Audit of the Clean Water and Drinking Water Revolving Fund Programs - PDF document

Audit of the Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentations, Selected Internal Controls, and Compliance for Fiscal Year Ended June 30, 2017 Division of Water Restoration Assistance State Revolving Fund Programs Report: A-1718DEP-018 Office of Inspector General Internal Audit Section Florida Department of Environmental Protection June 25, 2018 3900 Commonwealth Boulevard, MS 40 Tallahassee, Florida 32399-3000 www.dep.state.fl.us

Audit of the Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentations, Selected Internal Controls, and Compliance for the Fiscal Year Ended June 30, 2017 Report: A-1718DEP-018 Table of Contents Scope and Objectives .................................................................................................................... 2 Summary of Conclusions .............................................................................................................. 3 Independent Auditors’ Report on the Financial Statements .................................................... 4 Management’s Responsibility for the Financial Statements ..................................................... 4 Auditors’ Responsibility ............................................................................................................... 4 Auditors’ Opinion ......................................................................................................................... 5 Basis of Accounting ....................................................................................................................... 5 Restriction of Use .......................................................................................................................... 5 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................................................................. 16 Internal Control over Financial Reporting .............................................................................. 16 Compliance and Other Matters ................................................................................................. 17 Purpose of this Report ................................................................................................................ 17 Independent Auditors’ Report on Compliance with the Requirements Applicable to the Environmental Protection Agency’s State Revolving Fund Programs and on Internal Control Over Compliance Required by the Uniform Guidance ............................................ 18

Audit of the Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentations, Selected Internal Controls, and Compliance for the Fiscal Year Ended June 30, 2017 Report: A-1718DEP-018 The Office of Inspector General (OIG) conducted an audit of the Florida Department of Environmental Protection (Department), Division of Water Restoration Assistance (Division), Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentations, selected internal controls, and compliance for the fiscal year ended June 30, 2017. This audit was initiated as a result of the OIG fiscal year 2017-2018 Annual Audit Plan and assists the Division in complying with requirements of its federal funding agreements. Scope and Objectives The scope of the audit included the Department’s Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentation for the fiscal year ended June 30, 2017. This audit was performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The objectives were to: • Obtain reasonable assurance about whether the financial statements are free of material misstatement. • Report on internal control over financial reporting and on compliance and other matters based on an audit of the financial statements performed in accordance with Government Auditing Standards. June 25, 2018 Page 2 of 20

Audit of the Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentations, Selected Internal Controls, and Compliance for the Fiscal Year Ended June 30, 2017 Report: A-1718DEP-018 Independent 1 Auditors’ Report on the Financial Statements We have audited the accompanying financial statements, which comprise the balance sheet for the Clean Water and Drinking Water Revolving Fund Programs of the Department as of June 30, 2017; the statement of revenues, expenditures, and changes in fund balances for the fiscal year ended June 30, 2017; and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with financial reporting practices prescribed or permitted by the United States Environmental Protection Agency (USEPA). Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, and Government Auditing Standards , issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including an assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as 1 The Office of Inspector General, while independent for internal reporting, could be perceived by outside parties as not meeting all the Government Auditing Standards independence criteria for external reporting. June 25, 2018 Page 4 of 20

Audit of the Clean Water and Drinking Water Revolving Fund Programs’ Special Purpose Financial Presentations, Selected Internal Controls, and Compliance for the Fiscal Year Ended June 30, 2017 Report: A-1718DEP-018 evaluating the overall presentation of the financial statements. We believe that the evidence obtained during this audit is sufficient and appropriate to provide a basis for our audit opinion. Auditors’ Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Clean Water and Drinking Water Revolving Fund Programs of the Department as of June 30, 2017; and its revenues, expenditures, and changes in fund balances for the fiscal year ended June 30, 2017; in accordance with financial reporting practices prescribed or permitted by the USEPA. Basis of Accounting We draw attention to the notes to the financial statements, which describe the basis of accounting. The financial statements were prepared in conformity with the financial reporting practices permitted by the USEPA, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Restriction of Use Our report is intended solely for the information and use of the Department and the USEPA and is not intended to be, and should not be, used by anyone other than these specified parties. Florida Department of Environmental Protection Office of Inspector General Tallahassee, Florida June 25, 2018 June 25, 2018 Page 5 of 20