Audit 2552

FY End

2022-06-30

Total Expended

$32.22M

Findings

2

Programs

5

Organization: City of Lancaster (CA)

Year: 2022 Accepted: 2023-11-07

Auditor: Cliftonlarsonallen LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
1365	2022-002	Material Weakness	Yes	P
577807	2022-002	Material Weakness	Yes	P

ALN	Program	Spent	Major
20.205	Highway Planning and Construction	$2.18M	Yes
21.027	Coronavirus State and Local Fiscal Recovery Funds	$1.93M	Yes
59.075	Shuttered Venue Operators Grant Program	$621,325	-
14.218	Community Development Block Grants/entitlement Grants	$264,820	-
14.239	Home Investment Partnerships Program	$1,037	-

Contacts

Name	Title	Type
PLPTTCNAL6E1	George Harris	Auditee
6617235988	Nitin Patel	Auditor
No contacts on file

Notes to SEFA

Title: NOTE 4 CONTINGENCIES Accounting Policies: NOTE 1 BASIS OF PRESENTATION The accompanying Schedules of Expenditures of Federal Awards (the Schedule) include the federal award activities of the City of Lancaster (the City) under programs of the federal government as well as federal financial assistance passed through other government agencies for the year ended June 30, 2022. The information in the Schedule of Expenditures of Federal Awards (SEFA) is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedules present only a selected portion of the operations of the City, they are not intended to, and do not, present the financial statements of the City. The City’s reporting entity is defined in Note 1 of the notes to the City’s financial statements. NOTE 2 BASIS OF ACCOUNTING The accompanying Schedule is presented using the modified accrual basis of accounting for governmental funds and the accrual basis for proprietary funds, which is described in the Note 1 of the notes to the City’s financial statements. Such expenditures are recognized following the cost principles contained in the Uniform Guidance for all awards. The information in the SEFA is presented in accordance with the requirements of the Uniform Guidance. Therefore, some amounts presented in the SEFA may differ from amounts presented in, or used in the preparation of, the basic financial statements. Pass through entity identifying numbers are identified where available. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. Under the terms of federal and state grants, additional audits may be requested by the grantor agencies and certain costs may be questioned as not being appropriate expenditures under the terms of the grants. Such audits could lead to a request for reimbursement to the grantor agencies.

Finding Details

Finding 2022-002

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Cluster Assistance Listing Number: 20.205 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The City is required to report federal expenditures based on when costs are incurred. Condition: During our testing, we noted inaccuracy in the schedule of federal expenditure awards. Questioned costs: None Context: During our compliance testing for SEFA completeness, we noted the City did not have any Highway Planning and Construction Cluster expenditures included in the preliminary SEFA. Upon further investigation by the City, $3,492,591 was added to the SEFA. Cause: Due to extraordinary turnover in the Finance Department, the program was missed on the preliminary SEFA. Effect: The City had to revise the schedule of federal expenditures which resulted in increasing the amount reported by $3,492,591. Repeat finding: Yes. Recommendation: The City should evaluate their controls over the Schedule of Expenditures of Federal Awards reporting process to determine whether additional controls can be implemented to provide assurance over the accuracy and completeness of the Schedule of Expenditures of Federal Awards. View of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Management acknowledges that extraordinary turnover occurred in the Finance Department during the closing and subsequent preparation of the fiscal year end dated June 30, 2022. The vacant positions responsible for this work will be filled with trained, experienced accounting professionals and as a result the listed issues will be remedied. Additionally, an audit pre preparation plan is being developed to assure that the year-end audit process will continue to be a smooth process into the future.

Finding 2022-002

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Cluster Assistance Listing Number: 20.205 Award Period: July 1, 2021 through June 30, 2022 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: The City is required to report federal expenditures based on when costs are incurred. Condition: During our testing, we noted inaccuracy in the schedule of federal expenditure awards. Questioned costs: None Context: During our compliance testing for SEFA completeness, we noted the City did not have any Highway Planning and Construction Cluster expenditures included in the preliminary SEFA. Upon further investigation by the City, $3,492,591 was added to the SEFA. Cause: Due to extraordinary turnover in the Finance Department, the program was missed on the preliminary SEFA. Effect: The City had to revise the schedule of federal expenditures which resulted in increasing the amount reported by $3,492,591. Repeat finding: Yes. Recommendation: The City should evaluate their controls over the Schedule of Expenditures of Federal Awards reporting process to determine whether additional controls can be implemented to provide assurance over the accuracy and completeness of the Schedule of Expenditures of Federal Awards. View of responsible officials and planned corrective actions: There is no disagreement with the audit finding. Management acknowledges that extraordinary turnover occurred in the Finance Department during the closing and subsequent preparation of the fiscal year end dated June 30, 2022. The vacant positions responsible for this work will be filled with trained, experienced accounting professionals and as a result the listed issues will be remedied. Additionally, an audit pre preparation plan is being developed to assure that the year-end audit process will continue to be a smooth process into the future.