Memorandum

U.S. Department of 

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: INFORMATION: Quality Control Review of 

Single Audit on the City of Phoenix, Arizona 

Report No. QC-2009-089 

Date: September 21, 2009 

Reply 

To 

JA-20

From: Earl C. Hedges 

Program Director for Single Audit 

Attn Of: 

To: Regional Administrator, FTA, Region IX 

Regional Administrator, FAA, Western-Pacific Region 

Division Administrator, FHWA, Arizona Division Office 

This report presents the results of our Quality Control Review (QCR) of a single 

audit performed by Clifton Gunderson, LLP on the City of Phoenix (the City) for 

the fiscal year ending June 30, 2008. During this period of time, the City received 

funds from five grant programs in the Department of Transportation (DOT). 

DOT Operating 

Administration

CFD

A 

#

Program 

Name

FY 2008 

Expenditures

Major 

Program

Direct 

Awar

d

Federal Aviation 

Administration (FAA)

20.10

6

Airport Improvement 

Program

$21,298,444 Yes Yes

Federal Highway 

Administration (FHWA)

20.20

5

Highway Planning & 

Construction Program

$9,145,553 Yes No 

Federal Transit 

Administration (FTA)

20.50

0

Capital Investment 

Grants Program

$105,133,060 Yes Yes

Federal Transit 

Administration (FTA) 

20.50

7 

Formula Grants 

Program

$65,297,722 Yes Yes

National Highway Traffic 

Safety Administration 

(NHTSA)

20.60

0-

.604

Highway Traffic 

Safety Programs

$776,379 No No

 

Clifton Gunderson rendered an unqualified (clean) opinion on the City’s financial 

statements and did not question any costs concerning DOT grant programs. 

However, the auditor identified a significant deficiency in internal control over 

compliance with the FHWA program--the City did not prepare the Schedule of 

Expenditures of Federal Awards on an accrual accounting basis. 
3

The purpose of our QCR was to determine: (1) the adequacy of the auditor’s 

work; (2) whether the work complied with Generally Accepted Government 

Auditing Standards, the Single Audit Act of 1984, as amended (Act), and Office of 

Management and Budget (OMB) Circular A-133, “Audits of States, Local 

Governments, and Non-Profit Organizations;” and (3) the extent to which we 

could rely on the auditor’s work.1

 

RESULTS 

Based on our QCR, we determined that Clifton Gunderson’s work, as it related to 

the DOT major programs identified above, generally met the requirements of 

Generally Accepted Government Auditing Standards, the Act, and OMB Circular 

A-133. We found nothing to indicate that Clifton Gunderson’s opinion on the 

financial statements or reports on internal control and compliance were 

inappropriate or unreliable. 

However, during our review of Clifton Gunderson’s work, we identified audit 

documentation deficiencies. Clifton Gunderson provided explanations and 

additional documents in response to our concerns. Based on the information 

provided, we determined that these documentation deficiencies did not affect 

Clifton Gunderson’s overall audit results. However, to adequately support their 

audit conclusions, these deficiencies should be corrected in future audits. The 

deficiencies are related to the following areas: 

1. Compliance Requirements Deemed Not Applicable to DOT Programs. The 

OMB Compliance Supplement prescribes 14 specific requirements that need to 

be tested, unless deemed not applicable to the grant program by the auditor. 

Clifton Gunderson’s audit workpapers did not provide convincing and 

supportive reason(s) why two compliance requirements for FTA, three 

compliance requirements for FAA, and two compliance requirements for 

FHWA were deemed not applicable. 

2. Compliance Review and Testing of Major Program. Clifton Gunderson’s 

audit workpapers did not clearly explain, document, or sufficiently support the 

extent of its review and/or testing performed on the following compliance 

requirements:

 Requirement F (Equipment & Real Property Management): Clifton 

Gunderson’s audit documentation did not provide evidence that they 

sampled equipment acquired with DOT funds to ensure it was appropriately 

safeguarded and maintained. In addition, the audit documentation did not 

 

1

 The Department of Housing and Urban Development (HUD) is the cognizant Federal single audit agency 

for the City, but does not plan to perform a quality control review of Clifton Gunderson’s work. HUD 

gave us permission to review DOT programs. Our review was limited to the DOT major programs 

identified by Clifton Gunderson. 
3

specify whether differences existed between physical inventory counts and 

equipment records. 

 Requirement G (Matching): Clifton Gunderson’s audit documentation did 

not explain the work performed on the source(s) of the City’s matching 

contribution and if the funds were from an allowable source. 

 Requirement L (Reporting): Clifton Gunderson’s audit documentation did 

not explain the work performed on Disadvantaged Business Enterprise 

(DBE) reports submitted to FTA. 

 Requirement M (Subrecipient Monitoring): Clifton Gunderson’s audit 

documentation did not explain the work performed on the City’s 

monitoring of its subrecipients. 

3. Control Deficiencies Not Considered as Material Weaknesses. Clifton 

Gunderson’s audit workpapers did not include an explanation of why the three 

control deficiencies (2008-1, 2008-2, and 2008-3) identified during the audit 

were not considered material weaknesses. 

During our exit conference, we recommended Clifton Gunderson correct these 

issues in its single audit of the City for the fiscal year ending June 30, 2009.2

 

Clifton Gunderson concurred with our recommendation and agreed to provide its 

FY 2009 audit workpapers for our follow-up review. 

We appreciate the courtesies and cooperation of Clifton Gunderson, LLP and City 

of Phoenix representatives during this QCR. If you have any questions concerning 

this report, please call me at (410) 962-1729 or John R. Sysak, DOT National 

Single Audit Coordinator, at (410) 962-2630. 

# 

cc: Regional Administrator, NHTSA, Region IX 

 Audit Liaison, FTA, TBP-11 

 Audit Liaison, FHWA, HAIM-11 

 Audit Liaison, FAA, ABU-100 

 Audit Liaison, FAA, Western-Pacific Region, AWP-620.1 

 Audit Liaison, NHTSA, NPO-310 

 Audit Liaison, OST, M-1 

 Deputy Finance Director, City of Phoenix 

 

2 The single audit report issued by Clifton Gunderson is available upon request through the Freedom of 

Information Act process on http://www.oig.dot.gov/foia.jsp.