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6.1 B ATT�I�VI ENY 3 To the Honorable Mayor and Members of City Counril of the City of Redwood City Redwood City, Califomia Page 2 , Internal Control over Compliance Management of the City is responsibte for establishing and maintaining effective intemal controi over compliance with the requirements of iaws, regulations, contracts, and grants applicable to federal programs. In planning and performing our andit, we considered City's intemal rnntrol over compliance with the requirements that could have a direc# and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compiiance in accordance with OMB Circalar A-133, but not for the purpose of expressing an opinion on the effectiveness of internal rnntrot over compliance. Acrnrdingly, we do not express an opinion on the effectiveness of City's internai control over compiiance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify aIl deficiencies in internal control over compliance that rrtight be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internai control over compliance that we consider to be significant deficiencies. A deficiency in intemal control over compliance exists when the design or operation of a conlrol over compliance does not ailow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internai control over compliance is a deficiency, or combination of deficiencies, in intemal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant defictiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compiiance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying schednle of findings and questioned costs as item Finding 10-1 to be a significant deficiency. Schedule of Expenditures of Federal Awards We have audited the financiai statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Redwood City as of and for the year ended June, 30, 2010, and have issued our report thereon dated December 3, 2010. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financiai statements. Such information has been subjected to the auditing procedures appiied in the audit of the basic financial statements and, in onr opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. 4