HomeMy WebLinkAboutPACKET Audit Committee 2016-10-12Wednesday, October 12, 2016
8:30 a.m. — 10:00 a.m.
iciit nmittee Administration Conference Room
AGENDA
1. CALL TO ORDER
2. NEW BUSINESS
a) 2015 CAFR and Single Audit Review
I. Review 2015 Management Letter and Single Audit Findings with Auditors.
1. General Information.
2. Opinion.
b) Confirm readiness for October 25, 2016, Town Board presentation.
c) Other discussion items related to 2015 CAFR and Single Audit.
3. DISCUSSION
a) Discussion of annual renewal of Clifton Larson Allen contract for
2016 CAFR / Single Audit.
4. ADJOURN
Attachments:
Exhibit A: CliftonLarsonAllen Governance Letter
Exhibit B: CliftonLarsonAllen Management Comments
Exhibit C: Estes Park Single Audit 2015
CAFR available online at:
https://www.colorado.gov/pacific/town ofe, espark/comprehensive-annual-financia
report
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Board ofTrustees
Town ofEstes Park
Estes Park, Colorado
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VVehave audited the financial statements of the governmental activities, the business -type activities.
the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the Town of Estes Park as of and for the year ended December 31. 2015' and have
issued our report thereon dated August 28.2018.VVehave previously communicated toyou information
about our responsibilities Linder auditing standards generally accepted in the United States of America,
Government Auditing Sbanoan7t. and Title 2 U.G. Code of Federal Regulations Part 200. Uniform
Administrative Requirements, Cont Principles, and Audit Requirements for Federal Awards (Uniform
Guidance), as well as certain information related to the planned scope and timing of our audit.
Professional standards also require that we communicate to you the following information related to our
Significant audit findings
Qualitative aspects ofaccounting practices
Anonuntivgpolicies
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used bythe Town of Estes Park are described in Note 1 tothe financial statements.
As described in Note 14, the Town implemented Governmental Accounting Standards Board (GABE)
8butennmnt No. 68. ^4nnounbno and Financial for Pensions — an mn/enc�nmnt of GA3B
Statement No. 27 and the related GA8B Gtmhannent No. 71, Pension Transition for Contributions made
Subsequent hzthe Measurement Date —anamendment o[GA3BStatement No. 88' byrecognizing its
net pension liability related to its participation /n the Local Government Division TruotFund, a cost -
sharing multi -employer define pension plan administered by the Public Employees Retirement
Association of Colorado (PER/A. AnoordinO|y, the cumulative effect of the accounting change is
recorded at the beginning of the year in the financial statements of the governmental activities.
We noted no transactions entered into by the entity during the year for which there in o lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements \nthe proper period.
Accountinqambmatem
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and onaunnotiona
about future events. Certain accounting estimates are particularly sensitive because of their
significance to the financial statements and because of the possibility that future events affecting them
may differ significantly from those expected. The most sensitive estimate(s) affecting the financial
statements were:
° Management's estimate of depreciation expanse is based on an eoUmabxj useful life of the
asset from the date it is placed in service.
2
• Self -insured liabilities, including claims payable and incurred but not reported (IBNR) claims, are
estimated based on past experience and with the assistance of third party actuaries, who utilize
assumptions about inflation, recent claims, settlement trends, and other economic factors.
• The Town's other postemployment benefit obligation is determined based on an actuarial
analysis of the projected economic conditions.
• Management's estimate of the intergovernmental receivable, revenue and deferred inflow of
resources related to grant activity, specifically FEMA, is based on expenditures incurred and
recorded during 2015.
• Management's estimate of the environmental remediation is based on a drainage plan and
actual costs for completing necessary repairs which was based on a 3rd party valuation. See
Note 6 to the financial statements.
• Management's estimate of the compensated absence liability is based on hours, accrued hours
not used during the fiscal year, and the Town employees' current rate of pay as of December
31, 2015.
• Management's estimate of the net pension liability and associated deferred inflows and outflows
of resources are based on an actuarial analysis performed by the Public Employee's Retirement
Association of Colorado
• Management's estimate of the West Elkhorn Avenue, which was donated by the State of
Colorado during 2015, is based on a Pavement Condition Index (PCI) value for West Elkhorn
Avenue of 29 out of 100. This estimation estimates the value of the road has lost approximately
71% of its condition. The final value or $550,000 is 29% of the first 85% of the road's total value.
We evaluated the key factors and assumptions used to develop these estimates in determining that
they are reasonable in relation to the financial statements taken as a whole.
Financial statement disclosures
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosure affecting the financial statements was the
Town's disclosure regarding its $410,712 liability related to mitigation of groundwater and drainage
issues on at the Elm Road Landfill, as described in Note 6 to the financial statements.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties encountered in performing the audit
The completion of our audit was delayed due to the difficulties encountered surrounding the recording
and support received from the Town related to grant activities.
Uncorrected misstatements
Professional standards require us to accumulate all misstatements identified during the audit, other
than those that are clearly trivial, and communicate them to the appropriate level of management. The
attached schedule summarizes uncorrected misstatements of the financial statements. Management
has determined that their effects are immaterial, both individually and in the aggregate, to the financial
statements taken as a whole.
3
Corrected misstatements
The attached schedule summarizes all misstatements (material and immaterial) detected as a result of
audit procedures that were corrected by management.
Disagreements with management
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditors' report. See the Financial Statement Schedule of Findings and Questioned
Costs, finding 2015-005 for disagreement with management.
Management representations
We have requested certain representations from management that are included in the attached
management representation letter dated August 29, 2016.
Management consultations with other independent accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the entity's financial statements or a determination of
the type of auditors' opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Significant issues discussed with management prior to engagement
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to engagement as the entity's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our engagement.
Other audit findings or issues
We have provided a separate letter to you dated August 29, 2016, communicating internal control
related matters identified during the audit.
Audits of group financial statements
We noted no matters related to the group audit that we consider to be significant to the responsibilities
of those charged with governance of the group.
Other information in documents containing audited financial statements
With respect to the required supplementary information (RSI) accompanying the financial statements,
we made certain inquiries of management about the methods of preparing the RSI, including whether
the RSI has been measured and presented in accordance with prescribed guidelines, whether the
methods of measurement and preparation have been changed from the prior period and the reasons
for any such changes, and whether there were any significant assumptions or interpretations underlying
the measurement or presentation of the RSI. We compared the RSI for consistency with management's
responses to the foregoing inquiries, the basic financial statements, and other knowledge obtained
during the audit of the basic financial statements. Because these limited procedures do not provide
sufficient evidence, we did not express an opinion or provide any assurance on the RSI.
With respect to the schedule of expenditures of federal awards (SEFA) accompanying the financial
statements, on which we were engaged to report in relation to the financial statements as a whole, we
made certain inquiries of management and evaluated the form, content, and methods of preparing the
SEFA to determine that the SEFA complies with the requirements of the Uniform Guidance, the method
4
of preparing it has not changed from the prior period or the reasons for such changes, and the SEFA is
appropriate and complete in relation to our audit of the financial statements. We compared and
reconciled the SEFA to the underlying accounting records used to prepare the financial statements or
to the financial statements themselves. We have issued our report thereon dated August 29, 2016.
With respect to the combining and individual nonmajor fund financial statements, budgetary schedules,
and Local Highway Finance Report (collectively, the supplementary information) accompanying the
financial statements, on which we were engaged to report in relation to the financial statements as a
whole, we made certain inquiries of management and evaluated the form, content, and methods of
preparing the information to determine that the information complies with accounting principles
generally accepted in the United States of America, the method of preparing it has not changed from
the prior period or the reasons for such changes, and the information is appropriate and complete in
relation to our audit of the financial statements. We compared and reconciled the supplementary
information to the underlying accounting records used to prepare the financial statements or to the
financial statements themselves. We have issued our report thereon dated August 29, 2016.
The introductory and statistical sections accompanying the financial statements, which are the
responsibility of management, were prepared for purposes of additional analysis and are not a required
part of the financial statements. Such information was not subjected to the auditing procedures applied
in the audit of the financial statements, and, accordingly, we did not express an opinion or provide any
assurance on them.
In connection with the entity's annual report, we did not perform any procedures or corroborate other
information included in the annual report. Our responsibility for such other information does not extend
beyond the financial information identified in our auditors' report. We have no responsibility for
determining whether such other information is properly stated and do not have an obligation to perform
any procedures to corroborate other information contained in such documents. However, as required by
professional standards, we read management's discussion and analysis of financial conditions and
results of operations and considered whether the information or the manner in which it was presented
was materially inconsistent with information or the manner of presentation of the financial statements.
We did not identify any material inconsistencies between the other information and the audited financial
statements.
Our auditors' opinion, the audited financial statements, and the notes to financial statements should
only be used in their entirety. Inclusion of the audited financial statements in a document you prepare,
such as an annual report, should be done only with our prior approval and review of the document.
***
This communication is intended solely for the information and use of the Board of Trustees and
management of the Town of Estes Park and is not intended to be, and should not be, used by anyone
other than these specified parties.
CliftonLarsonAllen LLP
Greenwood Village, Colorado
August 29, 2016
5
Town of Estes Park
Exhibit A - Corrected Misstatements
December 31, 2015
General Fund:
Adjusting Journal Entries JE # 1
To record amount of forfeiture as of year end.
101-0000-151,00-00 Forfeiture Investment-ICM
101-0000-239.00-00 Forfeiture-ICMA Police
Total
Adjusting Journal Entries JE # 2
Audit adjustment due to overstatement of AR and Unearned Revenue related to the FEMA
grant as of 12/31/15
101-0000-222.00-00 Deferred Revenue
101-0000-126.00-00
Total
Intergovern. Receivable
Adjusting Journal Entries JE # 3
To record adjusting journal entry for revenue recorded in the Open Space Fund and not the
General Fund
101-0000-101, 00-00
101-3100-333.00-00
101-3100-334.20-00
Total
Light and Power Fund:
Pooled Cash
FEDERAL GRANT
STATE GOVERNMENT REVENUE
21,538.00
21,538.00
86,654.00
86,654.00
58,840.00
58,840.00
21, 538.00
21,538.00
86,654.00
86,654.00
50,434.00
8,406.00
58,840.00
Adjusting Journal Entries JE # 1
To remove loan receivable and revenue stream related to subsidy reimbursement as it was not
received until 2016. No funds were loaned to the Light and Power Fund
502-0000-385.50-00
502-0000-129.00-00
Total
OTHER FINANCING SOURCES
Loans Receivable
Adjusting Journal Entries JE # 2
Entry to record prior period adjustment for GASB 68 implementation
502-0000-170.00-00 DO - Contributions subsequent to measurement date
502-0000-279.00-00
502-0000-260.00-00
Total
Adjusting Journal Entries JE
To record CY activity for GASB
502-0000-170.00-00
502-0000-180.00-00
502-6301-540.14-50
502-6401-550,14-50
502-6501-560.14-50
502-0000-260.00-00
502-0000-261.00-00
502-0000-262.00-00
502-6301-540.14-32
502-6401-550.14-32
502-6501-560.14-32
Unreserved
Net Pension Liability
# 3
68 implementation
DO - Contributions subsequent to measurement date
DO - Earnings
Pension Expense Distribution
Pension Expense - Customer Accounts
Pension Expense - Admin.
Net Pension Liability
DI - Experience
DI - Proportionate Share
EMPLOYER BENEFITS
EMPLOYER BENEFITS
EMPLOYER BENEFITS
325,000.00
325,000.00
325,000.00 325,000.00
180,239.00
2,043,093.00
2,223,332.00
27,194.00
126,089.00
132,787.00
24, 933.00
48,241, 00
2,223,332.00
2,223,332.00
101,775.00
467.00
49, 569.00
133,736,00
25,111.00
48,586,00
Total 359,244.00 359,244.00
6
Town of Estes Park
Exhibit A - Corrected Misstatements
December 31, 2015
Adjusting Journal Entries JE # 4
To record change in compensated absences from 2014 to 2015
502-6301-540,11-02
502-0000-204.00-00
Total
PERSONAL SERVICE/SALARIES
Compensate Absenses (Short)
Adjusting Journal Entries JE # 5
Prior period adjustment to reflect overstatement of accounts payable as of 12/31/14
502-0000-202.00-00 Accounts Payable
502-0000-279.00-00 Unreserved
Total
Adjusting Journal Entries JE # 6
Entry to correct accounts payable entry which was recorded in error during 2015 to accounts
payable and miscellaneous revenue
502-0000-202.00-00
Total
Accounts Payable
502-0000-380.20-00 MISCELLANEOUS REVENUE
Adjusting Journal Entries JE # 7
To record AJE for FEMA AR and Revenue based on current year cash receipts
502-0000-126.00-00
502-0000-333.00-00
502-0000-334.20-00
Total
Water Fund:
Intergovern. Receivable
FEDERAL GRANT
STATE GOVERNMENT REVENUE
6,808.00
6,808.00
87, 325,00
6,808.00
6,808.00
87,325.00
87,325.00 87,325.00
87, 325.00
87,325.00
29,098.00
29,098.00
87,325.00
87,325.00
24, 941.00
4,157.00
29,098.00
Adjusting Journal Entries JE # 1
To record prior period adjustment for implementation of GASB 68
503-0000-170.00-00
503-0000-279.00-00
503-0000-260.00-00
Total
Adjusting Journal Entries JE # 2
Entry to record CY activity related to
503-0000-170.00-00
503-0000-180.00-00
503-6200-530.14-50
503-6300-540.14-50
503-6400-550.14-50
503-6500-560.14-50
503-0000-260.00-00
503-0000-261.00-00
503-0000-262.00-00
503-6200-530.14-32
503-6300-540.14-32
503-6400-550.14-32
503-6500-560.14-32
DO - Contributions Sub, to measurement date
Unreserved
Net Pension Liability
GASB 68 implementation
DO - Contributions Sub. to measurement date
DO - Earnings
Pension Expense - Purification
Pension Expense - Operation
Pension Expense - Gust. Account
Pension Expense - Admin.
Net Pension Liability
DI - Experience
DI - Proportionate Share
EMPLOYER BENEFITS
EMPLOYER BENEFITS
EMPLOYER BENEFITS
EMPLOYER BENEFITS
109,431.00
1,210,672.00
1,320,103.00
1,320,103.00 1,320,103.00
16,510.00
76, 555.00
26, 726.00
82, 882.00
9,059,00
19,497.00
91, 569.00
283.00
13,436.00
24, 362. 00
75, 549.00
8,258.00
17,772.00
Total 231,229.00 231,229.00
7
Town of Estes Park
Exhibit A - Corrected Misstatements
December 31, 2015
Adjusting Journal Entries JE # 3
To record GASB 62 entry that was never made during 2015 per Water Dept maintenance
policy.
503-6200-530.26-40 MATERIALS AND SUPPLIES
503-0000-227.00-00
Total
108,000.00
GASB 62 Maint Accrual 108,000.00
Adjusting Journal Entries JE # 4
To record change in compensated absences from 2014 to 2015
503-6200-530.11-01
503-0000-204.00-00
503-0000-204.40-00
Total
PERSONAL SERVICE/SALARIES
Compensate Absenses (Short)
Non -Current (Long Term)
Adjusting Journal Entries JE # 5
To record AJE related to FEMA based on current year cash receipts
503-0000-126.00-00
503-0000-333.00-00
503-0000-334.20-00
Total
Open Space Fund:
Intergovern. Receivable
FEDERAL GRANT
STATE GOVERNMENT REVENUE
108, 000.00 108,000.00
8,251.00
2,511.00
5,740.00
8,251.00 8,251.00
17,416.00
14,928.00
2,488.00
17,416.00 17,416.00
Adjusting Journal Entries JE # 1
To record adjusting journal entry for revenue recorded in the Open Space Fund and not the
General Fund
220-0000-333.00-00
220-0000-334.20-00
220-0000-101.00-00
Total
Medical Insurance Fund:
FEDERAL GRANT
STATE GOVERNMENT REVENUE
Pooled Cash
50,435.00
8,405.00
58, 840.00
58,840.00 58,840.00
Adjusting Journal Entries JE # 1
To record change in IBNR related to lag report for January 2016 - March 2016 payments
606-4200-635.29-11 OTHER CURRENT EXPENSES 12,683.00
606-0000-202.70-00 Medical Benefit Payment 12,683.00
Total 12,683.00 12,683.00
8
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Water
August 29, 2016
CliftontarsonAllen LIP
8390 E Crescent Parkway, Suite COO
Greenwood Village, CO 80111
This representation letter is provided in connection with your audit of the financial statements of
the Town of Estes Park (the Town), which comprise the respective financial position of the
governmental activities, the business -type activities, the discretely presented component unit, each
major fund, and the aggregate remaining fond information as of December 31, 2015, and the
respective changes in financial position and, where applicable, cash flows for the year then ended,
and the related notes to the financial statements, for the purpase of expressing opinions on whether
the financial statements are presented fairly, in ail material respects, in accordance with accoiinthig
principles generally accepted in the United States of America (U.S. GAAP),
Certain representations in this letter are described as being limited to matters that are material.
Items are considered material, regardless of size, if they involve an omission or misstatement of
accounting information that, in light of surrounding circumstances, makes it probable that the
Judgment of a reasonable person relying on the information would be changed or influenced by the.
omission or misstatement.
We confirm, to the best of our knowledge and belief, as of August 29, 2016, the following
representations made to you during, your audit of the financial statements as of and for the year
ended December 31, 201.5.
Financial State merits
We have fulfilled our responsibilities, as sot out in the terms of the audit engagement letter
dated December 3, 2015, for the preparation and .fair presentation of the financial
statements in accorcinnce with U.S. GAA0. The financial statements include all properly
classified funds and other financial information of the primary government and all
component units required by generally ecrepted accounting principles to be included in the
financial reporting entity.
We acknowledge and have fulfilled our responsibility for the design, implementation, and
maintenance of Internal control relevant to the preparation arid fair presentation .ef
financial statements that are free from nnate'ial misstatement, whether due to fraud or
error.
We acknowledge our responsibility for the design, implementation, and maintenance or
internal control to prevent and detect fraud.
14
� We have identified all accounting estimates that Could be rnatprial to the financial statements, including
the key factors and significarit assumptions used in making those estimates, and we believe the estimates
(including those measured Fit fair value) and the significant assumptions Used in makirig those a-.'xounting
estimatesare reasonable.
Related par ty ndF-don,hipu and t/ans:nct|ons, including, but not limited to, nexenu��
expendhums/exoenses,loans, transfers, )aa�;in�a�anQem�nt�am�guarnn���ondamountsruce(vab|o
from or payable to relautd parties hawo been appropriatelyaccounted for and disclosed in accor'dano with
the requirements ofU.S. SAAP.
No events, including hn»tances ofvnncompHarice, have occurred subsequent to the financial st;i�em�nt
date and thoouQhthe dm1emfthis letter that would require adjustment to, ordbdoaxreim,the financial
steiementxorimthe szhedu!eoffindinQsnndquestioned costs.
Thee8ectsofunznrrertedcnisstaterpent;areimmaieria|,bc¢hindhviduaUymndhnthmaggregatt-�,tuthu
financial statements for each *j�inion unit. A list of the uncorrected misstatements is altnch.,-d tothe
representation |pUx/. In addiUun, you have Proposed adjuodn@]ourn*| entries that have posted to
the entity's accounts. �Ve hgve revie-m2d and approved those adjusting journal entries and Und�rstand the
nature of the oh»nQea and their impact on the Hnmnuln| statements. We are /n a3reementw0�
ad/ustmenisand aco:p¢/esponsibUilyfor tinvm.
m VVeare not aware ofmrri orthreatened {b�pdo��ah�m noroesoma�sprvnossnr�adda|maor
assessments that are. oaquimJtobeaccrued ur disc|oand inthe financial statements in accor(mnoowkh
U.S. GAAP, or which would A'ectl federol award prcjranns, and we have not consulted a lawyc^�fji nim�
litigation, claims, orossnsamenM.
Arrangements with finemdai i�isbt ltionm involving repurchase, reverse repurchase, or se"u/bos kwod�nQ
agreements, corn pr;nss15i,cj bu|mncex or oUmronnngcments involving restrictions on Cash ba)un,-,2sz�od
line -of -credit or si/nibr have bmwn properly recorded or disclosed in flnaociz'!
statements.
~ Receivables recorded b the 5nonde| ntatemenb represent valid claims against debtors for homo-p T;tionc
@hmingonorbefore the Moanda\6aCcand have been reduced totheir ostl|/oetedn*Araa��zah|c
value.
We have no plans or 1hat mny makmdaily affect the carryinC value or dn=x��o�ton nfms�*�,
liabilities, orequity.
We believe that all hav,�1*cndeferred to future periods will
bor�o��a��
Participation in a ;mbko entity rj�-� yen| has bc�--n properly reported and disdns A |n dbe 0Ycanc��{
statements.
We believe that the itssvrn.pVmr and methods used to measure pnnolon
postmmnp|mpncntbnnaUCs Uab|6dosmmdcosts for financial accounting purposes mnuop�rop/��ebo
the circumstances.
15
JC'N 11);"`" J:LA,„"
We are unable to determine the possibility of a withdrawal liability in a multiple -employer benefit plan.
,0 We do not intend to compensate for the elimination of postretirement benefits by granting an increase in
pension benefits.
We do not plan to make frequent amendments to our pension or other postretirernent benefit plans.
Infor tion Tirovith:.4
We have provided you with:
o Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the financial statements such as records, documentation, and other matters,
o Additional information that you have requested from us for the purpose of the audit,
o Unrestricted access to persons within the entity from whom you determined it necessary to obtain
audit evidence.
o Complete minutes of the meetings of the governing board and related committ2eS, o; summaries
of actions of recent meetings for which minutes have not yet been prepared.
Access to all audit o';• relevant monitoring reports, if any, received from funding souites.
All material transactions have been recorded in the accounting records and are reflected in the financial
statements and the schedule of expenditures of federal awards.
Provision has been made for any material loss that is probable from environmental remediation iabilitis
associated with the Elm Road Landfill. We believe that this estimate is reasonable based on available
information and that the liabilities and related loss contingencies and the expected outcome of
uncertainties have been adequately described in the entity's financial statements.
We have disdosed to you the results of our assessment of the risk that the financial statements may he
materially misstated as a result of fraud.
We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
o ManagemoQt;
o Erni)lopes who fq.ivo sigaificant roles in internal control; or
o Others when the frond could have a material effect on the financial statements.
We have no knowledge of any aliegations of fraud, or suspected fraud, affecting the entity's financial
statements communicated by employees, former employees, grantors, regulators, or others.
16
We have no knowledge of any instances of noncompliance or suspected noncompliance with provisions of
laws, ree,ulations, contracts, and grant agreements, or abuse whose effects should be considered when
preparing financial statements.
Wei have disclosed to you all known actual or possible litigation, claims, and assessments whose effects
should he considered when preparing the financial statements.
• Tht3re z:re no other material liabilities or gain or loss contingencies that are required to be accrued or
dieciesed i71 accordance with U.S. GAAP.
We have disclosed to you the identity of the entity's related parties and all the related party relationships
end, transactions of which we are aware.
• The entity has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets,
ricr tir.4s any asset been pledged as collateral, except as made known to you and ,disclosed ia the financial
statements.
hove a process to track the status of audit findings and recommendations.
• We have identified to you any previous audits, attestation engagements, and other studies related to the
euclit obfe?etives and whether related recommendations have been implemented.
Yee have provided our views on reported findings, conclusions, and recommendations, as well as our planned
corrective actions, Re,- the report.
We are respensible for compliance with the laws, regulations, and provi.sions of contracts and grant
:agreements oppiicable to the Town, including tax or debt limits and debt contracts; and we have identified
and disclosed to you all laws, regulations, and provisions of contracts and grant agreements thatwe believe
have. a direct mid material effect on the determination of financial statement amounts or other financial data
significant to the audit objectives, including legal and contractual provisoes for reporting specific activities
seee.rete funds.
vieiations or possible violations of budget ordinances, laws and regulations (including those
p.erteir,tee,“ 'to edoptleg, approving, and amending budgets), provisions of contracts and grant agreements,
VAX. Or debt limits, and any related debt covenants whose effects should 15-Jc..., considered for disclosure in the
firtatements, or as a basis for recording a less contingeedy, er for reporang on noncompliance except
dlsciesed in P.;.oto 2 elated to the Street Improvement Fund.
The entity complied with all aspects of contractual or grant agreerneets that would have a material effect
on the financial statements in the event of noncompliance.
have. complied with all restrictions on resources (including donor restrictions) and all aspects of
con trt n rigrtagrnrnents that would have a material effect on the financial statements in the event
of non corn alien cte This includes complying, with donor requirements to ei eintain a specific asset composition
nucE,ssa;y to sNtisFy their restrictions.
17
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We have followed all applicable laws and regulations in adopting, approving, and amending budgets except
as disclosed in Note 2 related to the Street Improvement Fund.
O The financial statements include all component units as we as joint ventures with an equity inte,rest, and
properly disclose all other joint ventures, jointly governed organi7atiOnS, and other related organizations,
The financial statements properly classify all funds and activities.
O All funds that meet the quantitative criteria in GASL Statement Nos. 34 and 37 for presentation as major are
identified and presented as such and all other funds Clot are presented as major are particularly important
to financial statement users.
Corroponents of net position (net investment in capita 71S5L'ZI::,4 restricted; and unrestricted) amounts are
properly classified and, if applicable, approved.
investments are properly valued.
Provisions for uncollectible receivables have been 9rop.arly identified and recorded.
Expenses have been appropriately classified in or allocated to fun'Jioris and programs in the statement of
activities, and allocations have been made on a reasonable basis.
Revenues are appropriately classified in the sta',,enis.4ot of activities within program revenues and general
revonlie:S.
interfooid, internal, and intra-entity activity and balances have been appropriately classified arid reported.
• Deposits and investment securities are properly classified as to TifS, and are properly valued and disclosed.
0 Capital assets, including infrastructure and intangible iusots., err. properly capitalized, reported, and, if
applicable, depreciated.
O We have appropriately disclosed the entity's policy regarding, wirerher to first apply restricted or unrestricted
resources when an expense is Incurred for purposes for which both restricted and unrestricted net position
available and have determined that net position is properly recognimd under the policy,
We acknowledge owresponsibility for die requirwi 6l.ippmnentary information (RSI). The RSI is measured
and presented within prescribed guide.lines and the methods of measurement and presentation have not
changed from those used in the prior period. We haTi2 discitywd to you any significant assurnptions and
interpretations underlying the measurernent and presentation of the RSl.
18
.^
VVeacknowledge our responsibility for presenting the combining and |odiWdua| nonmajor fund financial
statements arid schedules, budgetary;dledo|o4 and Local Highway Finance Report (thesupp|emenCary
Information) in accnrdoncewitb U.S, GAAP, and vvebelieve the supp|ententaryinh»rmadon, including its
form and content, iF,fairly presented in accordance with U.S. GA&P. The methods o[mmaxuremant and
presentationofthesu9p}ementaryinf6;madonh*venctchan0edfromthusevsadinthepdorpK!riud,and
we have disdnsedt* you any si�jui8oantaosumpt/ons or interpretations underlying the measy/amuntand
presentation of the suppl:imentarV itiformation. If thesupplernentary information is not presentad with the
audited financial staternonts, we wil! make the audited financial statements readily availablr,) to thu intendwd
users of the supplernentdry '!nforrmition no later than the date we issue the supplementary ijiforcoation ind
theauditors' report thercon.
As part of your audit, you p/ep;.ted the draft financial x�atomenb and related xutcs and schedu!n of
expenditures nffedora|awards. k`,/ehave doyhIna&adaoindividual who possesses suitable skiU,b�wo|ed�e
and/or enperienfe to un6e/uvan,1 and oversee ynmr services; have made all management an |
dacixions;and have as�ummdn|�manaDemantrespmnxib|UUps.VVehave evaluated the ada4uaq/oadresm|ts
of the service. We have approw-cl, and accLpted responsibility for those financial state'neoti an'j
related notes and ofoffod.Z.-mVan/ardo.
w With respect tofederal award
���mv�
u We are responsible for undarstzndin,3 and complying with and have complied %vith ds
requirements ofTldm2U.S.code ofFe6s/a 8egWobions([FR)Part 20lUh0orm A.Uninfst.�etlme
8e9uhrn/cn��, Cost Pr;Ao¢ies, ondAudiY Requirements for Federal Awards (Unihor/n Guidance)
including, re/mtingtoprepmrationof the schedule ofexpenditures ofFndera(u:vards.
o VVeaokoon|edgeuu/respn'oibUityfor presonUng.the schedule nfexpend|tvresmffcdcra|av/ards
(5EEA) and notns in nxom/dance with the requirements clthe Uniform Guid�']nca, and wm
believe the SEFA, inclAing its form and content, is NOV presented in accordance with t.lpn tjniforw
Guidance. 'The methods ufmeusaruxom`tand presentation of the 6EFA have nml champed f/'nni
those used in tkepri:�r porind and we hnvodivc|msed to you any significant oysunnp�iono amd
inLerpnotst�oxmondlur:yixgthe /ncnsyvc'nentand prenentaUonofthe GEFA.
o Ifthe SEF4 is /oLpreacnted with the audited financial ctaten'ent's,xxewill mntnthe nudiied
finandu}s1atement,/eodiYyavmBoh{otodheiateodeduserooftheSEFAno|aterthan\heda�cwa
issued the SEE&and the auffltcru',eport1,berccn.
u We have |denUfisd and dis�losad to ynu all wfour government programs and ra|au,s ar���oy
subject tuThe Uo�omoGaidanmecoc9|iwnnavmditand |^duded|nthe SEFAexpend'1umsmnd-�.
during the auTt PefiOd fW4O -AV3Td.S Pro.Vidcrl by federal agencies in the form of fedarifl
federal cnm�re{mhumcmcn� can�ar¢, |omnS, loan guarantees, property dnnatcd
surp|:spropedy),comp�rsJhaintareot:ubsidies,insurance, food commw,-J|VaS,dirar.z
apprnprint|u/m,and m¢}'erdirec aoaisVince.
19
°
o We are responsible for understanding and complying with, and have compiled with, the
requirements of federal statutes, regulations, and the terms and conditions of federal awards
related to each of our federal programs and have identified and disclosed to you the requirements
of federal statutes, re.gulations, and the terms and conditions of federal awards that are
considered to have a direct and M .terial effect on each major program.
• We are responsible for establishing and maintaining, arid have established znid maintained,
effective internal control over compliance for federal programs that provides reasonable
assurance that we are managing our federal awards in compliance with fadaral statutes,
regulations, and the 4arms and conditions of federal awards that could have a material effect on
our federal programs. We believe the internal control system is adequate and is fuactioning as
intended.
o We have made availaille to you all federal awards (including amendments„ if any) ara:f any other
correspondence with federal agencies or pass -through entities relevant to fecletal progi.ains and
related activities.
We have received no requests from a federal agency to audit one or inure specific prqgrarns as a
major program.
o We have complied with the direct and material compliance roquiremeats including when
applicable, those set forth in the OMB Compliance Supplement, relating to federal awards and
confirm that there were no amounts questioned and no known noncompliance with the direct and
material compliance requirements of federal awards.
o We have disciosed to you any communications from federal awarding agencies ;Ltd pass -through
entities concerning possible noncompliance with the direct and material compliance
requiroments, including corrirrumications received from the end of the period covered by the
complianoe. aadit to the date orthe auditors' report.
o We have disclosed to you the findings received and related corrective actions tai,;an for previous
audits, dtl„eritaton ensagernents, and hiternal or external monitoring that directly rc.late to .tha
objectives of the compliance audit, includiag findings received and corrective acticals taken from
the end Of the period covered by rt Ctnilpliance audit to the date of the auditors' rport.
o Amounts claimed or used for matching were determined in accordance. with relevan I. guidelines in
OMB's Uniform GUIthit14; (', CFR part 200, subpart E) and OMB Cirollif A-8'7, co sr PriNeVa'a Stote,
Loco/, and Tribal Governments, and OMB Circular A-102 Uniform Administrative
C4rfurits and Coopem.fiv ,e5crreementsrri Stote ond LOCO! Governments.
o We have disclosed to you ow interpretation of cornpliance requirtKnents that may have varying
interpretations.
c We have Wilde available to you ell documentation related to compliancewitti tfra direct and
mat-este! compliance requirements, including information related te federal prok.irani financial
reports and clairtis for advances and 1%-:1,01.0(Irsements.
20
o We have disclosed to you the n3ture of any suhsequent events that provide additional evidence
about conditions that existed at the end of the reporting period affecting noncompliance during
the reporting period.
o
There are no known instances of noncompdlancc with direct and material compliance
requi;ementithat occurred subsequanttothe pehodcovered Lythsuud|bzn/report.
We have dist-lo,,;ed to you whethgr any changa!; in internal control over compliance or other factors
that might xignNoanUyaffect internal control, including any corrective action we have taken
regardin,,, signIficant deficiencies and/or material weaknessns in internai control over corr)l-jlianc(,-;,
hnreoccurred subsequent tnthe period covered bythe nudi0nm'ruport.
o Federal prv3ramfinancial reports and dakns for adwancmsandruirnbursament5are supported hy
tha, books and records from which the basic firianciv! s4lt,ementr, hiive been prepared,
u The codi-:!sof iedera| program financial reports Provided to you a�e truc copies of the reports
�uh/n��Und, oco|o'tronicaHytronsno/ttod', to the resVwc�[vm ƒ�)dera| aznocyor pass -through entity,
esnpp||cab1o.
o subrexplents,usnncess*ry,todeterminethat beyhave mwpendadsubewardu
in compliance with federal ntatMas, regulations, and the terms and conditions of the subaward
and|/avemet tbeother pays-thraurghentity requinpmont^ofthe UniFormGuidance.
o Woh�vebsm,,2dnnonogemontdecisions for audit findings thatm2lateLofad. ra|awards made to
oub/edpiezW,and such manFi0ementdecisions have boani��uadxJUAiosix Noothsofaooept-ance
o[the audit rn, ort by the Federal Audit Clearinghouse, Additkunaily,vie havc, followed -up ensuring
thotthrsuhredp|cnthas taken timely and appropriate acUonmoF!1deOdenci:P.sdetected through
audits, on-s|te rev}evvs, and other means that pertain tQ thm federal awa,d provided to the
»u'OrecIpi--nL
o We haw- ciasidered the results of sul)neciplontaudits and h-mmmad��Filly necessary adjustryionts
toour books andm���
I!, , la cost principles.
m %�e are rcspurisiblq for and have accurately prepared the SUr.),nmy schedii;e of prior audit findings
iaindu0mC,uruquinyd1obeiodmdodbythe Uniform �uidonoe, andme�,ovvprovided you
mitk nU }nformat;co on the status of the foUmm'up on prior audit findi.-iQs by federal awarding
oSeodosandp'�Ssthruoghentities, indudin2all managprnent deu/^ipnn.
o Wu arefor and have ensured the neporUn,,, dnei riot contain protected
Y�a m,e ��pmns/Mefor and have accurately prepared tile aud�ewanc�on ofthe Data [N|ootion
ruf fT) as by the Uniform Guidance,
21
o We are responsible for taking corrective action on each audit finding of the compliance audit and
have developed a corrective action plan .that meets the requirements of the Uniform Guidance.
o \i'Ve have disclosed to you all contracts or other agreements with srvice organizations, and we
hove disclossd to you all communications from the service organizations relating to
noncompliance. at the service organizations.
We have complied with all f/Ficondary reporting requirements under SEC Rule No. 240. 1.5c2-12, as outlined
in the covenants to our bond issuss.
We have informed all banking and savings and loan institutions that our deposits are subject to the
resperAive Public fieposi Protection Act and have provided banking institutions with our assigned number.
We widerstand TABOR (Section 20 to Article X of the Colorado Co(Istitution) i complex and subject to
interpretation anc! that many of the provisions will require judicial interpretation. liVe have reviewed the
various prOVISiOi;: Rn LI in terpcetations and believe to the best of our lot ovileds at this time; the Town is in
coin ia nce with TA3OR.
1(nowli?.iig9 our responsibility for the calculations and disclosures related to the Governmental
Accounting Standards Board ((oSP)Statenaent No. GB and 71. The net peosion liablity and related
componefits are mensure4 .and presented within prescribed guidelioes. We tv.dve disclosed to yOLI jny
significant awnlmptions and inte(pretations underlying the measurement and pre.suritation of this
in forr.lation.
Signature:
22
Clifton Lars onAllen LLP
�
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Board ofTrustees and Management
Town ofEstes Park
Estes Park, Colorado
In planning and performing our audit of the financial statements of the governmental ooUvdkas, the
buoinesn-type o(tivitios. the aggregate discretely presented component unit, each major fund, and the
a0gna0ab* remaining fund information of the Town of Estes Park as of and for the year ended
December 31, 2015, in accordance with auditing standards generally accepted in the United States of
America, we considered the entity's internal control over financial reporting (internal control) as a basis
for designing audit procedures that are appropriate in the circumstances for the purpose of expressing
our opinions on the financial otatennenbs, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Anoonding|y, we do not express an opinion on the
effectiveness of the entity's internal control.
However, during our audit we became aware of deficiencies in internal control oU)mn than significant
deficiencies and material weaknesses and other matters that are opportunities to strengthen your
internal control and improve the efficiency of your operations. Our comments and suggestions
regarding those matters are summarized below. A uepmnaba communication dated August 2g. 2010'
contains our written communication of material weaknesses and significant deficiencies in the entity's
internal control. This letter does not affect our communication dated August 29, 2016.
Control Procedures
Through inquiry of Town personnel during our oudit, it was brought to our attention that there are no
controls in place surrounding the cash receipts at off site locations, specifically, the Town's fairgrounds.
This could result in 000h receipts not being reported and subsequently recorded by the Finance
Department. We recommend the Town implement control procedures etlocations outside the Finance
Department to help strengthen internal controls and processes utilized by the Town,
Yearend Financial Reporting
Through test work padbmned over compensated absences and the Tovvn'm self-insurance |iabi|Uv, it
was noted the Town did not properly neOant and account for the change in the liability balances from
2014 to 2015 which resulted in audit adjustments. We recommend the Town implement assigned roles
within the Finance Department to ensure all yearend journal entries are monitored and properly
Financial Statement Preparation
The Board of Trustees and management share the ultimate responsibility for the Town's internal control
system. VVhi|a itioacceptable tu outsouroavmrious accounting functions, the responsibility for internal
control cannot be nutsourced. The Town engagements CLA to assist in preparing its financial
statements and accompanying disclosures. However, as independent mud|tors. CLA cannot be
considered pad of the TVwn'e internal control system. To establish proper internal control over the
preparation oYthe financial statements, including disclosures, the Town should design a comprehensive
review procedure to ensure the financial otahamento, including diso|onures, are complete and accurate.
ex"a
� \n^r r#^m
23
Capital Asset Review
Through work performed over capital assets and through inquiry of Town personnel, we noted the
Town does not have a process in place for the review over depreciation. In addition, it was noted the
capital asset schedule did not agree to the capital asset activity as of December 31, 2015. We
recommend the Town implement a process and procedure over the review of depreciation and capital
asset schedules, prior to these schedules being provided to external auditor.
Payroll Control Procedures
Through work performed over the Town's payroll process, it was noted an employee was not paid for
five hours of overtime worked during 2015. In addition, it was noted that two employee timesheets were
not approved by the supervisor before payroll processed the payment. Per Town policy, hourly
employees and salaried employees taking vacation, sick or emergency leave need to have their time
sheet approved by a supervisor. We recommend the Town review its policies and implement control
procedures to ensure all hourly employee time sheets are review and employees are paid the correct
amount based on hours worked.
Five Year Contracts — Light and Power
Through inquiries of Town personnel, it was noted the Town enters into five year contracts which
customers can obtain when they pay to extend the service line for light and power. Through work
performed, we noted one customer did not receive a refund during 2015 as scheduled. We recommend
the Town review its five year contracts and implement a process and understanding of how the refund
is calculated to help ensure all refunds due to customers are properly paid and recorded.
Overtime Pay
Through inquiry of Town personnel and review of overtime hours, we noted the Town paid excessive
amounts of overtime to hourly employees. As a result, payroll related expenditures within the financial
administration function increased approximately $25,000 as a result of the overtime paid. This large
increase in payroll related costs was reflected in the general fund original budget which increased
approximately $70,000 for the final budget of 2014. We recommend the Town review its hiring policies.
We will review the status of these comments during our next audit engagement. We have already
discussed many of these comments and suggestions with various entity personnel, and we will be
pleased to discuss them in further detail at your convenience, to perform any additional study of these
matters, or to assist you in implementing the recommendations.
This communication is intended solely for the information and use of the Board of Trustees and
management, and others within the entity, and is not intended to be, and should not be, used by
anyone other than these specified parties.
die/-4-x-Zet117,0--c./Z>
CliftonLarsonAllen LLP
Greenwood Village, Colorado
August 29, 2016
24
TOWN OF ESTES PARK
FEDERAL AWARDS REPORT IN ACCORDANCE
WITH THE
SINGLE AUDIT ACT AND UNIFORM GRANT GUIDANCE
December 31, 2015
25
TABLE OF CONTENTS
PAGE
Independent Auditors' 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 1
Independent Auditors' Report on Compliance for Each Major
Federal Program, Report on Internal Control Over Compliance,
And Report on the Schedule of Expenditures of Federal Awards
Required by the Uniform Guidance 3
Schedule of Expenditures of Federal Awards 6
Notes to Schedule of Expenditures of Federal Awards 7
Schedule of Findings and Questioned Costs 8
Summary Schedule of Prior Year Findings 15
26
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CliftonLawnAllen LLP
CLAcnnnectcmn
INDEPENDENT AUDITORS'REP@RT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED OWAN AUDIT OFFINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board ofTrustees
Town ofEstes Park
Estes Park, Colorado
�
|i
We have ouditod, in accordance with the auditing standards generally aooeobad in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
|aeumd by the Comptroller General of the United Stmbaa, the financial statements ofthe governmental
oniivitiaa, the business -type aotivities, the discretely presented component unit, each major fund, and
the o0gnegeh* remaining fund information of the Town of Estes Pork as of and for �h ended
. e yeoren e
Oenembmr31. 2015. and the related notes to the financial ototemnento, which collectively comprise the
Town of Estes Park's basic financial statements, and have issued our report thereon dated August 28.
2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial sbabamnenta, we considered the Town of Estes
Park'm internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
ndobomonta, but not for the purpose of expressing on opinion on the effectiveness of the Town of Estes
ParKo internal control. According|y, we do not express an opinion on the effectiveness of the Town of
Estes Park's internal control,
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and was not designed ho identify all deficiencies in internal control that might be material weaknesses
or significant deficiencies and therefbre, material weaknesses or significant deficiencies may exist that
were not identified. Hovvever, as described in the accompanying schedule of findings and questioned
coots, we identified certain deficiencies in internal control that we consider to be e material weakness
and significant deficiencies.
A deficiency /n internal control exists when the design or operation of e control does not allow
management oremployees, in the normal course of performing their assigned funuUona, to prevent, or
detect and norrect, misstatements on m timely baaio. A material weakness is o deOu|ency, or m
combination of deficiencies, in internal oontno|, such that there is m reasonable possibility that a nnmtnrio|
misstatement of the entity's financial statements will not be pnnvanted, or detected and corrected on a
timely basis. We consider the deficiencies described in the accompanying schedule of findings and
questioned costs asitems 2015-UO1,2O15'OO2.and 2O15-DO3tpbematerial weaknesses.
A significant deficiency is a defcienoy, or a combination of deficiencies, in internal control that is |eoa
severe than o material weakness. yet important enough to nneh1 attention by those charged with
governance. VVeconsider the deficiencies described in the accompanying schedule of findings and
questioned costs aoitenns301S-UU4.2015'0O5.2D15-OOGand 2O15-OO7tobesignificant deficiencies.
\m^�`r`^
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27
Board of Trustees
Town of Estes Park
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Estes Park's financial statements
are free from 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 objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance which are required
to be reported under Government Auditing Standards.
Town of Estes Park's Response to Findings
The Town of Estes Park's responses to the findings identified in our audit are described in the
accompanying schedule of findings and questioned costs. The Town of Estes Park's response was not
subjected to the auditing procedures applied in the audit of the financial statements and, accordingly,
we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the result of that testing, and not to provide an opinion on the effectiveness of the
entity's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
CliftonLarsonAllen LLP
Greenwood Village, Colorado
August 29, 2016
28
liftonLarsonAllen L.LP
LAconnect.corn
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR
FEDERAL PROGRAM, REPORT ON INTERNAL CONTROL OVER COMPLIANCE, AND
REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED BY THE UNIFORM GUIDANCE
Board of Trustees
Town of Estes Park
Estes Park, Colorado
Report on Compliance for Each Major Federal Program
We have audited the Town of Estes Park's (the Town) compliance with the types of compliance
requirements described in the OMB Compliance Supplement that could have a direct and material
effect on the Town's major federal program for the year ended December 31, 2015. The Town's major
federal program is identified in the summary of auditors' results section of the accompanying schedule
of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and
conditions of its federal awards applicable to its federal programs.
Auditors' Responsibility
Our responsibility is to express an opinion on compliance of the Town's major federal program based
on our audit of the types of compliance requirements referred to above. 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 the audit requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance 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 occurred. An audit includes examining, on a test basis, evidence about the
Town's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for the major
federal program. However, our audit does not provide a legal determination of the Town's compliance.
Opinion on Each Major Federal Program
In our opinion, the Town complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on the major federal program for the year
ended December 31, 2015.
Nexia
r:stl•
29
Board ofTrustees
Town of Estes Park
����l|^/H �I
Report omInternal Control Over Compliance
W1mnogennant of the Town is responsible for establishing and maintaining effective internal control over
compliance with the b/pon of compliance requirements referred to above. In planning and performing
our audit ofcompliance, we considered thoTmvvn'o internal control over compliance with the types of
requirements that could have adirect and material effect un the major federal program to determine the
auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion
oncompliance for the major fede,a|programondhoteotandreportonintarna|nontro|overoomp|ianne
in accordance with the Uniform Guidanoe, but not for the purpose of expressing on opinion on the
effectiveness of internal control over compliance. Aoconding|y, we do not express an opinion on the
effectiveness ofthe Town'ointernal control over compliance.
A deficiency /n internal control over compliance exists when the design or operation of a control over
compliance does not allow management or anop|oyeee, in the normal course of performing their
assigned functiono, to prement, or detect and cmrrgnt, noncompliance with a type of compliance
/uqui'u_'//w//i ui a ieJew| p|ogram or, a Giva|y 9-Jas|a. A n-tatal-102/ -Vic-rc-Ikn60-0- Iii ^uwbo/ over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that
there is a reasonable possibility that mmhaha| noncompliance with a type of compliance requirement of
e federal program will not be prevented' or detected and norreoted, on o timely bmo|m. A significant
deficiency /n /nbonnm/ cnnhn/ over compliance is a deficiency, or o combination of dmfic|enn|ae, in
internal control over compliance with a type of compliance requirement of a federal program that is less
severe than a material weakness in internal control over compliance, yet important enough to merit
attention bythose charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the fire
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies and therefony, material
weaknesses or significant deficiencies may exist that were not identified. We WonUfiod o deficiency in
internal control over oomp|ionma, as described in the accompanying schedule of findings and
questioned costs aoitem 2U15-DO8that vveconsider tobeomaterial weakness.
The Town's response to the internal control over compliance finding identified in our audit is described
in the accompanying schedule of findings and questioned costs. The Tmmn's response was not
subjected to the auditing procedures applied in the audit ofcompliance and, eccond|nq|y, we express
noopinion onthe response.
The purpose of this report on inhanla| control over compliance is so|mk/ to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
the Uniform Guidance. Accordin0|y, this report is not suitable for any other purpose.
Report mnSchedule mfExpenditures mf Federal Awards Required by the Uniform Guidance
We have audited the financial statements ofthe governmental mcbvdUem, the business -type activities,
the aggregate discretely presented component unit, each major fund, and the aggregate remaining
fund information of the Town as of and for the year ended December 31, 2015, and the related notes to
the financial ntatamenta, which collectively comprise the Town's basic financial statements. We |oouad
our report thereon dated August 29. 2018. which contained unmodified opinions on those financial
statements. Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the basic financial statements. The accompanying schedule of expenditures
of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance
and is not a required port of the basic financial statements.
30
Board of Trustees
Town of Estes Park
Such information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements
or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the schedule of
expenditure of federal awards is fairly stated in all material respects in relation to the basic financial
statements as a whole.
d4:-/-14-2cZoteko--,c,ielAto‹...//_>
CliftonLarsonAllen LLP
Greenwood Village, Colorado
September 28, 2016
31
TOWN OF ESTES PARK
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended, December 31, 2015
Federal Grantor/Pass through Grantor!
Program or Cluster Title
Department of Commerce
Direct Programs:
Economic Adjustment Assistance
Total Department of Commerce Direct Programs
Pass -
Through
Federal Entity Passed
CFDA Identifying Through to Federal
Number Number Subrecipients Expenditures
11.307 $
$ 238,297
238,297
Department of Housing and Urban Development
Passed through Colorado Department of
Housing and Urban Development:
Community Development Block Grants —
Disaster Recovery Grants 14,269 None provided - 338,469
Total Department of Housing and Urban Development 338,469
Department of Justice
Direct Programs:
Bulletproof Vest Partnership Program 16.607 - 817
Subtotal Department of Justice Direct Programs 817
Department of Transportation
Direct Programs:
Paul S. Sarbanes Transit in the Parks 20.520 151,142
Passed through Colorado Department of Transportation:
Highway Planning and Construction
State and Community Highway Safety
Total Department of Transportation
U.S. Department of Homeland Security
Passed through Colorado Department of Public Safety
Division of Homeland Security and Emergency Management
Disaster Grants - Public Assistance
Total U.S. Department of Homeland Security
20,205 None provided
20.600 None provided
686,357
1,913
839,452
97.036 See Note 3 1,349,493
1,349,493
Total Expenditures of Federal Awards $ - $ 2,766,528
32
TOWN OF ESTES PARK
NOTES TO SCHEDULE OF FEDERAL AWARDS
Year Ended December 31, 2015
NOTE 1: BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of
the Town for the year ended December 31, 2015. All federal awards received directly from federal
agencies, as well as federal awards passed through other governmental agencies, are included in the
schedule. The information in this Schedule is presented in accordance with the requirements of 2 CFR
Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from
amounts presented in, or used in the presentation of, the basic financial statements.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
Revenue from federal awards is recognized when the Town has done everything necessary to establish
its right to revenue. For governmental funds, revenue from federal grants is recognized when it
becomes both measureable and available. Expenditures of federal awards are recognized in the
accounting period when the liability is incurred. The Town has elected to not use the 10 percent de
minimis indirect cost rate as allowed under the Uniform Guidance.
NOTE 3: PASS THROUGH ENTITY IDENTIFYING NUMBERS
The pass through award numbers for the Disaster Grants — Public Assistance program were
PW — ESTPK05, PW — ESTPK06, PW — ESTPK08, PW — ESTPK09, PW — ESTPKI 1, PW — ESTPKI5
and PW — ESTPK16.
33
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2015
Section I —Summary of Auditors' Results
Financial Statements
1. Type of auditors' report issued:
2. Internal control over financial reporting:
• Material weakness(es) identified?
• Significant deficiency(ies) identified?
3. Noncompliance material to financial
statements noted?
Federal Awards
1. Internal control over major programs:
• Material weakness(es) identified? 0 yes
• Significant deficiency (ies) identified? ❑ yes
2. Type of auditors' report issued on
Compliance for major program:
Unmodified
Unmodified
►1
►..
yes U no
yes U none reported
❑ yes /1 no
no
none reported
3. Any audit findings disclosed that are
required to be reported in accordance
with 2 CFR 200 516(a)? 1 yes ❑ no
Identification of major programs
CFDA Number(s) Name of Federal Program or Cluster
97.036 Disaster Grants — Public Assistance (Presidentially Declared Disaster)
Dollar threshold used to distinguish between
type A and type B programs:
$750,000
Auditee qualified as low -risk auditee? r1 yes ❑ no
34
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2015
PART II —FINDINGS RELATED TO FINANCIAL STATEMENTS
Finding 2015-001
Material Weakness
Criteria:
Condition:
Cause:
Effect:
Recommendation:
prior Period Restatement
Accurate financial reporting is critical to ensure the Town's report is in
accordance with the Governmental Accounting Standards Board.
Through work performed over accounts payable, it was noted the December 31,
2014 balance was overstated by approximately $87,325. In addition, it was also
noted during the current year, a journal entry was posted in error which created a
total misstatement of approximately $174,000. Finally, through inquiries with
Town personnel, it was brought to our attention that a journal entry was made in
2015 to correct a prior period balance; however, it was posted to current year
activity in error.
Journal entries were recorded to the Town's general ledger in error during the
prior period and in the current year.
The Town's financial statements were materially misstated as a result of the
journal entries posted.
We recommend the Town review its journal entry review process for all journal
entries posted to the general ledger to help ensure all journal entries are
reviewed and posted accurately.
Views of responsible officials and planned corrective action:
Journal entries are reviewed by the Finance Director prior to posting to the
general ledger. This includes review of the entry for keypunch errors as well as
the substance of the entry and supporting documentation. A couple of items were
missed during the journal entry review process for 2015, resulting in the errors
noted during the audit. The Town will watch entries more closely in the future.
Finding 2015-002
Material Weakness
Criteria:
Condition:
Grant Receivables. Unearned Revenue and Revenues
The Town of Estes Park is required to track and maintain a general ledger to
account for grant related expenditures, receivables, unearned revenue and
revenues.
During our audit procedures performed over grant revenues, we noted the Town
did not record receivables, unearned revenue and revenue during fiscal year
2014 for expenditures incurred surrounding the Federal Emergency Management
Agency (FEMA) reimbursement grant. In addition, during 2015, the Town
recorded receivables and unearned revenue in excess of current year
expenditures and recorded revenue in error to the incorrect fund.
Cause: The Town did not properly record transactions to receivables, unearned revenue
or revenue during the last two fiscal years.
9
35
Effect:
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2015
The Town's grant receivables were misstated, with corresponding misstatements
to either revenue or unearned revenue. As a result, we proposed and the Town
recorded adjustments to receivables, unearned revenue and revenues in the
General Fund, Light and Power Fund, Water Fund and Open Space Fund. In
aggregate, adjustments were material to the financial statements.
Recommendation: We recommend the Town review and amend its existing procedures to more
accurately track grant expenditures and adjust for the related receivables,
unearned revenue and revenue when expenditures are incurred.
Views of responsible officials and planned corrective action:
The Town recognizes the need for a central grant coordinator position to assist
project managers properly track, record and recognize grant revenue
transactions. With the Town more aggressively pursuing grants, this need is
anticipated to continue to increase in the coming years. To cover this need for
2016, Staff duties and responsibilities will be reallocated and prioritized. For the
future, a new full time position for a central grant coordinator is being proposed
within the 2017 budget.
Finding 2015-003 Capital Assets.
Material Weakness
Criteria: Accurate financial reporting is critical to ensure the Town's report is in
accordance with the Governmental Accounting Standards Board.
Condition:
Through work performed over capital assets, the Town was the recipient of a
donated street during 2015 valued at approximately $550,000. We noted the
Town did not add the donated asset to the capital asset register during 2015. In
addition, the Town was the recipient of a donated asset in 2010 valued at
approximately $400,000. We noted this asset was never placed into service by
the Town, however, it was added to the capital asset register as a non -
depreciable asset. This asset was disposed of during the current year.
Cause: Capital asset activity was not properly recorded and accounted for related to
donated assets.
Effect: The Town's capital asset registers did not properly reflect capital asset activity at
the end of 2015. Adjustments were made to properly reflect the donated street in
2015 for $550,000 and to remove the donated asset in 2010 in the amount of
$400,000.
Recommendation: We recommend the Town implement a process and procedures over the review
of capital asset additions to ensure all donated assets are properly recorded
within the capital asset registers. We also recommend the Town review the
capital asset registers to assist in determining whether there are assets recorded
which are no longer used or in service.
10
36
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2016
Views of responsible officials and planned corrective action:
The Town acknowledges that the assets in question should have been handled
differently. The Town will implement a process to review any changes to
infrastructure due to annexations or development that occurred during the year.
Also, the detail asset listing will be reviewed as a final year end completion step
to help identify obsolete or unused assets for removal as deemed appropriate.
Finding 2015-004 Town's Purchasina Process
Significant Deficiency
Criteria: The Town has a Finance Policies and Procedures Manual which outlines
purchasing policies the Town is to follow for all Town purchases.
Condition: Through inquiries and testing over purchases and general disbursements, we
noted the Town is issuing purchase orders after invoices are received. All
disbursements over $500 are required to have a purchase order before the
goods or services are purchased.
Cause: Purchases are made by Town departments prior to the Town approving the
related purchase order.
Effect: This is a violation of the Town's policies and procedures as outlined in the Town
of Estes Park Finance Policies and Procedures Manual, section 3.4.6.
Recommendation: We recommend the Town prepare and issue a purchase order at the time of
purchase to ensure the Town is in compliance with their Finance Policies and
Procedures Manual.
Views of responsible officials and planned corrective action:
The Town is in the process of revising its purchasing policies and procedures,
including purchase order policies. The policy states that a "purchase order is not
required for items under $500 and a purchase order will be issued at the time an
order is placed". Purchases over $500, with a few exceptions, should therefore
have a purchase order pulled prior to ordering. This has turned out to be too low
of a threshold, requiring purchase orders for many items for which the purchase
order serves no functional purpose. Early in 2016, the Town revised the
purchase order policy to increase the threshold requiring purchase order use to
$3,000.
In addition, the Town's accounts payable office has begun to compile a listing of
purchases made without a previous purchase order. The Finance Director will
review this list on a periodic basis to confirm that these purchases meet the
appropriate exception criteria. If not, further corrective action will be taken to
enforce compliance as deemed necessary.
Findina 2015-005 User Access Rights
Significant Deficiency
Criteria: User access rights within the information technology system help to ensure the
Town maintains proper segregation of duties.
11
37
Condition:
Cause:
Effect:
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2015
Through work performed over user access rights, we noted individual access
rights are not updated when an employee switches positions within the Town's
Finance Department. For example, certain employees have access rights to cash
receipts and utility billing which were part of the employee's prior position, but
unrelated to their current position.
Individuals have switched positions within the Finance Department and their user
access rights were not revised in regards to their new position.
Employees within the Finance Department have access to modules of the
information technology system which are unnecessary related to the job
functions. This can create a segregation of duties issue.
Recommendation: We recommend the Town implement procedures to periodically review the user
access rights of all Town employees to ensure unnecessary access rights are
restricted and monitored.
Views of responsible officials and planned corrective action:
The Town's Finance Department is relatively small, with three utility staff, two
payroll staff, one grant monitoring staff, one accounts payable staff, two
accounting staff, and the Finance Director. With such limited staffing, providing
appropriate backup and redundancy for specific functions can be challenging.
Staff members who have transitioned from one role to another generally serve as
backup to the new primary staff position performing that role. This requires that
staffing retain some of their prior system access permissions as well as gaining
the new role's system access permissions.
Auditor Response:
Staffing's system access permissions are evaluated for appropriateness given
the need to provide depth of coverage in each position. Town management feels
the current user access rights are appropriate.
Through our testing there are individuals who have access to components of the
information technology system which do not meet their job functions. We believe
this is a reportable condition.
Finding 2015-00Q Long Term Debt Continuing Disclosures
Significant Deficiency
Criteria: The Town is required to submit continuing disclosures with the Municipal
Securities Rulemaking Board.
Condition:
Through inquiry of the Town and work performed over debt continuing
disclosures, we noted the Town has not followed the Provision of Annual Reports
requiring annual financial reports to be filed as part of continuing disclosures with
EMMA within 9 months of the end of the Town's fiscal year.
Cause: The Town has not performed the required filing of continuing disclosures within 9
months of the end of the Town's fiscal year.
12
38
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2015
Effect: The Town is not in compliance with required filing requirements.
Recommendation: We recommend the Town review and implement procedures to ensure the
comprehensive annual financial report is filed as part of continuing disclosures
with EMMA within 9 months of the end of the Town's fiscal year.
Views of responsible officials and planned corrective action:
The Town has one debt issuance, the 2007 Light and Power Revenue Bonds,
which has continuing disclosure requirements beyond the audited
Comprehensive Annual Financial Statements and the annual budget process. It
was noted by the new Finance Director that these continuing disclosures had not
been updated and uploaded to EMMA and currently plans on completing this by
the September 30 deadline.
Finding 2015-007 Yearend Journal Entries
Significant Deficiency
Criteria:
Condition:
The Board approved a policy to accrue maintenance costs for large or routine
maintenance projects in advance of the work being performed.
At the end of each fiscal year, the Town records a liability under GASB
Statement No. 62. The objective is to recognize the expense and related liability
for maintenance and replacement of capital assets, as necessary, to cover future
costs related to the water system. Through review of this liability account, it was
noted the Town did not record the liability as of December 31, 2015 in the
amount of $108,000.
Cause: As this is a one-time entry at the end of the fiscal year, the Town did not record
the liability.
Effect: The Town's liability was understated in the amount of $108,000 and was not in
compliance with the Town's Board approved policy.
Recommendation: We recommend the Town review its financial closing procedures to ensure all
journal entries are recorded and go through the proper controls prior to posting to
the Town's general ledger.
Views of responsible officials and planned corrective action:
The Finance Director position was vacant during much of the year end process,
resulting in less time to review the financial records prior to the auditors starting
their fieldwork. The entry in question was simply missed partially due to the short
staffing during the 2015 year end process. The Finance Department will perform
a thorough review of the year end entries in the future.
39
TOWN OF ESTES PARK
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Year Ended December 31, 2015
PART III —FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding 2015-008 CFDA 97.036 Disaster Grants — Public Assistance (Presidentially Declared
Disaster)
Financial Reporting, Schedule of Expenditures of Federal Awards
Material Weakness
Criteria:
Condition:
Context:
Cause:
Effect:
Recommendation:
Management of the Town is responsible for the accurate reporting of financial
statements, included the schedule of expenditures of federal awards (SEFA) in
accordance with 2CFR 200.510 Financial Statements.
During our testing over 2015 FEMA grant expenditures, we noted certain federal
expenditures incurred during fiscal year 2014 were inadvertently omitted from the
SEFA for the FEMA grant program on the 2014 SEFA.
Reported within the Town's 2015 federal expenditure detail for the FEMA
program, we noted approximately $73,164 in 2014 expenditures which were not
included on the 2014 SEFA.
The Town's controls over the review of federal expenditures were not operating
effectively. The Town believed only expenditures requested for reimbursement
were to be reported on the SEFA, however, under FEMA, expenditures must be
included on the SEFA if FEMA has approved a project worksheet and the Town
has incurred the eligible expenditures.
The Town's 2014 SEFA was understated.
We recommend management strengthen their policies and procedures to ensure
that all FEMA expenditures incurred under an approved project worksheet and
incurred during a fiscal year are accurately and properly recorded on the SEFA.
Views of responsible officials and planned corrective action:
The Town concurs with the finding and is reworking its process to record grant
receivables, unearned revenue and recognized grant revenue. As part of this
process development, the methodology of identifying grant expenditures to report
within the Schedule of Expenditures of Federal Awards (SEFA) is also being
revised. In the past, both accounting and SEFA entries were based on grant
requests for reimbursement forms (RFR). However, due to complications with
grant reimbursements, this process did not work smoothly and expenditures
eligible for inclusion in the SEFA were inadvertently missed. The new process
will focus on identifying eligible expenditures first and then look at inclusion in
RFR's and ultimately the SEFA. This should result in much improved accounting
and reporting of grant related expenditures.
14
40
TOWN OF ESTES PARK
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
Year Ended December 31, 2015
PART II —FINDINGS RELATED TO FINANCIAL STATEMENTS
Finding 2014-001 Grant Receivables, Unearned Revenue and Revenues
Significant Deficiency
Summary:
During audit procedures performed over grant revenues, it was noted the Town
did not account for or record unearned revenue and revenue related to
expenditures incurred during fiscal year 2014 surrounding the FEMA
reimbursement grant. It was also noted, in certain situations, the Town recorded
grant revenue above the federal reimbursement threshold.
Status: Not implemented. See finding 2015-002.
Reason for finding's recurrence:
During audit procedures performed in the current year, it was noted again that
grant receivables, revenues and unearned revenue were recorded in excess of
current year grant expenditures across the General Fund, Light and Power Fund
and Water Fund. The Town acknowledges it is in the process of reworking its
process to record grant related receivables, revenues and unearned revenue and
this new process will focus on identifying eligible expenditures and then look at
the proper accounting between receivables, revenues and unearned revenue.
PART III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Finding 2014-002 CFDA 97.036 Disaster Grants — Public Assistance (Presidentially Declared
Disaster)
CFDA 10.923 Emergency Watershed Protection Program
Summary:
During our testing over thirty contract and material transactions under CFDA #
97.036 and six expenditure transactions under CFDA #10.923, we noted one
instance, under both programs, where the purchase order was issued or created
after the Town received a vendor invoice. This is a violation of the Town's
policies and procedures as outlined in the Town of Estes Park Finance Policies
and Procedures Manual, section 3.4.6.
Status: Implemented.
Finding 2014-003 CFDA 10.923 Emergency Watershed Protection Program
Suspension and Debarment
Significant Deficiency, Noncompliance
Summary:
During our testing over two contractors, we noted in both cases, the contractors
were not verified as being suspended or debarred by the Town prior to the Town
entering into agreements for services to be provided.
Status: Implemented.
15
41
TOWN OF ESTES PARK
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS
Year Ended December 31, 2015
Finding 2014-004 CFDA 97.036 Disaster Grants — Public Assistance (Presidentially Declared
Disaster)
Allowable Costs/Allowable Activities
Significant Deficiency, Noncompliance
Summary:
During our testing over six equipment transactions, we noted the materials
worksheet used to track equipment usage, did not outline the related cost code,
specific to the equipment used. We also noted one instance where total hours
documented did not agree to total hours reported in determining reported
expenditures. In addition, through inquiry of Town personnel, we identified which
cost codes equipment selections were related to. In one instance, we noted
equipment charges were calculated using a $35 reimbursement rate, however,
through review of FEMA's Schedule of Equipment Rates, equipment charges
should have been recorded with a reimbursement rate of $20.
Status: Implemented.
Finding 2014-005 CFDA 20.520 Paul S. Sarbanes Transit in the Parks
Reporting
Significant Deficiency, Noncompliance
Summary:
Status:
During our testing over two quarterly financial reports, we noted one instance
where the Town did not submit the report within the thirty day reporting window.
Implemented.
42