Board of Directors Regular Meeting Agenda


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Meeting Date: 06/26/2019  

SUBJECT MATTER:
Receive, consider and act upon a recommendation from the Audit Committee on the Comprehensive Annual Financial Report and the Single Audit Reports for the year ended December 31, 2018; 
FISCAL IMPACT:
N/A
BACKGROUND:
An audit of The Woodlands Township’s financial records is conducted annually by an independent audit firm to ensure the Township’s financial transactions and statements are properly documented, recorded and presented in conformity with generally accepted accounting principles.
 
Blazek & Vetterling, Certified Public Accountants, conducted an audit of the Township’s 2018 financial records and reviewed the resulting Comprehensive Annual Financial Report (CAFR) with the Audit Committee on June 20, 2019.  
 
The auditors reported that the financial statements “present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Township, as of December 31, 2018, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America”.  A copy of the CAFR is attached for review.  The Independent Auditors’ Report can be found on pages 13 - 14.  Although the attached CAFR is in “Draft” form, only minor formatting changes to the attached report are anticipated.  The final version of the CAFR will be published by the auditors upon acceptance of the report by the Board of Directors. 
 
In conjunction with the audit, the auditors also performed additional analysis specific to the expenditure of federal awards (grants) related to the Township’s transportation services.  This additional analysis is required by the federal Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance). The resulting Single Audit Reports are attached for review and the auditors' opinions are summarized below:
  • Report on the Schedule of Expenditures of Federal Awards - the auditors reported that "the financial statement presents fairly, in all material respects, the expenditures of federal awards of The Woodlands Township for the year ended December 31, 2018, in accordance with accounting principles generally accepted in the United States of America." The full audit opinion is on page 2 of the Single Audit Reports.                                                               
  • Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters  - The auditors explained that they "considered the Township's internal controls over financial reporting to determine the audit procedures that are appropriate for the purpose of expressing our opinion on the financial statements."  They reported that given these parameters, "during our audit we did not identify any deficiencies in internal controls that we consider to be material weaknesses."  The auditors also reported that " the results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards."  The full audit opinions are on pages 5 - 6 of the Single Audit Reports.  
  • Independent Auditors' Report on Compliance for Each Major Program and Report on Internal Control Over Compliance Required by the Uniform Guidance - The auditors explained that they conducted the audit of compliance in accordance with auditing standards generally accepted in the United States of America; Government Auditing Standards; and the Uniform Guidance.  They reported, "In our opinion, the Township complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2018."  They also reported, "We did not identify any deficiencies in internal controls over compliance that we consider to be material weaknesses." The full audit opinions are on pages 7 - 8 of the Single Audit Reports.
The report did note that although the fiscal year 2012 FTA 5307 operating grant had a requirement to allocate 1% ($16,640) of grant funds for security projects and an additional 1% ($16,640) for transit improvements, the Township did not spend funds on either of these programs.  FTA is aware that funds were not spent for these purposes and, in the case of the security projects, authorized the Township to revise the grant to state that current security measures meet the needs of the transit program and thus the expenditures were not necessary.  For transit improvements, it was noted that the fiscal year 2013, 2014 and 2015 FTA grants expended a total of $74,000 for such projects and a change in federal law eliminated the 1% expenditure requirement on transit improvements effective September 1, 2015.
 
The auditors also reviewed the required “Audit Communications” letter with the Committee, which is attached for the Board’s reference.  The auditors informed the committee that:
  • "There were no significant adjustments recorded as a result of the audit."
  • "There we no difficulties encountered in performing or completing the audit."
  • "There were no disagreements with management regarding the application of generally accepted accounting principles or auditing standards." 
RECOMMENDATION:
Consider and act upon a recommendation from the Audit Committee to accept the Comprehensive Annual Financial Report and the Single Audit Reports for the year ended December 31, 2018. 
 
Attachments
Audit Communications Letter
Comprehensive Annual Financial Report 2018
Single Audit Reports 2018


    

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