2021-002 – Equipment and Real Property Management (NC/SD)
Federal Program Title: Equitable Sharing Program
Federal Catalog Number: 16.922
Federal Agency: U.S. Department of Justice
Category of Finding: Equipment and Real Property Management
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2021 Part 4 16.922 Equitable Sharing Program (page 16.922-2), property
purchased with equitable sharing funds, or obtained for official use, is subject to inventory control, log
maintenance, and disposal requirements.
Condition: During our audit, we noted that the City did not maintain a log of equipment acquired with
ESP funds. The City has not performed a physical inventory of equipment at least since 2019.
Cause: Lack of appropriate control over equipment acquired with ESP funds, mainly due to turn-over in
City personnel.
Effect or Potential Effect: Equipment acquired with ESP funds may have been utilized for purposes
not in accordance with the program’s objectives. If a piece of equipment was disposed, the City would
not be able to comply with disposal requirements.
Questioned Cost: None.
Context: We inquired with City personnel who are directly responsible for the program. They were not
aware of an equipment log maintained by the City or a physical inventory of equipment during fiscal year
2021.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: Yes.
Recommendation: The City should design and establish internal controls over equipment acquired using
federal funds, which should include:
1) Tracking of equipment purchases which should include the asset ID
2) Physical inventory of equipment, including tagging of the assets
3) Formal procedures for disposal of equipment purchased with federal funds
4) Consider converting to a computerized asset management system
5) Purchases of equipment should be approved and supporting documentation should be retained
for all items.
Management Response and Corrective Action Plan
City’s Response: The City Concurs with the finding. Staff responsible for this control during FY
2021 are no longer employed by the City.
Corrective Action Plan: Current City staff will begin a physical inventory of fixed asset to ensure
documentation assets are identified by the associated funds with which they were purchased.
2021-003 – Reporting (NC/SD)
Federal Program Title: Equitable Sharing Program
Federal Catalog Number: 16.922
Federal Agency: U.S. Department of Justice
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2021 Part 4 16.922 Equitable Sharing Program (page 16.922-3), the annual
reporting requirement for equitable sharing funds is through the submission of the annual Equitable
Sharing Agreement and Certification (ESAC) form. Agencies report on the ESAC the amount of funds
received and how they were expended in general categories such as equipment and training.
Condition: During our audit, the City was unable to provide evidence of reporting for fiscal year 2021.
Cause: Lack of appropriate control over reporting, mainly due to turn-over in City personnel.
Effect or Potential Effect: Noncompliance may result in termination of the grant, reduction in future
payments or funding amounts, repayment of federal funds already received and spent, imposed fines
and penalties, reputational damage, special status for oversight and reviews, need for corrective action
plan, and/or suspension or debarment.
Questioned Cost: None.
Context: The City was unable to provide evidence that the appropriate reports were submitted for fiscal
year 2021.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: No.
Recommendation: The City should design and establish internal controls over reporting, which should
include maintaining copies of reports submitted for audit
Management Response and Corrective Action Plan
City’s Response: The City Concurs with the finding. Staff responsible for this control during FY
2021 are no longer employed by the City.
Corrective Action Plan: Current City Finance staff in conjunction with Police Department staff are
monitoring ESAC reporting processes.
Planned Implementation Date: started in Q4 FY 2023 and has continued into FY 2024
Responsible Person: Finance Department staff
2021-001 – Claimed CRF Expenditures Also Claimed from CDBG (NC/MW)
Federal Program Title: Coronavirus Relief Fund
Federal Catalog Number: 20.019
Federal Agency: U.S. Department of Treasury
Category of Finding: Activities Allowed or Unallowed/ Allowable Costs/Cost Principles
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2021 Part 4 20.019 Coronavirus Relief Fund (page 21.019-4), recipients
may not use payments from the fund to cover expenditures for which they will receive reimbursement
from other sources.
Condition: During our audit, we noted that certain expenditures reported as CRF expenditures were also
reported as CDBG expenditures.
Cause: Lack of appropriate control over review and approval of allowable costs.
Effect or Potential Effect: The City may have received reimbursement for the same costs from two
different sources. This may result in repayment of funds already received and spent. In addition,
noncompliance may result in reduction in future payments or funding amounts, imposed fines and
penalties, or termination of the grant. More often than not, noncompliance may also result in reputational
damage, special status for oversight and reviews, need for corrective action plan, and/or suspension or
debarment.
Questioned Cost: $95,500.
Context: We selected 25 invoiced, non-payroll expenditures from a detailed listing provided by the City.
Out of 25 items, we noted 10 items totaling $40,500 were also emergency housing or business assistance
related to CDBG program. Upon review of the detailed listing, we found a total of $95,500 expenditures
related to CDBG emergency housing or business assistance.
Statistical Sampling Validity: Yes
Repeat of a Prior-Year Finding: No
Recommendation: We recommend that the City should thoroughly review all expenditures charged to
federal grants to ensure that any cost claimed for one grant is not also claimed in another. The City should
establish procedures to avoid double counting of allowable costs.
Management Response and Corrective Action Plan:
City’s Response: The City concurs with the finding. Staff responsible for this control during FY
2021 are no longer employed by the City.
Corrective Action Plan: CDBG staff worked with program auditors to resolve the issues. Finance
Staff and related CDBG staff have been trained to ensure there is not duplication of expenditures in
multiple programs. In addition, the City has hired third-party consultants to provide guidance and
oversight.
2021-002 – Equipment and Real Property Management (NC/SD)
Federal Program Title: Equitable Sharing Program
Federal Catalog Number: 16.922
Federal Agency: U.S. Department of Justice
Category of Finding: Equipment and Real Property Management
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2021 Part 4 16.922 Equitable Sharing Program (page 16.922-2), property
purchased with equitable sharing funds, or obtained for official use, is subject to inventory control, log
maintenance, and disposal requirements.
Condition: During our audit, we noted that the City did not maintain a log of equipment acquired with
ESP funds. The City has not performed a physical inventory of equipment at least since 2019.
Cause: Lack of appropriate control over equipment acquired with ESP funds, mainly due to turn-over in
City personnel.
Effect or Potential Effect: Equipment acquired with ESP funds may have been utilized for purposes
not in accordance with the program’s objectives. If a piece of equipment was disposed, the City would
not be able to comply with disposal requirements.
Questioned Cost: None.
Context: We inquired with City personnel who are directly responsible for the program. They were not
aware of an equipment log maintained by the City or a physical inventory of equipment during fiscal year
2021.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: Yes.
Recommendation: The City should design and establish internal controls over equipment acquired using
federal funds, which should include:
1) Tracking of equipment purchases which should include the asset ID
2) Physical inventory of equipment, including tagging of the assets
3) Formal procedures for disposal of equipment purchased with federal funds
4) Consider converting to a computerized asset management system
5) Purchases of equipment should be approved and supporting documentation should be retained
for all items.
Management Response and Corrective Action Plan
City’s Response: The City Concurs with the finding. Staff responsible for this control during FY
2021 are no longer employed by the City.
Corrective Action Plan: Current City staff will begin a physical inventory of fixed asset to ensure
documentation assets are identified by the associated funds with which they were purchased.
2021-003 – Reporting (NC/SD)
Federal Program Title: Equitable Sharing Program
Federal Catalog Number: 16.922
Federal Agency: U.S. Department of Justice
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2021 Part 4 16.922 Equitable Sharing Program (page 16.922-3), the annual
reporting requirement for equitable sharing funds is through the submission of the annual Equitable
Sharing Agreement and Certification (ESAC) form. Agencies report on the ESAC the amount of funds
received and how they were expended in general categories such as equipment and training.
Condition: During our audit, the City was unable to provide evidence of reporting for fiscal year 2021.
Cause: Lack of appropriate control over reporting, mainly due to turn-over in City personnel.
Effect or Potential Effect: Noncompliance may result in termination of the grant, reduction in future
payments or funding amounts, repayment of federal funds already received and spent, imposed fines
and penalties, reputational damage, special status for oversight and reviews, need for corrective action
plan, and/or suspension or debarment.
Questioned Cost: None.
Context: The City was unable to provide evidence that the appropriate reports were submitted for fiscal
year 2021.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: No.
Recommendation: The City should design and establish internal controls over reporting, which should
include maintaining copies of reports submitted for audit
Management Response and Corrective Action Plan
City’s Response: The City Concurs with the finding. Staff responsible for this control during FY
2021 are no longer employed by the City.
Corrective Action Plan: Current City Finance staff in conjunction with Police Department staff are
monitoring ESAC reporting processes.
Planned Implementation Date: started in Q4 FY 2023 and has continued into FY 2024
Responsible Person: Finance Department staff
2021-001 – Claimed CRF Expenditures Also Claimed from CDBG (NC/MW)
Federal Program Title: Coronavirus Relief Fund
Federal Catalog Number: 20.019
Federal Agency: U.S. Department of Treasury
Category of Finding: Activities Allowed or Unallowed/ Allowable Costs/Cost Principles
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2021 Part 4 20.019 Coronavirus Relief Fund (page 21.019-4), recipients
may not use payments from the fund to cover expenditures for which they will receive reimbursement
from other sources.
Condition: During our audit, we noted that certain expenditures reported as CRF expenditures were also
reported as CDBG expenditures.
Cause: Lack of appropriate control over review and approval of allowable costs.
Effect or Potential Effect: The City may have received reimbursement for the same costs from two
different sources. This may result in repayment of funds already received and spent. In addition,
noncompliance may result in reduction in future payments or funding amounts, imposed fines and
penalties, or termination of the grant. More often than not, noncompliance may also result in reputational
damage, special status for oversight and reviews, need for corrective action plan, and/or suspension or
debarment.
Questioned Cost: $95,500.
Context: We selected 25 invoiced, non-payroll expenditures from a detailed listing provided by the City.
Out of 25 items, we noted 10 items totaling $40,500 were also emergency housing or business assistance
related to CDBG program. Upon review of the detailed listing, we found a total of $95,500 expenditures
related to CDBG emergency housing or business assistance.
Statistical Sampling Validity: Yes
Repeat of a Prior-Year Finding: No
Recommendation: We recommend that the City should thoroughly review all expenditures charged to
federal grants to ensure that any cost claimed for one grant is not also claimed in another. The City should
establish procedures to avoid double counting of allowable costs.
Management Response and Corrective Action Plan:
City’s Response: The City concurs with the finding. Staff responsible for this control during FY
2021 are no longer employed by the City.
Corrective Action Plan: CDBG staff worked with program auditors to resolve the issues. Finance
Staff and related CDBG staff have been trained to ensure there is not duplication of expenditures in
multiple programs. In addition, the City has hired third-party consultants to provide guidance and
oversight.