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Cpa Diaz-Martinez COMMONWEALTH OF PUERTO RICO AUTONOMOUS MUNICIPALITY OF CAGUAS BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FISCAL YEAR ENDED JUNE 30, 2020 [WITH THE ADDITIONAL REPORTS AND INFORMATION REQUIRED BY THE GOVERNMENT AUDITING STANDARDS AND UNIFORM GUIDANCE] Member of: CPA DIAZ-MARTINEZ, PSC Governmental Audit Quality Center Puerto Rico Society of Certified Public Accountants CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS Enrolled in the AICPA Peer Review Program Since 1988 This page intentionally left blank. BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION COMMONWEALTH OF PUERTO RICO TABLE OF CONTENTS AUTONOMOUS MUNICIPALITY OF CAGUAS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Pages PART I – Financial: Independent Auditor’s Report ......................................................................................................................... 2- 5 Required Supplementary Information – Management’s Discussion and Analysis (Unaudited) ...................... 6- 22 Basic Financial Statements: Governmental-wide Statements: Statement of Net Position ....................................................................................................................... 23- 24 Statement of Activities ............................................................................................................................. 25 Governmental Funds Statements: Balance Sheet – Governmental Funds ................................................................................................... 26 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position .................. 27 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ........... 28 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities ................................................. 29 Notes to Financial Statements .................................................................................................................... 30-160 Required Supplementary Information: (Unaudited) Schedule of Revenues and Expenditures Budget and Actual – General Fund – Non-GAAP Budgetary Basis ................................................................................................................ 162 Notes to Schedule of Revenues and Expenditures Budget and Actual – General Fund – Non-GAAP Budgetary Basis ................................................................................................................ 163 Required Supplementary Information: (Unaudited) – Pension Employees’ Retirement System of the Government of the Commonwealth of Puerto Rico – Schedule of Proportionate Share of the Net Pension Liability ................................................................. 164 Employees’ Retirement System of the Government of the Commonwealth of Puerto Rico – Schedule of Contributions to the Employees’ Retirement Systems ........................................................ 165 Notes to Required Supplementary Information - Pension ........................................................................... 166 continue i BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION COMMONWEALTH OF PUERTO RICO TABLE OF CONTENTS AUTONOMOUS MUNICIPALITY OF CAGUAS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Pages Supplementary Information Required by U.S. Department of Housing and Urban Development: Section 8 Housing Choice Vouchers Program: Financial Data Schedule (RQ007) – Entity Wide Balance Sheet Summary ............................................ 168-169 Financial Data Schedule (RQ007) – Program Revenues and Expenses Summary ................................ 170 Financial Data Schedules (RQ007) – Notes to Financial Data Schedules .............................................. 171 PART II – Schedule of Expenditures of Federal Awards and Reports Required by Government Auditing Standards and Uniform Guidance: Schedule of Expenditures of Federal Awards ................................................................................................ 173-175 Notes to Schedule of Expenditures of Federal Awards .................................................................................. 176-177 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 ..................................................................................... 178-179 Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance ...................................................... 180-182 PART III – Findings and Questioned Costs: Schedule of Findings and Questioned Costs ................................................................................................. 184-186 Summary Schedule of Prior Audits Findings .................................................................................................. 187 ii PART I FINANCIAL 1 This page intentionally left blank. CPA DIAZ-MARTINEZ, PSC ENHANCING THE QUALITY OF ACCOUNTING, AUDITING AND ATTESTATION SERVICES CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 202 Gautier Benitez Ave. Consolidated Mall C-31 PO Box 8369 Caguas, PR 00726-8369 Phones: (787) 746-0510 / 1185 / 1370 Fax: (787) 746-0525 cpadiazmartinez.com INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of the Municipal Legislature Autonomous Municipality of Caguas of the Commonwealth of Puerto Rico Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Autonomous Municipality of Caguas of the Commonwealth of Puerto Rico (Municipality), as of and for the fiscal year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise Municipality’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 Government Auditing 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 Municipality’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 Municipality’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of the 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 our audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 2 Member of: AICPA Government Audit Quality Center Puerto Rico Society of Certified Public Accountants Enrolled in the AICPA Peer Review Program Since 1988 INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of the Municipal Legislature Autonomous Municipality of Caguas of the Commonwealth of Puerto Rico Page 2 Basis for Qualified Opinion on Governmental Activities and Note Disclosure Regarding Pensions Plan and Other Postemployment Benefits Plan We were unable to obtain sufficient appropriate audit evidence about the deferred outflows/inflows of resources, liabilities, and expenses relations to pension and other postemployment benefits of the governmental activities and the related disclosures in the accompanying notes. As discussed in Notes 19 and 20, the Puerto Rico Government Employees Retirement System (PRERS) has not issued audited financial statements as of and for the fiscal years ended June 30, 2019 nor has provided to the Municipality the required information to record transactions related to pension and other postemployment benefits as of and for the Fiscal Year ended June 30, 2020. Amounts reported in the government-wide financial statements as deferred outflows of resources, deferred inflows of resources, net pension liability, and net other postemployment benefits liability were derived from the application of the proportional share included
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