreement that are just not direct to material because we're may worrying about the expenditures.

Right? We're not gonna necessarily test for discrimination policies when you're talking about federal award expenditures. You know? Those are because there could be some nonfinancial requirements in the grant agreements, but the grantor will follow-up on those things.

Okay. Well, thank you. Yeah. I have

to say Yeah. There's already This is the best news we've had in a meeting in quite a while.

I can assume that after last last week's meeting being canceled that you're like you like these results. You may I know I understand why you didn't wanna meet at eight in the morning or ten in the morning after that.

Even good news wouldn't have been welcomed at that point.

Yeah. No. Definitely. And, maybe you can get to our normal meet council meetings so you can help us speed them along. There was is there any action on this one? There is a recommendation, put it in your I was gonna

say. There. I'll make the motion to accept the single audit report for the fiscal year ending 06/30/2025,

and I will second that. And

Just for the record, is there any member of the public?

No. There's no members of the public. Thank you.

Alright. Shocker.

And I always forget usually, on the school board side, we would always make a motion first and then take public comment. So I'm still, I'm still I remember now, but, yeah, it's still Good news to it. Yeah. Alright. So we have a motion and a second. Any, discussions? Seeing none, say aye. Aye. Any opposed? Any abstentions? So that motion carries two to zero with member Shahal being absent.

Yes. Yeah. He's still out of the country. So

thank you, everyone. Thank you, Amy.

Alright. Thank you. You have a great day.

Yeah. Thank you.

Thank you for rescheduling, everyone.

Yes. Alright.

Bye bye. Bye bye. You all.