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08-1007Conncil File RESOLUTION Presented by 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Wf�REAS, pursuant to Minn. Stat. 6.49 the Office of the State Auditor has completed the audit of the City of Saint Paul Comprehensive Annual Financial Report for fiscal yeaz ended December 31, 2007 in accordance with auditing standazds generally accepted in the United States and the standards applicable to financial audits contamed in Government Auditing Standards, issued by the Compuoller General of the United States; and WHEREAS, the City has received a Mana�ement and Compliance Report for the yeaz ended December 31, 2007 prepazed by the Office of the State Auditor as a result of their audit; and WHEREAS, the State Auditor based on their audit, has given the City's basic financial statements an unqualified opurion, wluch indicates the City's financial statements aze fauly presented and free of material irusstatement; and WHEREAS, new pracrices and pLOCeduces have been put in place to correct the audit findings relating to intemal controls and administrarion of federal programs; and WHEREAS, the Statement on Auditing Standazds No. ll 4— The Auditor's Communication With Those Charged With Governance is effecrive for the 2007 audit and requires the Office of the State Auditor to communicate these results to the Mayor and City Council. RESOLVED, the Mayor and Saint Paul City Council accepT the Management and Compliance Report fot the yeaz ended December 31, 2007 as provided by the Office of the State Auditor. Requested by Department of: Financial Services B Approved by the Offic Financial Services � Approved by Ciry Attomey By: t � � � , !� Adopted by Council: Date ��/7�J� Approv by a for Submi i Coi Adoption Certified by Council Secretary $y � By: � Approve y a t � By: �n Sheet '��� 7 FS —Fm�� s���� Contact Persan & Pho�e: Lori Lee 26fi-8822 Must Be on Council Aqen Doc. Type: RESOLUTION E-0ocument Required: Y Document Contact: Contact Pho�u: 10-SEP-08 i � Assign 1 Number � For ' Routing � Order Total # of Signature Pages (Clip All Locations for Signature) Sheet NO: 3059337 0 mapcialServiCes i 1 �Nlnancial Servicu � Denartment Direetor i 2 ily Attornev � � 3 Mayor's Office i Mayor/Assiswnt i 4 Council I ' > ity Qerk I City Clerk Accept the Management and Compliance Report for fical yeaz ended December 31, 2007 from the Office of the State Auditors. itlations: Approve (A) or Rejeet (R): Personal Service Contrects Must Answer the Following Questions: Planning Commission 1. Has this person(firm ever worked under a contract for this tlepartment? CIB Committee Yes No Civil Service Commission 2. Has this person/firm ever been a city employee? Yes No 3. Ooes this person/firm possess a skill not normally possessed by any current city employee? Yes No , Explain aIl yes answers on separate sheet and a$ach to green sheet Initiating Problem, Issues, Opportunity (Who, What, When, Where, Why): The State Auditor has requested to appeaz at City Council meeting to communicate the results of the Ciry's Audit for yeaz ended as part of new auditing standazds. Advantages If Approved: Disadvantages If Approved: DisadvanWges If NotApproved: Ibtal Amount of Transaction: $ Funtling Source: Financial fnformation: (F�cplain) CosURevenue Hudgeted: Activity Number. September 10, 2008 '133 PM Page 1 b�-lOa 7 STATE OF MINNESOTA Office of the State Auditor Rebecca Otto State Auditor MANAGEMENT AND COMPLIANCE REPORT PREPARED AS A RESULT OF THE AUDIT OF THE CITY OF SAINT PAUL SAINT PAUL, MINNESOTA YEAR ENDED DECEMBER 31, 2007 o�-1�a� ! Descriprion of the Office of the State Auditor The mission of the Office of the State Auditor is to oversee local govemment finances for Minnesota taxpayers by helping to ensure financial integrity and accountability in local governmental financial activities. Through financial, compliance, and special audits, the State Auditor oversees and ensures that local govemment funds are used for the purposes intended by law and that local governments hold themselves to the highest standards of financial accountability. The State Auditar performs approximately ] 60 financial and compliance audits per year and has oversight responsibiliries for over 3,300 local units of government throughout the state. The office currently maintains five divisions: Audit Practice - conducts financial and legal compliance audits of local governments; Gavernment Information - collects and analyzes financial information for cities, towns, counties, and special districts; Legal/Special Investigations - provides legal analysis and counsel to the Office and responds to outside inquiries about Minnesota local govemment law; as well as investigates allegarions of misfeasance, malfeasance, and nonfeasance in local government; Pension - monitors investment, financial, and actuarial reporting for approximately 730 public pension funds; and Taz Increment Financing - promotes compliance and accountability in local governments' use of tax increment financing through financial and compliance audits. The State Auditor serves on the State Execurive Council, State Board of Inveshnent, Land Exchange Board, Public Employees Retirement Association Board, Minnesota Housing Finance Agency, and the Rural Finance Authority Board. Office of the State Auditor 525 Park Street, Suite 500 Saint Paul, Minnesota 55103 (651)296-2551 state. auditor@state.mn. us www . auditor. state.mn. us This document can be made available in alternative formats upon request. Call 651-296-2551 [voice] or 1-800-627-3529 [relay service] for assistance; or visit the Office of the State Auditor's web site: www.auditor.state.mn.us. �-�a� � � CITY OF SAINT PAUL SAINT PAUL, MINNESOTA Year Ended December 31, 2007 Management and Campliance Report Audit Practice Division Office of the State Auditor State of Minnesota 68'1a This page was left blank intentionally. 08�1 p�� CITY OF 5AINT PAUL SAINT PAUL, NIINNESOTA TABLE OF CONTENTS Reference Page Schedule of Findings and Questioned Costs Schedule 1 I. Summary of Auditor's Results II. Findings Related to Financial Statements Audited in Accordance with Government Auditing Standards III. Findings and Questioned Costs for Federal Award Programs Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable to Bach Major Program and Intemal Control Over Compliance in Accordance with OMB Circular A-133 7 10 Schedule of Expendituxes of Federal Awards Schedule 2 13 __ -- - - �g -��a`7 This page was left blank intentionally. 68- CITY OF SALriT PAUL SAIlVT PALJL, NIINNESOTA Schedule 1 SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAK ENDED DECEMBER 31, 2007 I. SUMMARY OF AUDTTOR'S RESULTS A. Our zeport expresses unqualified opinions on the basic financial statements of the City of Saint Paul. B. Deficiencies in intemal control were disclosed by the audit of the financial statements of the City of Saint Paul and are reported in the "Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards." Both of the significant deficiencies are material weaknesses. C. No instances of noncompliance material to the financial statements of the City of Saint Paul were disclosed during the audit. D. A significant deficiency relating to the audit of the major federal award programs is reported in the "Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Ovex Compliance in Accordance with OMB Girculaz A-133." The significant deficiency is not a material wealrness. E. F G. The Auditor's Report on Compliance for the majar federal award programs for the City of Saint Paul expresses an unqualified opinion. A finding relative to a major federal award program for the City of Saint Paul was reported as required by Section 510(a) of OMB Circulaz A-133. The major programs are: Emergency Shelter Grants Program Community Development Block Grants/Bzownfields Economic Development Initiarive Highway Planning and Construction Urban Areas Security Initiarive Homeland Security Grant Program CFDA #14.231 CFDA #14.246 CFDA #20.205 CFDA #97.008 CFDA #97.067 Page 1 _ _------ ag-/�a � Schedule 1 (Continued) H. The threshold for disrinb ishing between Types A and B programs was $535,546. I. The City of Saint Paul was determined to be a low-risk auditee. II. FINDINGS RELATED TO FINANCIAL STATEMENTS AUDITED IN ACCORDANCE WITA GOVERNMENTAUDITINGSTANDARDS 1NTERNAL CONTROL ITEMS ARTSING THIS YEAR 07-1 Notes and Loans Receivable During our audit procedure confirming the notes and loans receivable balance, we received five confirmations with a discrepancy between what the borrowers stated as their principal balance at November 30, 2007, and the balance that the HRA had recorded on the Nortridge System as of the same date. According to the Nortridge System, the cumulative principal balance of these five confixmations was $2,914,926, while the bonowers reported principal balances totaling $2,148,695, a dafference of $766,23L In accordance with the stated terxns and conditions, the loan principals had been either partially or completely forgiven. The loan officers/project managers were responsible for communicating with the proper accounting pexsonnel to adjust the loan balances to ensure that the Norlridge System reflected the proper receivable balances outstanding. However, due to a lack of communication or a communication breakdown, this information was not properly received, and the Nortridge System was not accordingly adjusted. The discrepancies between the bonowers' and the HRA's records that existed as of November 30 potentially could have carried over indefinitely beyond the date of the financial statements. A material audit adjustment was made, as identified in Finding 07-2, to cozrect the overstated loans receivable for the year-end December 31, 2007, financial statements. We recommend that the HRA review internal controls currently in place, especially relating to communication, and then design and implement pxocedures to improve intemal controls to timely detect and prevent inaccuracies in the Nortridge System and misstatements in the financial statements. Page 2 v� Schedule 1 (Continued) Client's Resnonse: In less than a four-month span from December 2007 through March 2008, the department's three senior accounting staff members retired. Retirees included Planning and Economic Development's (PED) two supervisory accountants, and our operations and parking accountant. Three new staff leaming PED's business and accounting practices, coupled with a new, earlier timeframe for preparing subsequent year budgets for the Mayor and City Council, has made preparing for the 2007 audit particularly challenging. In addition, GASB issuance of several new accounting standards has sign�cantly increased complecity offtnancial statements, thus putting more pressure on our new staff. While our operations budget will not provide for an increase in accounting staff to deal with these and other accounting demands, PED remains committed to woYking diligently to review fnancial statements prior to the audit. By July 31, 2008, we will imptement a new toan review servicing system to ensure Nortridge loan balances are correct. This new procedure will include cross-checks among the Loan Servicing Group, Project Managers, the Nortridge Loan Administrator, and HRA's lead accountant. (All other loans �iles are handled annuallv bv HRA Loan Servicin�(or such items as insurance and other administrative requirements. Each Proiect MunaQer also conducts an annual loan portfolio review.) Firzally, a reminder directive from the PED Director's Office will be communicated to all PED staff requiring a prompt response by all PED staff to any/all requests from the State Auditor. Team Leaders will ensure compliance with this directive as well. 07-2 Audit Adiustments A control deficiency exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned funcrions, to prevent ox detect misstatements of the financial statements on a timely basis. Statement on Auditing Standards No. 112 states that one control deficiency that shall be regazded as at least a significant deficiency is identification by the auditor of a material misstatement in the financial statements that was not inirially identified by the entity's internal controls, even if management subsequently conects the misstatement. During our audit, we identified the following material adjashnent: - Notes and loans receivable, net of allowance, decreased by $189,811, and the related operaring expenses were increased by the same amount in the HRA Loan Enterprise �und. Page 3 - D��lDO� Schedule 1 (Continued) The proposed audit adjus�nent was reviewed and approved by the appropriate staff and is reflected in the financial statements. However, by definirion, independent external auditors cannot be considered part of the HRA's intemal control. We recommend the HRA strengthen and monitor the intemal controls related to notes and loans receivable to improve the detecrion of misstatements in the financial statements. ClienY s Resroonse: Implemendation of tnternal controls related to the cause of Finding 07-1 (i.e., new loan review servicing system) will correct the factors which resulted in Finding 07-2, audit adjustments. PREVIOUSLY REPORTED ITEM RESOLVED Restatement (06-1) The City made a prior period adjushnent to the 7anuary l, 2006, net asset balances for the Sewer Utility Enterprise Fund and the business-type activities. Resolution The City was not required to make any prior period adjustments to its January 1, 2007, net asset balances as previously reported in its financial statements. IIL FINAINGS ANA QUESTIONED COSTS FOR F�DERAI, AWARD PROGRAMS INTERNAL CONTROL ITEM ARISING TAIS YEAR 07-3 Davis-Bacon Act - Hi�hwav PlanninQ and Construction (CFDA #20.2051 When required by the Davis-Bacon Act, all laborers and mechanics employed by the contractars or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established far the locality of the project. Page 4 U�`�la — Schedu[e 1 (Continued) One of the construcrion projects, Como $ikeway Project, financed by Highway Planning and Conshucrion funds, was administered by the City's Public Works Traffic Engineering Division. The project manager of the Como Bikeway Project believed that the City's Human Rights Deparhnent was monitoring compliance with the Davis-Bacon Act. The project manager, upon learning that the City's Human Rights Department was not responsible for monitoring compliance with the Davis-Bacon Act for this project, obtained information on the process for monitoring compliance with the Davis-Bacon Act from the Public Works Sheet Construction Engineering Division and then began to monitor the Como Bikeway Project for compliance with the Davis-Bacon Act. We recommend that the Depariment of Public Works review its system for monitoring projects for compliance with the Davis-Bacon Act, when applicable. Corrective Action Plan (Depariment of Public Works): Contact Person(s): Rhonda Gillquist, Accountant IV (6S7) 266-6070 Dan Haakm, Assistant City Engineer (651) 266-6084 Conective Action Plan During the audit of the 2007 YeaY End Financial Statements by the State Auditor, it was discovered that the monitoYing for compliance of prevailing wages for the Como Avenue Bike Lane project was not being done by the project manager. The project manager mi.rtakenly believed that this monitoring was done by the City's Human Rights Deparhnent. Upon Zearnzng of the need to perform wage monitoring, the project manager obtained the necessary payroll dacumentation and completed the rrzonitoring. Unfortunately, the contract has been completed and the project manager was not able to conduct field interviews. All of the payrolls for the specific time period for the main contractor have been checked. There were no findings of non-compliance for the contractoY's payrolls. All payroll documentation for the subcontractors will also be obtained and checkecl. Page 5 pg -/aa � Schedule 1 (Continued) To ensure that this does not occur in the future, training will be provided to project managers on the requirements of monitoring for compliance ofprevailing wages for all federally funded projects. The need to monitor wages wiZ1 also be reviewed ¢t pre-construction meetings with contractors. Anricipated Complerion Date: Anticipated completion date for the project manager's review of all payroll documentation is June 3Q 2008. Anticipated completion date for training of staff new to project management is September 30, 2008. Staff training will continue orc an as-needed basis. Sfaff will attend Minnesota Departrnent of Transportation (Mn/DOT) training when available. Page 6 �g�lo OF THE STATE AUDITOR `'°F���''ry"'��'�" SliITE 500 �; '°"�`�� � �25 PARK STREET (651) 296-2551 (Vo�ce) REBECCA 01�'O SAL�IT PAI7L, MN 55103-2139 state audnor@sta�te�inn.us (E-ma ) STATE AGDSTOR t-300-G27-3S29 (Relay Service) REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDTT OF FINANCIAL STATEMENTS PERFORMED Il� ACCORDANCE WITH GOVERIVMENTAUDITINGSTANDARDS Mayor and Members of the Ciry Council Ciry of Saint Paul, Minnesota We have audited the financial statements of the govemmental activities, the business-type activiries, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Saint Paul, Minnesota, as of and for the year ended December 31, 2007, and have issued our report thereon dated July 25, 2008. Our report was modified to include refarences to other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standazds applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Other auditars audited the financial statements of the Saint Paul RiverCentre Convention and Visitors Authority, which represent 2 percent, less than 1 percent, and 18 percent, respecrively, and the Port Authority of the City of Saint Paul, which represent 28 percent, 12 percent, and 20 percent, respecrively, of the assets, net assets, and revenues of the aggregate discretely presented component units, as described in our report on the City of Saint Paul's financial statements. This report does not include the results of the other auditor's testing of intemal con�ol over financial reporting or compliance and other matters that are reported on separately by those auditors. The financial statements of the Saint Paul RiverCentre Convention and Visitors Authority and the Port Authority of the City of Saint Paul were not audited in accordance with Governn:ent Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Saint Paul's intemal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's intemal control over financial reporting. Page 7 An Equal Opportvnity Empbyer �-/aa� Our consideration of intemal control over financial reporting was for the limited purpose described in the preceding pazagraph of this section and would not necessarily idenrify all deficiencies in intemal control over financial reporting that might be significant deficiencies or matezial weaknesses. However, as discussed below, we idenrified certain deficiencies ln lnternal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a rimely basis. A significant deficiency is a control deficiency, or combinarion of control deficiencies, that adversely affects the City's ability to iniriate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's intemal control. We considered the deficiencies described in the accompanying Schedule of Findings and Quesrioned Costs as items 07-1 and 07-2 to be significant deficiencies in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that . results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City of Saint PauPs intemal control. Our consideration of intema] control over financial xeporting was for the limited purpose described in the first para�aph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weal:nesses. However, both of the significant deficiencies described above are material weaknesses. Comroliance and Other Matters As part of obtaining reasonable assurance about whether the City of Saint Paul's financial statements are free of material misstatement, we performed tests of its 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 objecrive of our audit and, accardingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Audicircg Standards. Minnesota Legal Compliance We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minnesota Legal Compliance Audit Guide foY Local Government, pxomulgated by the State Auditor pursuant to Minn. Stat. § 6.65. Accordingly, the audit included such tests of the accounring records and such other audiring procedures as we considered necessary in the circumstances. I' , � : Og -/4 � 7 e Minnesota Legal Comp[iance Audit Guide for Local Government contains seven categories of compliance to be tested: contracting and bidding, deposits and inveshnents, conflicts of interest, public indebtedness, claims and disbursements, taY increment financing, and miscellaneous provisions. Our study included all of the listed categories. The results of our tests indicate that, for the items tested, the City of Saint Paul complied with the material terms and conditions of applicable legal provisions. The City of Saint PauPs cvritten responses to the material weaknesses idenrified in our audit have been included in the Schedule of Findings and Questioned Costs. We did not audit the City's responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of the Mayor, the City Council, the City's management, others within the City of Saint Paul, and federal awarding agencies and pass-through entities and is not intended to be, and should not be, used by anyone other than those specified parties. 1slRebecca Otto REBECCA OTTO STATE AUDITOR July 25, 2008 /slGreg Hierlinger GREG HTERLINGER, CPA DEPUTY STATE AUDITOR Page 9 Og � l40 7 This page was 1eft blank intentionally. �-/60� OF THE STATE AUDITOR =ew':'*�'�->:.y;°' 's„�X% i (6S1)2962SS1 (Voice) �-.,�-._� . 525 PARK STREET REBECCA OTTO SAINT PAUL, MN 5� 103-2139 state.aud�tor@state us (E nFa ) S?ATE AliDITOR 1-300-627-3529 (Relay Strvfce) REPORT ON COMYLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Mayor and Members of the City Council City of Saint Paul, Minnesota Compliance We have audited the compliance of the City of Saint Paul, Minnesota, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) CircularA-I33 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 2007. The City of Saint Paul's ma}or federal programs are idenrified in the Summary of Auditor's Results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. The Ciry of Saint Paul's financial statements include the operations of the Housing and Redevelopment Authority (HRA} of the City of Saint Paul, a component unit of the City, which eYpended $1,565,113 in federal awards during the year ended December 31, 2007, which aze not included in the Schedule of Expenditures of Federal Awazds. Our audit, described below, did not include the operations of the HRA because it had a separate single audit in accordance with OMB Circular A-133. 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 Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Govenaments, and Non-Projit Organizations. Pa�e 10 An Equal Opportunrt;� Employer ��-/�a � Those standazds and OMB Cizcular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occuned. An audit 3ncludes examining, on a test basis, evidence about the City of Saint Paul's compliance with those requirements and perfomung such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not pzovide a legal determinarion on the City's compliance with those requirements. Tn our opinion, the City of Saint Paul complied, in all material respects, with the requirements refened to above that are applicable to each of its major federal programs for the year ended December 31, 2007. Internal Control Over Compliance The management of the City of Saint Paul is responsible for establishing and anaintaining effective intemal control over compliance with requirements of laws, regularions, contracts, and grants applicable to federal programs. In planning and pexforming our audit, we considered the Ciry's internal cont�ol over compliance with requirements 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, but not for the purpose of expressing an opinion on the effecriveness of intemal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's Internal control over compliance. Our consideration of internal control over compliance was for the limited ptupose described in the preceding paragraph and would not necessarily identify all deficiencies in the City of Saant PauPs internal control that might be significant deficiencies or material wealatesses as defined below. However as discussed below, we identified a deficiency in internal control over compliance that we consider to be a significant deficiency. A control deficiency in internal control over compliance exists when the design ar operarion of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to administer a federal program such that there is more than a xemote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the City's intemal control. We consider the deficiency in intemal control over compliance in the accompanying Schedule of Findings and Questioned Costs as item 07-3 to be a significant deficiency. Page 11 �8-fOD � A material weakness is a significant deficiency, oz combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the City of Saint Paul's internal control. We did not consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a material weakness. Schedule ofExpenditures ofFederal Awards We have audited the financial statements of the governmental acrivities, the business-type activiries, the aggregate discreteiy presented component units, each major fund, and the aggregate remaining fund information of the City of Saint Paul, Minnesota, as of and for the year ended December 31, 2007, and have issued our report thereon dated July 25, 2008. We did not audit the financial statements of the Saint Paul RiverCentre Convention and Visitors Authority, which represent 2 percent, less than 1 percent, and 18 percent, respecrively, and the Port Authority of the Ciry of Saint Paul, which represent 28 percent, 12 percent, and 20 percent, respectively, of the assets, net assets, and revenues of the aggregate discretely piesented component units. Those financial statements were audited by other auditors. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City of Saint Paul's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of addirional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information 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. The City of Saint Paul's conective action plan to the federal award finding identified in our audit is included in the accompanying Schedule of Findings and Questioned Costs. We did not audit the City's corrective action plan and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Mayor, the City Council, the City's management, others within the City of Saint Paul, and federal awarding agencies and pass-through entiries and is not intended to be, and should not be, used by anyone other than those specified parties. /s/Rebecca Otto REBECCA OTTO STATE AUDITOR July 25, 2008 /s/Greg Hierlinger GREG HIERLINGER, CPA DEPUTY STATE AUDITOR Page 12 ��-laa � Tbis page was left blank intentionally. ��-l�a � CITY OF SAINT PAUL SAINT PAUL, M7N?VESOTA Schedule 2 SCHEDUI.E OF EXPEYDITURES OF FEDERAI., AWAILDS FOR THE YEAR E.\DED DECEbIBER 31, 2007 Fedual Grantor Pass-Throug4 Agency Grant Pros+am Title U.S. Department of Commerce Dfrect Gretn Investments for Public Works and Economic Development Facilities U-S. Department of Housing and Urban Development D¢ect Grnn4 Commumty Devetopttsnt Bbck GsanWEnhtlement Grnnts Emergency Shelter Grazau Rograzn Co=rununiry Develo}xnent Block Csrants7Brownfields Econo{mc Development Ininative (BEDI, Sect�on 108) Total U.S. Department of Housing and Urban Developmen[ U.S. Department of the Interior Direct Cttant Rives, Tcails and Conservation Ass�stance Lilydale Park Trni( Connection U.S. DepartmenY of Justice Direct 6rants Services forTrafficking Vicnms M�ssing Childreds Assistance - Intemet Cnmes Against Ch�Idren Grants to Fncourage Arrest Polic�es and Enforcement of Protection Orders - First LighS Accouniabiliry, Response, and Enfircement (FLARE) Pu6lic Safety Par[nership and Commun�ry Pohcmg Cttants Cops Moce Technoloay Cops More 2002 Secw�e G�r Schools � Gang Resistance Education and Traming (G R.E.A.T ) Program Edwazd Byme Memonal Jushce Ass�stance Grant Rogram Jus6ce Ass�stance Passed ThroughMmnesota Department of PubLc Safriy Juvemle Accountalvlity B(ock G7ants Tifle V- Delmquency Pcevention Rogrnm Edward Byme Memoiial Focmula Granc Pcogrnm African American immtgmnt and Musi�m Healmg ImnaUVe Anti-Gang InaiaYive Youth Gang 3nierven4on Passed Through National Assoc�anon ofPolice AthleliGActivfies Leagues Part E- Developing 7'csting, and Demonstratmg Promismg New Proarams Youth Enrichment Rngram Federal CFDA Number I 1 300 l4 218 I4 231 14 246 15 921 16.320 16.543 I6 590 l6 710 16.710 16 710 16 937 16.738 16.523 1Cti548 16.579 7 6 744 1fi.541 Passed Through to Expenditures Subrecipienzs 5 301,193 $ $ 10,741,31t $ 4,388,638 24I,166 217,596 __ 419,321 _____ $ 11,401,795 $_ 4,60b,234 $ 97,D00 $ $ 163,567 $ - 305,418 - Iti$891 - 99,451 - 1,554 - 14,983 - 6,158 - 249,348 - 9,515 - 60,�00 - 65,919 - 11,845 - 7,SCd - Page 13 _ Q��/Db � CITY OF SAINT PAUL SAINT PAUL, MINNESOTA Sckedule 2 (Confuiued) SCHEDULE OF EXPEHDITURBS OF FEDERAT. AWARDS FOR THE YEAR ENUED DECE:ySER 31, 2007 Federal Grantor Pass-Through.4gency Grant Proo�m Title U.S. Department of Justire (Continued) Pused'I}irough Ramsey County, Minnesota Edv2rd Byme Memorial Jusnce Assistance Gru�t Rogrnm Narcotics Control Program - Suiveillance Tatai U.S. DepaAment ot Justice U.S. Department of Transportatlon Passed Through Minnesota Deparanent of Trnnsportaaon Highway Plannmg and Construciion Pederai Highway AdmmisRation Central Corridor Grant Passed Through Minnesota Department of Public Safery Highway Safety Ciuster State and CommuniTy Highway Safety Speed Lumt Enfircement Grant Niyht Cap Grant Alco6ol, 7raffic Safety, and Dnmk Driving Prevennon 3ncenCive Gran[s - Safe a�d Sober Total L1S. Departme.ot of Tranaportation U.S. Equal Employmen[ Oppor[uuity Commission Dvect Grant Employ[nent Disoriminarion - State and I.ocal Faic Employment Prdctices Equal F�nployment Oppod�niry- EEOC QfCice of Library Services, Ipsptute ot Moseum aud Gibrary Services, Nafional Fowdatio� on the Arts and the Aumznifies Passed Through Nunnesota DepartmenC of Education and the Friends of the Library Gants to S[ates Inshtute of Maseum and Library Passed Through the College of St Catherine Laura Bush 21 s[ Ceumry Lbranan Proaram Teachmg-Leaming Lbrazy Total O[6ce of Library Suvices, InsNtute of Museum and Library Services, National Foundation on the Arts and the Humarutfes Federal Passed CPDA 7hrough to N umber Ex pendiNres SubrecipienU I6 738 104,227 __ $ 1,268 y 676 $ 20205 3 1,824,894 � 20.500 145,?23 20 600 20.600 20 607 9,233 11,144 52,119 _ - $ 2,�42,613 $ ___ 3Q002 $ 51,089 $ _ 45.310 5 2,745 $ 45 3l3 65, 439 $ 68,184 $ Page 14 ��-/o�� CITY OF SAII3T PAUL SAINT PAUL, MINNESOTA Schedule 2 {Continue� SCELEDULE OF EXPENDI"PiiRES OF FEDERAi. AWARDS FOR THE YEAR ENDED DECE7vI�ER 31, 2007 Federal Grantor Federal Passed Pass-Through .Ageucy CPDA Through to GrantProgramTitle Yumber Expeuditure ' Subrecipients Corporatiou for National and Community Service D�rect Grant Volunteers in Service to America (VISTA) AmeriCorps U.S. Departmen[ otHomeland Security Passed through Minnesota Departrnent ofPublic Safety Urban Areas Secunty Initiahve Homeland Security Grant ftogram Law Enforcement'Certonsm Prevention Pmgrnm State Homeland SecuriTy Grant Progrcm Urban Aieas Secunry lnitiative Urban Areas$ecunty Supplemental Buffer Zone &oceccion Rogrnm Homeland Securiry Part II Equipment 94 013 97.008 92067 97.067 97.067 97.067 97.078 5 _ 218,556 $ - Total U.S. Department of Homeland SxuriTy Total Federal Awards Notes to Scheduie oFExcendiNres of Federal Awards 388,032 $ 3I,085 48,A55 805,638 964,269 _ 165,343 $ 2,402, $ - % 1�785�536 $ 4,b06,23A L The Schedule of Expendrtures ofFederal Awards presents the acero�ty of Pedernl award proa ams expended by the Ciry of Saint Paul It do� w[ include $1,565,113 (See Note 4 below) m federal awazds expended by the Housmg and Redevelopme�t Authonty (I3RA� a componrnt un�t ofthe Ciry, which had a separate smgle aud�t The C�ry oFSaint Paul's repoRing entiry is defined m Note II to the basm financial statementa 2. The expe�dim`es on this schedule are on the basis of accounhag usai by the indrvidual ffinds of the Ciry of Sa�nt Paul Govemmenial funds use the modified accrual basis of accoanting. Rropnetary funds use the accrual basis 3 Pass-through grant numbers were �ot ass�gned by the pass-through agencies. 4 In the Ciry's Comprehansive Annual Finanmal Repor[, the Schedule oflntergovemmrntal Revenue All Funds (Schedule 36J mdicates $19,133,987offederalrevenue. Thefederalawardsonthisschedu(eare$t7,851,536,adiffecenceof$1,282,451 Thefederal intergwemmental revenue celated m fhe Federat Highway Adrmmstration gmnt (CFDA No. 2Q205) was $2,Q94,407, with related expettditu�es of$1,824,894, adifference of $269,513. 1'he HRA Federnl and State Progrnms Fund had $961,192 offederal intecgovemmental revenue, and the HRA Loan Enterynse Fund had $51,746 of fedecal iatergovemmeatal revenue. In ad&hon, the HRA Parkmg Entecpnse Fund u czporting a capital conmbut�on of$552,175 �r the construcCion oFthe Wesi End Multi-Modal Hub (Sm�th Avence Tran>it Ramp) Page 15