Cochise County June 30, 2007 Report Highlights-Single Audit

Office Of The Auditor General

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Cochise County
REPORT
County’s CondensedHIGHLIGHTS
SINGLE AUDIT Financial Information
Subject
Statement of Net Assets
Cochise County is June 30, 2007
responsible for preparing The County’s government-wide financial (In thousands)
financial statements, statements provide readers with a broadmaintaining strong internal Totaloverview of the County’s finances in acontrols, and demonstrating Governmental
manner similar to private-sector businesses.accountability for its use of and
public monies. As the These statements report the financial Business-type
auditors, our job is to Activitiesactivities of the overall government, except
determine whether the Current and other assets $ 83,195for fiduciary activities.
County has met its Capital assets 144,633
responsibilities. Total assets 227,828The tables to the right present a summarized
Our Conclusion version of the County’s government-wide
Current liabilities 13,517
Statement of Net Assets and Statement of Noncurrent liabilities 15,922The information in the Activities reported in the current year financial Total liabilities 29,439financial statements is fairly
statements.stated in all material
respects, and the financial Net assets:
statements can be relied The Statement of Net Assets presents Invested in capital assets,
upon. Generally, the County information on the county assets and net of related debt 135,172
maintained adequate Restricted net assets 25,965liabilities, with the difference between the two
internal controls over Unrestricted net assets 37,252reported as net assets. The Statement offinancial reporting with two Total net assets $ 198,389Activities presents information showing howexceptions, see page 2.
Also, the County maintained net assets changed during the most recent
Statement of Activitiesadequate internal controls fiscal year. As shown in the tables, net assets Year Ended June 30, 2007over, and complied with, increased by more than $15 million. This (In thousands)federal program increase was primarily due to increases inrequirements for four of the
Totalinvestment in capital assets.eight programs tested. Governmental
However, for four of the and
federal programs tested, As required by Governmental Accounting Business-type
auditors found internal Standards Board (GASB) Statement No. 34, Activities
control weaknesses and beginning net assets were restated to Program revenues:noncompliance with Governmental activities $ 48,078include $55 million in major generalprogram requirements, see
Business-type activities 37,495infrastructure assets acquired prior to July 1,page 3.
General revenues:2002. These assets include major roadways 55,343and bridges that were constructed, 779
purchased, or donated to the County, or that
Total revenues 141,695
received substantial improvements
Expenses:
subsequent to July 1, 1980. Infrastructure Governmental activities 92,269
acquired after June 30, 2002, has previously Business-type activities 34,0842007 been included in the net asset balance. Total expenses 126,353
Change in net assets 15,342
Year Ended June 30, 2007 Net assets—beginning, as restated 183,047
Net assets—ending $ 198,389Infrastructure Added to
Capital Assets
Cochise County has $144,633,004 in
Capital Assets by Typecapital assets net of depreciation, which
Net of Depreciation
represents 63.5 percent of its total As of June 30, 2007
governmental and business-type activities’
assets. As explained on page 1, to Improvements other Land
than buildings (3%)implement GASB Statement No. 34
(3%)
requirements effective in fiscal year 2007,
Equipmentthe County restated its beginning net
(14%)assets to add infrastructure acquired
Infrastructurebefore July 1, 2002, including major
(42%)
roadways and bridges. After this
Construction in restatement, infrastructure became the
progresslargest category of the County’s capital (17%)
assets, totaling over $60 million, net of
depreciation. The figure to the right
Buildingspresents the County’s capital asset
(21%)percentages by type.
Internal Control Weaknesses and
Instances of Noncompliance
Other auditors audited portions of the County’sFinancial Audit Findings
financial statements and noted internal control
weaknesses and noncompliance affecting the• The County needs to improve its control
financial statements, as summarized below.procedures over capital assets. Specifically, it
should develop procedures to record, report,
and monitor construction projects; implement Ft. Huachuca Accommodation
procedures to complete a physical inventory School District Fund
every 2 years; develop procedures to ensure
that disposals are properly approved; and • Lack of adequate internal controls over
implement procedures to reconcile capital preparation of financial statements.
assets listings to financial statement amounts. • Cash reconciliations with the County
• The County did not have adequate Treasurer were not performed in a timely
procedures to ensure it accurately reported manner.
financial information when implementing new • Noncompliance with statutory budget
accounting standards, such as GASB requirements, resulting in unfavorable budget
Statement No. 34 requirements to report variances of over $6 million.
infrastructure acquired from 1980 through
2002. To help ensure it accurately implements Cochise Private Industry Council, Inc.accounting standards in the future, the
County should develop a process to identify
• Lack of expertise to prepare year-endbest practices among governments,
adjustments to financial statements to ensurecommunicate regularly between departments
accurate financial reporting. that need to share financial information, and
• Lack of adequate training and expertise tohave a knowledgeable employee review the
prepare the financial statements. financial information compiled.
• Noncompliance with federal grant provisions
and Single Audit Act reporting requirements.
page2tested. Other auditors audited the Lead-Federal Award Findings
Based Paint Hazard Control in Privately
Owned Housing program and theThe County spent $20.2 million of federal
Workforce Investment Act (WIA) Clustermonies this past year for 57 programs.
administered by the Housing Authority ofAuditors tested 8 federal programs under
Cochise County and Cochise Privatethe requirements established by the
Industry Council, Inc., respectively. TheSingle Audit Act. Auditors found internal
table below summarizes our auditcontrol weaknesses and instances of
findings reported by federal program.noncompliance with program
requirements for 4 of the programs
Summary of Federal Award Findings
June 30, 2007

Education Technology State Grants
Federal cash management requirements were not always followed.
Required monthly financial reports were not reconciled to the County’s general ledger system.
Subrecipients were not monitored to ensure they administered awards in compliance with federal requirements.
Immunization Grants
Controls to ensure vaccines were safeguarded and accounted for were not adequate.

Programs audited by other auditors:

Lead-Based Paint Hazard Control in Privately Owned Housing
Grant funds were requisitioned in advance of program expenditures.
Housing Authority did not maintain proof of compliance with Davis-Bacon regulations.
WIA Cluster
Financial information was not properly prepared and auditors had to make significant adjustments.
Workers’ compensation insurance was not maintained in compliance with the grant agreement.
The Single Audit Fact Sheet
 Ten weaknesses in financial reporting internal
controls, three of which were material
weaknesses.
 Eight weaknesses in federal compliance
internal controls, three of which were material
weaknesses.
 Five instances of noncompliance with federal
compliance requirements, one of which was
material noncompliance.
 Three instances of noncompliance resulted in
potential questioned costs that were not
practicable to determine.
page3TTOO OOBBTTAAIINN
MORE INFORMATION
A copy of the full report
can be obtained by calling
(602) 553-00333
or by visiting
our Web site at:
www.azauditor.gov
Contact person for
this report:
Donna Miller
REPORT
HIGHLIGHTSCochise County
SINGLE AUDIT
Year Ended June 30, 2007
page 4