Audit 1217

Finding 2022-004 Reporting - Timely Submission of Financial Reports – Material Weakness in Internal control over Financial Reporting and Material Noncompliance Agency U.S. Department of Treasury Program ALN: No. 21.027 Coronavirus State and Local Fiscal Recovery Funds - COVID-19 Award No. AK0137 Award Year 2022 Criteria or Specific Requirement 2 CFR subtitle A Chapter II part 200 subpart F section 200.512 states that “(1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.” Condition The Federal data collection form and reporting package were not filed on time. Cause There were limited personnel resources at the City to assist in the timely completion of the City’s audit. Effect or potential effect Federal funds could potentially be expended on unallowable activities and for unallowed costs, and outside the period of performance. Questioned Costs None. Context The Form SF-SAC is due nine months after the fiscal year-end. The form for the fiscal year ended June 30, 2022 was filed late. Recommendation The City should prepare for its fiscal year audit before year end to ensure that it is able to assist in the execution of the audit. Views of responsible officials and planned corrective actions Management agrees with the finding. The City recently hired a Finance Director and is working to fill the Controller position. Being fully staffed will assist in the timely completion of the City’s audit.

Finding 2022-005 Procurement, Suspension, and Debarment - Material Weakness in Internal Control and Material Noncompliance Agency U.S. Department of Treasury Pass-through Entity State of Alaska Department of Commerce, Community, and Economic Development Program ALN: No. 21.027 Coronavirus State and Local Fiscal Recovery Funds – COVID-19 Award No. AK0137 Award Year 2022 Criteria or Specific Requirement In accordance with 2 CFR section 200.320, the City is required to have and use documented procurement policies consistent with the standards of the CFR for any method of procurement used in the acquisition of property or services required under the American Rescue Plan Act. Condition Personnel at the City of Unalaska, acting under the local emergency in effect for FY22 did not follow procurement policies consistent with 2 CFR 200.320 for small purchases in FY22. Cause The City of Unalaska relaxed procurement policies per Resolution 2020-16 passed by the City Council on March 18, 2020. The relaxed procurement policies were not consistent with procurement policies per 2 CFR 200.320. Effect or potential effect The City was not in compliance with 2 CFR section 200.320 during 2022. Goods and services procured by the City under the program may not be the most cost-effective or appropriate for the City. Questioned Costs None. Context We tested the procurement for one sample selected in FY22. BDO was unable to obtain documentation for rate or quote solicitation for the selected sample and upon inquiry, identified that procurement policies at the City were relaxed during FY22. Recommendation Procurement policies should be updated and documented so that they are at least as restrictive as the policies required per the Code of Federal Regulation. Views of responsible officials and planned corrective actions Management agrees with the finding. Management will review procurement policies and update as needed to ensure they are at least as restrictive as the policies required per the Code of Federal Regulation.

Finding 2022-006 Procurement, Suspension, and Debarment - Material Weakness in Internal Control and Material Noncompliance Agency U.S. Department of Treasury Pass-through Entity State of Alaska Department of Commerce, Community, and Economic Development Program ALN: No. 21.027 Coronavirus State and Local Fiscal Recovery Funds – COVID-19 Award No. AK0137 Award Year 2022 Criteria or Specific Requirement Internal control policies should be established to document that an entity with which the City plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded for covered transactions under the Uniform Guidance. Condition The City did not retain documentation that vendors were not debarred, suspended, or otherwise disbarred. Cause During FY22, the City did not have internal control policies in place to ensure that adequate documentation was maintained over vendors with which the City entered into covered transactions. Effect or potential effect The lack of documentation can impede the City’s management to monitor compliance with the requirement. Questioned Costs None. Context Auditor were unable to verify internal controls over sampled procurements because no documentation was retained. Auditor verified that the vendor was not suspended or disbarred. Recommendation We recommend that management retain evidence of review that prospective vendors and suppliers are not on the suspension and debarment list for covered transactions under Uniform Guidance. Views of responsible officials and planned corrective actions Management agrees with the finding. Management will retain evidence of review that prospective vendors and suppliers are not on the suspension and debarment list for covered transactions under Uniform Guidance.

Finding 2022-004 Reporting - Timely Submission of Financial Reports – Material Weakness in Internal control over Financial Reporting and Material Noncompliance Agency U.S. Department of Treasury Program ALN: No. 21.027 Coronavirus State and Local Fiscal Recovery Funds - COVID-19 Award No. AK0137 Award Year 2022 Criteria or Specific Requirement 2 CFR subtitle A Chapter II part 200 subpart F section 200.512 states that “(1) The audit must be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day.” Condition The Federal data collection form and reporting package were not filed on time. Cause There were limited personnel resources at the City to assist in the timely completion of the City’s audit. Effect or potential effect Federal funds could potentially be expended on unallowable activities and for unallowed costs, and outside the period of performance. Questioned Costs None. Context The Form SF-SAC is due nine months after the fiscal year-end. The form for the fiscal year ended June 30, 2022 was filed late. Recommendation The City should prepare for its fiscal year audit before year end to ensure that it is able to assist in the execution of the audit. Views of responsible officials and planned corrective actions Management agrees with the finding. The City recently hired a Finance Director and is working to fill the Controller position. Being fully staffed will assist in the timely completion of the City’s audit.

Finding 2022-005 Procurement, Suspension, and Debarment - Material Weakness in Internal Control and Material Noncompliance Agency U.S. Department of Treasury Pass-through Entity State of Alaska Department of Commerce, Community, and Economic Development Program ALN: No. 21.027 Coronavirus State and Local Fiscal Recovery Funds – COVID-19 Award No. AK0137 Award Year 2022 Criteria or Specific Requirement In accordance with 2 CFR section 200.320, the City is required to have and use documented procurement policies consistent with the standards of the CFR for any method of procurement used in the acquisition of property or services required under the American Rescue Plan Act. Condition Personnel at the City of Unalaska, acting under the local emergency in effect for FY22 did not follow procurement policies consistent with 2 CFR 200.320 for small purchases in FY22. Cause The City of Unalaska relaxed procurement policies per Resolution 2020-16 passed by the City Council on March 18, 2020. The relaxed procurement policies were not consistent with procurement policies per 2 CFR 200.320. Effect or potential effect The City was not in compliance with 2 CFR section 200.320 during 2022. Goods and services procured by the City under the program may not be the most cost-effective or appropriate for the City. Questioned Costs None. Context We tested the procurement for one sample selected in FY22. BDO was unable to obtain documentation for rate or quote solicitation for the selected sample and upon inquiry, identified that procurement policies at the City were relaxed during FY22. Recommendation Procurement policies should be updated and documented so that they are at least as restrictive as the policies required per the Code of Federal Regulation. Views of responsible officials and planned corrective actions Management agrees with the finding. Management will review procurement policies and update as needed to ensure they are at least as restrictive as the policies required per the Code of Federal Regulation.

Finding 2022-006 Procurement, Suspension, and Debarment - Material Weakness in Internal Control and Material Noncompliance Agency U.S. Department of Treasury Pass-through Entity State of Alaska Department of Commerce, Community, and Economic Development Program ALN: No. 21.027 Coronavirus State and Local Fiscal Recovery Funds – COVID-19 Award No. AK0137 Award Year 2022 Criteria or Specific Requirement Internal control policies should be established to document that an entity with which the City plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded for covered transactions under the Uniform Guidance. Condition The City did not retain documentation that vendors were not debarred, suspended, or otherwise disbarred. Cause During FY22, the City did not have internal control policies in place to ensure that adequate documentation was maintained over vendors with which the City entered into covered transactions. Effect or potential effect The lack of documentation can impede the City’s management to monitor compliance with the requirement. Questioned Costs None. Context Auditor were unable to verify internal controls over sampled procurements because no documentation was retained. Auditor verified that the vendor was not suspended or disbarred. Recommendation We recommend that management retain evidence of review that prospective vendors and suppliers are not on the suspension and debarment list for covered transactions under Uniform Guidance. Views of responsible officials and planned corrective actions Management agrees with the finding. Management will retain evidence of review that prospective vendors and suppliers are not on the suspension and debarment list for covered transactions under Uniform Guidance.