State of Florida - Compliance and Internal Controls Over Financial Reporting and Federal Awards
As a condition of receiving Federal funds, the U.S. Office of Management and Budget (OMB) requires an audit of the State’s financial statements and Federal awards programs as described in OMB Circular A‑133. The audit of the State’s financial statements, performed in accordance with Government Auditing Standards, culminates in an Independent Auditor’s Report and a 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. The audit of the State-administered Federal awards programs results in a Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133.
Summary of Independent Auditor’s Report
Our Report on the State’s financial statements for the fiscal year ended June 30, 2004, is included in the Florida Comprehensive Annual Financial Report issued by the Chief Financial Officer.
Summary of 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
The results of our audit disclosed no instances of noncompliance that are required to be reported by Government Auditing Standards.
Internal Control Over Financial Reporting
We noted the following matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions:
Other internal control matters were noted regarding payables and expenditures at the Department of Children and Family Services.
Summary of Report
on Compliance with Requirements Applicable to Each Major Program
and on Internal Control over Compliance in Accordance with OMB Circular A-133
Except for the Unemployment Insurance, Foster Care - Title IV-E, and Social Services Block Grant programs as described in the following paragraphs, the State of Florida complied, in all material respects, with the compliance requirements applicable to each of its major Federal awards programs.
Unemployment Insurance. Sufficient records were not maintained to support compliance with requirements applicable to the Special Tests and Provisions regarding Employer Experience Rating. Consequently, the Agency for Workforce Innovation and the Department of Revenue could not demonstrate that the Unemployment Insurance tax rates for all experience-based employers were properly calculated for the 2004 calendar year in accordance with applicable provisions of Florida Statutes. Absent sufficient records, we were not able to satisfy ourselves as to the State’s compliance with those requirements. (Finding No. FA 04-016)
Foster Care – Title IV-E. The Department of Children and Family Services and contracted Community‑Based Care Agencies did not properly document, in 9 of 40 cases reviewed, the determination of eligibility of children for which Foster Care payments were made. In 2 of the 9 instances, case file information showed that the eligibility requirements were not met. (Finding No. FA 04-061)
Social Services Block Grant (SSBG). The Department of Children and Family Services did not properly determine eligibility or did not document that Temporary Assistance to Needy Families funds transferred to the SSBG program were used for children and their families that met income eligibility requirements. (Finding No. FA 04-064)
The results of our audit also disclosed other instances of noncompliance pertaining to various programs administered by various State agencies, universities, and community colleges. Some of the instances of noncompliance, primarily those pertaining to the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Eligibility compliance requirements, resulted in questioned costs subject to disallowance by the grantor agency. Other instances pertained to various compliance requirements including, but not limited to, Matching, Level of Effort, and Earmarking; Subrecipient Monitoring; and Special Tests and Provisions. Instances of noncompliance are described in the Schedule of Findings and Questioned Costs.
Internal Controls Over Compliance
We noted numerous matters at various State agencies, universities, and community colleges involving internal control over compliance and its operation that we consider to be reportable conditions. These conditions pertain to various compliance requirements including, but not limited to, Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Equipment and Real Property Management, Reporting, and Subrecipient Monitoring. Reportable conditions are described in the Schedule of Findings and Questioned Costs. The reportable conditions for the Unemployment Insurance, Foster Care – Title IV-E, and Social Services Block Grant programs described in the previous paragraphs on compliance were considered to be material weaknesses in internal control. The following reportable condition was also considered to be a material weakness.
State Domestic Preparedness Equipment Support. The Department of Community Affairs did not complete basic monitoring procedures to ensure equipment distributed to subrecipients was properly accounted for and utilized for Program purposes. (Finding No. FA 04-084)
Schedule of Expenditures of Federal Awards
The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the State of Florida’s basic financial statements. However, information in the Schedule of Expenditures of Federal Awards has been subjected to the auditing procedures applied in the audit of the basic financial statements, and in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
During the 2003-04 fiscal year, State agencies, universities, and community colleges administered over 550 Federal awards programs or program clusters. We audited the State’s compliance with governing requirements for 40 of the Federal awards programs or program clusters that we identified as major programs for the fiscal year ended June 30, 2004. Expenditures for the major programs totaled approximately $20.5 billion, or 94 percent of the total expenditures of $21.8 billion as reported on the State’s Schedule of Expenditures of Federal Awards.
Our audit of Federal awards programs for the fiscal year ended June 30, 2004, did not include the administration of Federal awards programs by Workforce Florida, Inc., a blended component unit of the State, or the discretely presented component units other than the State universities and community colleges. As applicable, Federal awards programs administered by component units excluded from our audit, as well as, other governmental units and nonprofit organizations that receive Federal funds through the State, are subject to audits by other auditors.
Our audit was conducted in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
Audit of Federal Awards Programs
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
Part A - State Agencies
Part B - State Universities
Part C - State Community Colleges
Written responses from the State agencies, universities, and community colleges to our findings and recommendations are included within the audit report which can be viewed on the Auditor General Web site.