Navajo County June 30, 2006 Single Audit

Office Of The Auditor General

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A REPORT
TO THE
ARIZONA LEGISLATURE
Financial Audit Division
Single Audit
Navajo County
Year Ended June 30, 2006
Debra K. Davenport
Auditor GeneralThe Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five
senators and five representatives. Her mission is to provide independent and impartial information and specific
recommendations to improve the operations of state and local government entities. To this end, she provides financial
audits and accounting services to the State and political subdivisions, investigates possible misuse of public monies, and
conducts performance audits of school districts, state agencies, and the programs they administer.
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • [phone]
Additionally, many of our reports can be found in electronic format at:
www.azauditor.govNavajo County
Single Audit Reporting Package
Year Ended June 30, 2006


Table of Contents Page

Financial Statements

Issued separately

Single Audit Section

Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Basic Financial Statements
Performed in Accordance with Government Auditing Standards 1

Report on Compliance with Requirements Applicable to Each Major
Program and on Internal Control over Compliance in Accordance
with OMB Circular A-133 3

Schedule of Expenditures of Federal Awards 6

Schedule of Findings and Questioned Costs
Summary of Auditors’ Results 9
Financial Statement Findings 10
Federal Award Findings and Questioned Costs 15

County Responses

Corrective Action Plan 26

Summary Schedule of Prior Audit Findings 33





STATE OF ARIZONA
OFFICE OF THE
DEBRA K. DAVENPORT, CPA WILLIAM THOMSON AUDITOR GENERAL AUDITOR GENERAL DEPUTY AUDITOR GENERAL

Independent Auditors’ Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Basic Financial
Statements Performed in Accordance with Government Auditing Standards


Members of the Arizona State Legislature

The Board of Supervisors of
Navajo County, Arizona


We were engaged to audit the financial statements of the governmental activities, each major fund, and
aggregate remaining fund information of Navajo County as of and for the year ended June 30, 2006, which
collectively comprise the County’s basic financial statements, and have issued our report thereon dated
April 20, 2008. Our report was modified for a disclaimer of opinion on the basic financial statements of
Navajo County taken as a whole.

Internal Control over Financial Reporting

In planning the engagement, we considered the County's internal control over financial reporting in order
to determine our auditing procedures for the purpose of expressing our opinions on the basic financial
statements and not to provide an opinion on internal control over financial reporting. However, we noted
certain matters involving internal control over financial reporting and its operation that we consider to be
reportable conditions. Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of internal control over financial reporting that, in our judgment,
could adversely affect the County's ability to initiate, record, process, and report financial data consistent
with the assertions of management in the basic financial statements. Reportable conditions are described
in the accompanying Schedule of Findings and Questioned Costs as items 06-01 through 06-06.

A material weakness is a reportable condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that misstatements caused by
error or fraud in amounts that would be material in relation to the basic financial statements being audited
may occur and not be detected within a timely period by employees in the normal course of performing
their assigned functions. Our consideration of internal control over financial reporting would not
necessarily disclose all matters in internal control that might be reportable conditions and, accordingly,
would not necessarily disclose all reportable conditions that are also considered to be material
weaknesses. However, of the reportable conditions described above, we consider items 06-01 through
06-06 to be material weaknesses.
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2910 NORTH 44 STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • [phone] • FAX [phone]

Compliance and Other Matters

As part of the engagement to obtain reasonable assurance about whether the County's basic financial
statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit and, accordingly, we do not express
such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards, which are described in the accompanying
Schedule of Findings and Questioned Costs as items 06-01 and 06-06.

This report is intended solely for the information and use of the members of the Arizona State Legislature,
the Board of Supervisors, federal awarding agencies, and pass-through entities and is not intended to be
and should not be used by anyone other than these specified parties. However, this report is a matter of
public record, and its distribution is not limited.



Dennis L. Mattheisen, CPA
Financial Audit Director

April 20, 2008
2




STATE OF ARIZONA
OFFICE OF THE
DEBRA K. DAVENPORT, CPA WILLIAM THOMSON AUDITOR GENERAL AUDITOR GENERAL DEPUTY AUDITOR GENERAL

Independent Auditors’ Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control over Compliance in
Accordance with OMB Circular A-133


Members of the Arizona State Legislature

The Board of Supervisors of
Navajo County, Arizona


Compliance

We have audited the compliance of Navajo County with the types of compliance requirements described
in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are
applicable to each of its major federal programs for the year ended June 30, 2006. The County’s major
federal programs are identified in the Summary of Auditors’ Results section of the accompanying
Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations,
contracts, and grants applicable to each of its major federal programs is the responsibility of the County's
management. Our responsibility is to express an opinion on the County's compliance based on our audit.

We conducted our audit of compliance in accordance with U.S. generally accepted auditing standards;
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments,
and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform
the audit to obtain reasonable assurance about whether noncompliance with the types of compliance
requirements referred to above that could have a direct and material effect on a major federal program
occurred. An audit includes examining, on a test basis, evidence about the County'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. Our audit does not
provide a legal determination of the County's compliance with those requirements.

As described in the following table, Navajo County did not comply with certain compliance requirements
that are applicable to its major federal programs. Compliance with such requirements is necessary, in our
opinion, for the County to comply with requirements applicable to those programs.

Program Title (CFDA Number) Compliance Requirement Finding Number

Special Supplemental Nutrition Program for Single audit report submission, 06-101, 06-102,
Women, Infants, and Children Eligibility, Equipment and real 06-103, 06-104,
(10.557) property management 06-105

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2910 NORTH 44 STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • [phone] • FAX [phone]

Program Title (CFDA Number) Compliance Requirement Finding Number

Emergency Watershed Protection Program Single audit report submission 06-101, 06-102,
(10.923) 06-103
Community Development Block Grants/State