HomeMy WebLinkAboutNARC 2020 Audit - Final M a n e r
Maner Cosierisan PC
2425 E.Grand River Ave.
Suite 1
sterisan
Lansing,MI 4891
T.517 323 750 T500
C:ertilicil Public ACCOLI[llit[;Lti F.5173236346
Business&-Technology Advisors www.manercpa.com
December 18,2020
The Honorable Mayor,Members of the City Council
of the City of Lansing,and Members of the Board of
Directors of the Tri-County Metro Narcotics Squad
Lansing,Michigan
We have audited the financial statements of the governmental activities and the governmental fund of the Tri-
County Metro Narcotics Squad,a special revenue fund of the City of Lansing,Michigan, for the year ended June
30,2020. Professional standards require that we provide you with information about our responsibilities under
generally accepted auditing standards and Govern men tAuditing Standards,as well as certain information related
to the planned scope and timing of our audit. We have communicated such information in our letter to City
Council dated May 5, 2020. Professional standards also require that we communicate to you the following
information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Tri-County Metro Narcotics Squad are described in Note 1 to the financial
statements. No new accounting policies were adopted,and the application of existing policies were not changed
during the year ended June 30,2020. We noted no transactions entered into by the Tri-County Metro Narcotics
Squad during the year for which there is a lack of authoritative guidance or consensus. All significant
transactions have been recognized in the financial statements in the proper period.
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 assumptions 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. There were no significant estimates for the year ended June 30,2020.
The financial statement disclosures are neutral,consistent,and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely
misstatements identified during the audit, other than those that we believe are trivial, and communicate them
to the appropriate level of management. Further, professional standards require us to also communicate the
effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account
balances or disclosures,and the financial statements as a whole and each applicable opinion unit. In addition,
professional standards require us to communicate to you all material, corrected misstatements that were
brought to the attention of management as a result of our audit procedures. The material misstatements
detected as a result of audit procedures and corrected by management are described in connection with our
report on internal control over financial reporting.
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
auditor's report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 18,2020.
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 Tri-County Metro's financial statements or a determination of the type of auditor's
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.
OtherAudit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as Tri-County Metro's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
Other Matters
We applied certain limited procedures to the required supplementary information (RSI) that supplement the
basic financial statements. Our procedures consisted of inquiries of management regarding the methods of
preparing the information and comparing the information for consistency with management's responses to our
inquiries,the basic financial statements,and other knowledge we obtained during our audit of the basic financial
statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
Restriction on Use
This information is intended solely for the use of City Council, the Board of Directors of the Tri-County Metro
Narcotics Squad,and management of the City and is not intended to be,and should not be,used by anyone other
than these specified parties.
Very truly yours,
2
TRI-COUNTY METRO NARCOTICS SQUAD
LANSING, MICHIGAN
REPORT ON FINANCIAL STATEMENTS
(with required supplementary information)
YEAR ENDED JUNE 30, 2020
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TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT.........................................................................................................................................1-2
BASIC FINANCIAL STATEMENTS...................................................................................................................................................3
Government-wide Financial Statements
Statementof Net Position..........................................................................................................................................................4
Statementof Activities................................................................................................................................................................5
Governmental Fund Financial Statements
BalanceSheet..................................................................................................................................................................................6
Reconciliation of the Governmental Fund Balance Sheet to the Statement of Net Position.........................7
Statement of Revenues,Expenditures,and Changes in Fund Balance...................................................................8
Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balance
of the Governmental Fund to the Statement of Activities........................................................................................9
Notesto Financial Statements................................................................................................................................................10-14
REQUIRED SUPPLEMENTARY INFORMATION......................................................................................................................15
BudgetaryComparison Schedule.........................................................................................................................................16
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 GOVERNMENTAUDITING STANDARDS.....................................................................................................................17-19
Maner Maner Costerisan PC
2425 E.Grand River Ave.
Suite 1
sterisan Lansing,M1 489 1
T.517 323 750 7500
Certified Public Accountants F.517 323 6346
Business&Technology Advisors www manercpa.com
INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor,Members of the City Council
of the City of Lansing,and Members of the Board of
Directors of the Tri-County Metro Narcotics Squad
Lansing,Michigan
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and the governmental
fund of the Tri-County Metro Narcotics Squad ("Tri-County Metro"),a special revenue fund of the City of Lansing,
Michigan, as of and for the year ended June 30, 2020,and the related notes to the financial statements, which
collectively comprise Tri-County Metro's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes 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.
Auditor's Responsibility
Our responsibility is to express opinions 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 the
standards applicable to financial audits contained in GovernmentAuditing Standards,issued by the Comptroller
General of the United States. 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 the 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 evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
1
Opinions
In our opinion,the financial statements referred to above present fairly,in all material respects,the respective
financial position of the governmental activities and the governmental fund of the Tri-County Metro Narcotics
Squad as of June 30,2020,and the respective changes in financial position for the year then ended in accordance
with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Tri-County Metro has omitted the management's discussion and analysis information that accounting principles
generally accepted in the United States of America require to be presented to supplement the basic financial
statements. Such missing information,although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. Our
opinions on the financial statements are not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the budgetary comparison
schedule, as identified in the table of contents,be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally accepted
in the United States of America,which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our inquiries, the
basic financial statements,and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Emphasis of Matter
Exclusive Presentation
As discussed in Note 1,the financial statements referred to above present only the Tri-County Metro Narcotics
Squad and do not purport to,and do not,present fairly the financial position of the City of Lansing,Michigan,as
of June 30,2020,and the changes in its financial position for the year then ended,in conformity with accounting
principles generally accepted in the United States of America. Our opinion is not modified with respect to this
matter.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards,we have also issued our report dated December 18,2020,on
our consideration of the Tri-County Metro Narcotics Squad's internal control over financial reporting and on our
tests of its compliance with certain provisions of laws,regulations,contracts,grant agreements,and other matters.
The purpose of that report is to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing,and not to provide an opinion on internal control over financial reporting
or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering Tri-County Metro's internal control over financial reporting and compliance.
December 18,2020
2
BASIC FINANCIAL STATEMENTS
3
TRI-COUNTY METRO NARCOTICS SQUAD
STATEMENT OF NET POSITION
JUNE 30,2020
ASSETS
Cash and cash equivalents $ 698,130
Due from other governments 60,946
TOTAL ASSETS 759,076
LIABILITIES
Accounts payable 44,988
Accrued payroll 1,904
Due to other governments 303,716
Undistributed forfeitures 40,368
TOTAL LIABILITIES 390,976
NET POSITION
Restricted for public safety $ 368,100
See accompanying notes to financial statements.
4
TRI-COUNTY METRO NARCOTICS SQUAD
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30,2020
Program Net(Expense)
Revenues Revenues and
Charges for Changes in
Functions/Programs Expenses Services Net Position
Governmental activities
Public safety $ 643,297 $ 635,930 $ (7,367)
General revenues
Interest 8,652
Other 10,587
Total general revenues 19,239
Change in net position 11,872
Net position,beginning of the year 356,228
Net position,end of the year $ 368,100
See accompanying notes to financial statements.
5
TRI-COUNTY METRO NARCOTICS SQUAD
GOVERNMENTALFUND
BALANCESHEET
JUNE 30,2020
ASSETS
Cash and cash equivalents $ 698,130
Due from other governments 60,946
TOTAL ASSETS $ 759,076
LIABILITIES
Accounts payable $ 44,988
Accrued payroll 1,904
Due to other governments 303,716
Undistributed forfeitures 40,368
TOTAL LIABILITIES 390,976
FUND BALANCE
Restricted for public safety 368,100
TOTAL LIABILITIES
AND FUND BALANCE $ 759,076
See accompanying notes to financial statements.
6
TRI-COUNTY METRO NARCOTICS SQUAD
RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET
TO THE STATEMENT OF NET POSITION
JUNE 30,2020
Fund balance-governmental fund $ 368,100
Reconciliation of the governmental fund balance sheet to the statement of net
position is not required as fund balance was equal to the net position as of
June 30,2020.
Net position of governmental activities $ 368,100
See accompanying notes to financial statements.
7
TRI-COUNTY METRO NARCOTICS SQUAD
GOVERNMENTALFUND
STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE
YEAR ENDED JUNE 30,2020
REVENUES
Intergovernmental $ 614,842
Forfeitures 21,088
Interest 8,652
Other 10,587
TOTAL REVENUES 655,169
EXPENDITURES
Current
Public safety 643,297
NET CHANGE IN
FUND BALANCE 11,872
Fund balance,beginning of year 356,228
Fund balance,end of year $ 368,100
See accompanying notes to financial statements.
8
TRI-COUNTY METRO NARCOTICS SQUAD
RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN
FUND BALANCE OF THE GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30,2020
Net change in fund balance-governmental fund $ 11,872
Reconciliation of the statement of revenues, expenditures, and changes in fund
balance to the statement of activities is not required as the net change in fund
balance was equal to the change in net position for the year ended June 30, 2020. -
Change in net position of governmental activities $ 11,872
See accompanying notes to financial statements.
9
TRI-COUNTY METRO NARCOTICS SQUAD
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Tri-County Metro Narcotics Squad ("Tri-County Metro") is a special revenue fund of the City of Lansing,
Michigan. The financial statements of Tri-County Metro have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board
(GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting
principles. The more significant of Tri-County Metro's accounting policies are described below.
Reporting Entity
Tri-County Metro was formed under an interlocal agreement with participation from the City of Lansing,City of
East Lansing,Ingham,Eaton,and Clinton Counties and the Michigan Department of State Police. This task force
was formed pursuant to the Urban Cooperation Act of 1967 and is governed by a command board made up of
member-designated representatives. The operations of Tri-County Metro are accounted for by the City of
Lansing as part of its nonmajor governmental funds.
The purpose of Tri-County Metro is to establish a cooperative law enforcement force assembled for the purpose
of enforcing narcotics and other controlled substances laws.
The accompanying financial statements present the financial position and results of operations of Tri-County
Metro. They do not purport to, and do not present fairly,the net position of the City of Lansing, Michigan and
changes in its net position or cash flows in conformity with accounting principles generally accepted in the
United States of America. Tri-County Metro has no blended or discretely presented component units,and is not
itself a component unit of any other government.
Operations
Tri-County Metro's primary revenue sources are forfeitures, grants and local contributions. These sources
provide funding for goods and services which include supply and equipment purchases,office,and vehicle rents
and contractual services including payment for contract labor. Tri-County Metro has no direct employees.
Basis of Presentation
Separate financial statements are provided for governmental funds and proprietary funds,when applicable. The
individual governmental fund is reported as a separate column in the fund financial statements. Tri-County
Metro does not have any proprietary funds.
Governmental Fund
This fund is used to account for all financial transactions including all financial resources and general operating
expenditures.
Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities)
report information on all of the activities of Tri-County Metro. Governmental activities are mainly supported by
forfeitures and intergovernmental revenues.
10
TRI-COUNTY METRO NARCOTICS SQUAD
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
Government-wide and Fund Financial Statements (continued)
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment
are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function
or segment. Program revenues include 1) charges to customers or applicants who purchase, forfeit to, use, or
directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and
contributions that are restricted to meeting the operational or capital requirements of a particular function or
segment. Internally dedicated resources are reported as general revenues rather than as program revenues.
Measurement Focus.Basis of Accounting.and Financial Statement Presentation
The government-wide financial statements (the statement of net position and statement of activities) are
reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded when a liability is incurred,regardless of the timing of related
cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed
by the provider have been met.
Governmental fund financial statements(balance sheet and statement of revenues,expenditures and changes in
fund balance) are reported using the current financial resources measurement focus and the modified accrual
basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose,the government considers revenues to be available if they are
collected within three months of the end of the current fiscal period,or within one year for expenditure-driven
grants. Expenditures generally are recorded when a liability is incurred,as under accrual accounting.
Charges for services,grant revenue,and interest associated with the current fiscal period are all considered to
be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue
items are considered to be measurable and available only when cash is received by the government.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand,and amounts held by the City of Lansing for the benefit of Tri-
County Metro.
Capital Assets
Capital assets, which include property and equipment, are reported in the government-wide statements
(statement of net position). Capital assets are defined by Tri-County Metro as assets with an initial,individual
cost of more than$5,000 and an estimated life in excess of one year. Such assets are recorded at historical cost
or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition cost
at the date donated.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset
lives are not capitalized.
Depreciation is recorded over the estimated useful lives (six years for equipment) of the assets, using the
straight-line method for all capital assets.
11
TRI-COUNTY METRO NARCOTICS SQUAD
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fund Equity
Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either
(a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund
balance is reported when externally imposed constraints are placed on the use of resources by grantors,
contributors,or laws or regulations of other governments. Committed fund balance is reported for amounts that
can only be used for specific purposes pursuant to constraints imposed by formal action of the government's
highest level of decision-making authority,the Board of Directors. A formal resolution of the Board of Directors
is required to establish,modify,or rescind a fund balance commitment. The government reports assigned fund
balance for amounts that are constrained by the government's intent to be used for specific purposes,but are
neither restricted nor committed. Tri-County Metro currently has no committed or assigned fund balance.
When the government incurs an expenditure for purposes for which various fund balance classifications can be
used, it is the government's policy to use restricted fund balance first,then committed fund balance, assigned
fund balance,and finally unassigned fund balance.
Budgetary Process
Tri-County Metro is under formal budgetary control. Formal budget integration is employed as a management
control device during the year. Tri-County Metro's budget is provided to the Tri-County Metro Narcotics Squad
Board after approval by City Council of the City of Lansing to confirm in accordance with Public Act 2 of 1968,as
amended by Public Act 621, the Michigan Uniform Budgeting and Accounting Act, which mandates an annual
budget process and an annual appropriation act to implement the budget. The budget, as presented in the
accompanying statement of revenues,expenditures,and changes in fund balance,was prepared on the modified
accrual basis of accounting.
Public Act 2 of 1968,as amended,provides that a local unit shall not incur expenditures in excess of the amount
appropriated.
NOTE 2 -DEPOSITS
Tri-County Metro's cash and cash equivalents included on the statement of net position and governmental fund
balance sheet are classified as follows:
Cash on hand $ 49,029
Equity in pooled cash of the
City of Lansing,Michigan 649,101
Total $ 698,130
Deposits and Investments
State of Michigan statutes authorize Tri-County Metro to invest in bonds,other direct obligations and repurchase
agreements of the United States,certificates of deposit,savings accounts,deposit accounts or receipts of a bank
which is a member of the FDIC,commercial paper,bankers'acceptance of U.S.banks,obligations of the State of
Michigan and its political subdivisions,external investment pools,and certain mutual funds.
12
TRI-COUNTY METRO NARCOTICS SQUAD
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - DEPOSITS (continued)
Deposits and Investments (continued)
The above cash and cash equivalents are held by the City of Lansing,Michigan(the fiscal agent of Tri-County Metro).
Specific deposit and investment accounts are not held in the name of Tri-County Metro but are pooled with all
deposits of the City. The amount of federal depositary insurance and custodial credit risk of investments is
determined for the City of Lansing,Michigan as a whole,and cannot be separately identified for Tri-County Metro.
NOTE 3 - CAPITAL ASSETS
The following is a summary of changes in capital assets for the year ended June 30,2020:
Balance Balance
July 1, 2019 Additions Deletions June 30,2020
Equipment $ 53,970 $ - $ - $ 53,970
Less accumulated depreciation (53,970) - - (53,970)
Capital assets,net $ - $ - $ - $
NOTE 4-RISK MANAGEMENT
Tri-County Metro, a special revenue fund of the City of Lansing, is exposed to various risks of loss that are
covered by the City's policies,including losses related to issues of cyber security,liability,errors and omissions,
flood, boiler and machinery, property, employee bonding, auto, crime, ERISA considerations, and workers'
compensation. City representatives in Tri-County Metro are covered through the City's insurance policies. The
City carries commercial insurance to cover these risks. Settled claims related to the commercial insurance have
not exceeded the amount of insurance coverage during the past three years.
NOTE 5-UPCOMING ACCOUNTING PRONOUNCEMENTS
In January 2017,the GASB issued Statement No.84,Fiduciary Activities. This Statement establishes criteria for
identifying fiduciary activities for all state and local governments, focusing on (1) whether a government is
controlling the assets of the fiduciary activity and (2)the beneficiaries for whom a fiduciary relationship exists.
Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements
that are fiduciary activities. The Tri-County Metro is currently evaluating the impact this standard will have on
the financial statements when adopted during the 2020-2021 fiscal year.
In June 2017,the GASB issued Statement No.87,Leases. This Statement increases the usefulness of governments'
financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were
classified as operating leases and recognized as inflows of resources or outflows of resources based on the
payment provisions of the contract. The Tri-County Metro is currently evaluating the impact this standard will
have on the financial statements when adopted during the 2021-2022 fiscal year.
13
TRI-COUNTY METRO NARCOTICS SQUAD
NOTES TO FINANCIAL STATEMENTS
NOTE 5-UPCOMING ACCOUNTING PRONOUNCEMENTS(continued)
In May 2019,the GASB issued Statement No.91,Conduit Debt Obligations. This Statement will improve financial
reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities,
thereby ending significant diversity in practice. The clarified definition will resolve stakeholders'uncertainty as
to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities
associated with additional commitments extended by issuers and to recognize assets and deferred inflows of
resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity,
thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial
statement users with better information regarding the commitments issuers extend and the likelihood that they
will fulfill those commitments. That information will inform users of the potential impact of such commitments
on the financial resources of issuers and help users assess issuers' roles in conduit debt obligations. The Tri-
County Metro is currently evaluating the impact this standard will have on the financial statements when
adopted during the 2022-2023 fiscal year.
In May 2020,the GASB issued Statement No.96,Subscription-based Information Technology Arrangements. This
Statement provides guidance on the accounting and financial reporting for subscription-based information
technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a
SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset - an intangible asset - and a
corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription
payments,including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To
the extent relevant,the standards for SBITAs are based on the standards established in Statement No.87,Leases,
as amended. The Tri-County Metro is currently evaluating the impact this standard will have on the financial
statements when adopted during the 2022-2023 fiscal year.
14
REQUIRED SUPPLEMENTARY INFORMATION
15
TRI-COUNTY METRO NARCOTICS SQUAD
GOVERNMENTALFUND
BUDGETARY COMPARISON SCHEDULE
YEAR ENDED JUNE 30,2020
Variance with
Final Final Budget
Original Amended Positive
Budget Budget Actual (Negative)
REVENUES
Intergovernmental $ 425,000 $ 493,610 $ 614,842 $ 121,232
Forfeitures 382,000 382,000 21,088 (360,912)
Interest - - 8,652 8,652
Other - - 10,587 10,587
TOTAL REVENUES 807,000 875,610 655,169 (220,441)
EXPENDITURES
Current
Public safety 807,000 875,610 643,297 232,313
NET CHANGE IN FUND BALANCE - - 11,872 11,872
Fund balance,beginning of year 356,228 356,228 356,228 -
Fund balance,end of year $ 356,228 $ 356,228 $ 368,100 $ 11,872
16
Maner Maner Costerisan PC
2425 E.Grand River Ave.
Suite 1
sterisan Lansing,M1 489 1
T.517 323 750 7500
Certified Public Accountants F.517 323 6346
Business&Technology Advisors www manercpa.com
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
The Honorable Mayor,Members of the City Council
of the City of Lansing,and Members of the Board of
Directors of the Tri-County Metro Narcotics Squad
Lansing,Michigan
We have audited,in accordance with the 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, the financial statements of the governmental activities and the
governmental fund of the Tri-County Metro Narcotics Squad("Tri-County Metro"),a special revenue fund of the
City of Lansing, as of and for the year ended June 30, 2020, and the related notes to the financial statements,
which collectively comprise the Tri-County Metro's basic financial statements and have issued our report
thereon dated December 18,2020.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements,we considered the Tri-County Metro'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 opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the Tri-County Metro's internal control. Accordingly,
we do not express an opinion on the effectiveness of the Tri-County Metro's internal control.
A deficiency in internal control 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 and correct,
misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal
control such that there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness,yet
important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not
identified. However,as described below,we identified certain deficiencies in internal control that we consider
to be material weaknesses:
17
2020-001 MATERIAL JOURNAL ENTRIES PROPOSED BY AUDITORS
Condition: Material journal entries for the proper recognition of various financial statement amounts within
the City's accounting records were proposed by the auditors, including accounts that affected Tri-County
Metro. In addition,we received several revisions to the City's trial balance(the final version coming in early
December 2020),each of which contained material corrections to previous trial balances.
Criteria: Management is responsible for establishing,maintaining,and monitoring internal controls,and for
the fair presentation in the financial statements of financial position,results of operations, and cash flows,
including the recording of all appropriate journal entries to assure the trial balance from which the financial
statements are prepared, reflect amounts that are in conformity with U.S. generally accepted accounting
principles.
Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all
accounts, has reduced in size due to budget reductions, staffing reductions and staffing turnover. These
changes have placed a significant burden on the month and year end close processes,and have contributed
to journal entries not being completed or reviewed timely.
Effect: The Tri-County Metro's accounting records were initially misstated by amounts material to the
financial statements. Necessary adjustments were brought to the attention of management and were
subsequently recorded in the Tri-County Metro's general ledger.
Recommendation: We recommend that the City take steps to assure that material journal entries are not
necessary at the time future audit analysis is performed.
Corrective Action Response: Management of the City will continue to review auditor recommendations/
corrections and internal procedures related to the identification and correction of potential errors in the
financial statements prior to the beginning of future audits. The Finance team will meet to review
adjustments made to this year's financial statements and will develop a plan to address the most significant
issues in a timelier manner going forward. Within budget constraints, Management will look to increase
staffing levels and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely
analyses of the various account balances.
2020-02 BANK RECONCILIATIONS
Condition: Throughout the year,the City failed to complete bank reconciliations on a timely basis for most
of its cash accounts,including the pooled account which the Tri-County Metro is part of. Several individual
bank account reconciliations were not completed for the entire fiscal year until approximately four months
after fiscal year end while audit fieldwork was ongoing.
Criteria: Completion of timely bank account reconciliations and review thereof, represent an important
control used to detect and prevent misstatements and errors. Such reconciliations should be completed and
reviewed monthly for all accounts.
Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all
entity accounts, has reduced in size due to staffing reductions and staffing turnover. These changes have
placed a significant burden on the month and year end close processes, and have contributed to
reconciliations not being completed or reviewed timely.
Effect: As a result of this condition, all activities that have cash transactions have an increased risk that
misstatements in the accounting records, whether caused by error or fraud, would not be detected and
corrected on a timely basis.
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2020-02 BANK RECONCILIATIONS (continued)
Recommendation: We recommend the City take steps to assure all bank reconciliations are completed and
tied to the general ledger in a timely fashion and all differences be resolved in a timely manner.
Correction Action Response: Management of the City will work on several areas of improvement to alleviate
this issue.
a. We will continue to review the need for the various bank accounts that have been established over
the years with the view toward more consolidation.
b. We will assign the responsibility for each of the bank accounts to various Finance staff members,
including using City Treasury staff, who will be responsible for reconciling those statements in a
timely manner.
c. We will review the old outstanding reconciling items with the view toward clearing them up before
the end of the next fiscal year.
d. We will look to increase staffing levels in Finance and/or obtain temporary assistance earlier in the
fiscal year,in order to perform more timely analyses of the various bank statements.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Tri-County Metro'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
financial statements. 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 or other matters that are required to be reported under Governmental Auditing Standards.
Tri-County Metro's Responses to Findings
Tri-County Metro's responses to the findings identified in our audit are described above. Tri-County Metro's
responses were not subject to the auditing procedures applied in the audit of the financial statements and,
accordingly,we express no opinion on them.
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 results 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.
December 18,2020
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