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, 2005, 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

Compliance

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:

• Department of Environmental Protection records of the Board of Trustees of the Internal Improvement Trust Fund were not adequate to document the ownership and valuation of a substantial portion of the land reported within the governmental activities at June 30, 2005.  This was considered to be a material weakness in internal control.  (Finding No. FS 05-01)

• The Agency for Workforce Innovation did not have adequate internal controls at year-end to ensure that amounts reported as taxes receivables and related allowance accounts were in accordance with generally accepted accounting principles.  (Finding No. FS 05-02)

Other internal control matters, which are of lesser significance than reportable conditions, were noted.

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

Compliance

Except for the Centers for Disease Control and Prevention – Investigations and Technical Assistance, Foster Care - Title IV-E, and HIV Care Formula Grants 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.

Centers for Disease Control and Prevention – Investigations and Technical Assistance.  The Department of Health did not maintain records of time worked to support salary costs charged for 9 of 16 employees.  (Finding No. FA 05-057)

Foster Care – Title IV-E.  The Department of Children and Family Services and contracted Community‑Based Care Agencies did not properly document, in 10 of 40 cases reviewed, the determination of eligibility of children for which payments were made.  (Finding No. FA 05-070)

HIV Care Formula Grants.  The Department of Health failed to properly document, in 14 of 40 cases reviewed, the determination of clients to receive AIDS Drug Assistance Program assistance.  (Finding No. FA 05-076)

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 Centers for Disease Control and Prevention – Investigations and Technical Assistance, Foster Care – Title IV-E, and HIV Care Formula Grants described in the previous paragraphs on compliance were considered to be material weaknesses in internal control.

Schedule of Expenditures of Federal Awards

The accompanying Schedule of Expenditures of Federal Awards for the fiscal year ended June 30, 2005, 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.

Audit Scope

During the 2004-05 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, 2005.  Expenditures for the major programs totaled approximately $22.2 billion, or 91 percent of the total expenditures of $24.4 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, 2005, 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.

Audit Methodology

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