Commonwealth of Virginia Single Audit Report for the Year Ended June 30, 2007

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• Langue: English

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COMMONWEALTH OF VIRGINIA
SINGLE AUDIT REPORT
FOR THE YEAR ENDED
JUNE 30, 2007EXECUTIVE SUMMARY


The results of our single audit of the Commonwealth of Virginia for the year ended June 30, 2007, are
summarized below:

• we issued an unqualified opinion on the basic financial statements;

• we found certain matters that we consider significant deficiencies; however, we do
not consider these to be material weaknesses;

• we identified instances of noncompliance with selected provisions of applicable
laws and regulations which could have a material effect on the basic financial
statements;

• we found certain matters and instances of noncompliance with selected provisions
of laws and regulations related to major programs required to be reported in
accordance with OMB Circular A-133, Section .510(a); and

• we issued an unqualified opinion on the Commonwealth’s compliance with
requirements applicable to each major program.

Our audit findings are reported in the accompanying, “Schedule of Findings and Questioned Costs.”



- T A B L E O F C O N T E N T S -
Page
EXECUTIVE SUMMARY


INTRODUCTION LETTER 1


INDEPENDENT AUDITOR’S REPORTS:

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 2- 3

Report on Compliance with Requirements Applicable to Each Major Program, on Internal
Control over Compliance in Accordance with OMB Circular A-133, and on the Schedule
of Expenditures of Federal Awards 4- 5


SCHEDULE OF FINDINGS AND QUESTIONED COSTS:

Summary of Auditor’s Results 6- 7

Risk Alert 8

Financial Statement Findings 9-43

Federal Award Findings and Questioned Costs:

General Services Administration 43-44

U.S. Department of Veterans Affairs 45-50

U.S. Department of Education 51-53

U.S. Department of Health and Human Services 53-59

Social Security Administration 60-61

U.S. Department of Homeland Security 62-65

AUDITOR’S COMMENTS ON RESOLUTION OF PRIOR YEAR AUDIT FINDINGS 66-70

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS:

Schedule of Expenditures of Federal Awards 71-110

Notes to the Schedule of Expenditures of Federal Awards 111-120

APPENDIX:

Acronyms of Agencies and Institutions 121

State Agency Contact List for Audit Findings 122

March 10, 2008




The Honorable Timothy M. Kaine The Honorable Thomas K. Norment, Jr.
Governor of Virginia Chairman, Joint Legislative Audit
State Capitol and Review Commission
Richmond, Virginia General Assembly Building
Richmond, Virginia



We are pleased to submit the statewide Single Audit Report of the Commonwealth of Virginia for
the fiscal year ended June 30, 2007.

The Single Audit Report for the Commonwealth of Virginia discloses the Commonwealth’s
compliance with requirements applicable to major federal financial assistance programs. The statewide
Single Audit Report provides the General Assembly and agency management with a means to determine how
internal controls affect federal funds and whether agencies are complying with federal laws and regulations.

I would like to express my appreciation to the many individuals whose efforts assisted in preparing
this report. This report could not have been accomplished without the professionalism and dedication
demonstrated by the staff within this Office. We would like to recognize the agency and institution
management, and federal program and financial staffs for their cooperation and assistance in resolving single
audit issues.

We believe this report represents a significant indication of the sound fiscal operations of federal
funds in the Commonwealth. The report should greatly assist agency management in administering federal
programs and enhance their dealings with federal agencies.

AUDITOR OF PUBLIC ACCOUNTS

BEM/wdh

1

INDEPENDENT AUDITOR’S 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

We have audited the financial statements of the governmental activities, the business-type activities,
the aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the Commonwealth of Virginia, as of and for the year ended June 30, 2007, which collectively
comprise of the Commonwealth’s basic financial statements and have issued our report thereon dated
December 14, 2007. Our report was modified to include a reference to other auditors. Also, our report was
modified to indicate the Commonwealth changed the method for computing its liability related to deferred
taxes and the method for reporting amounts due from the General Fund and the Department of Treasury’s
reimbursement programs to higher education institution component units. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States.

Other auditors audited the financial statements of certain component units of the Commonwealth as
described in our report on the Commonwealth’s financial statements and Note 1.B. to the financial statements.
This report does not include the results of the other auditors’ testing of internal control over financial
reporting or compliance and other matters that are reported on separately by those auditors. The financial
statements of the Hampton Roads Sanitation District Commission, Virginia Museum of Fine Arts Foundation,
Science Museum of Virginia Foundation, Library of Virginia Foundation, Belmont Bay Science Center
Foundation, and Danville Science Center, Inc., which were audited by other auditors upon whose reports we
are relying, were audited in accordance with auditing standards generally accepted in the United States of
America, but not in accordance with Government Auditing Standards.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the Commonwealth’s internal control over
financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion
on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
Commonwealth’s internal control over financial reporting. Accordingly we do not express an opinion on the
effectiveness of the Commonwealth’s internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in
the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial
reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we
2 identified certain deficiencies in internal control over financial reporting that we consider to be significant
deficiencies.

A control deficiency exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on
a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that
adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in
accordance with generally accepted accounting principles such that there is more than a remote likelihood that
a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or
detected by the entity’s internal control over financial reporting. We consider the deficiencies described in
the accompanying “Schedule of Findings and Questioned Costs” as items 07-01 through 07-30, 07-32 through
07-40, and 07-42 through 07-46 to be significant deficiencies in internal control over financial reporting.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the financial statements will not be prevented
or detected by the entity’s internal control over financial reporting.

Our consideration of the internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies in the
internal control over financial reporting that might be significant deficiencies and, accordingly, would not
necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However,
we believe that none of the significant deficiencies described above is a material weakness.