Audit 301530

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-004 Improve Time and Effort Documentation Federal Agency: U.S. Department of Housing and Urban Development Cluster/Program: Community Development Block Grants/Entitlement Cluster Award Name: Community Development Block Grants/Entitlement AL Number(s): 14.218 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Internal Control over Compliance – Significant DeficiencyCriteria or Specific Requirement Grantees must provide reasonable assurance that Federal awards are expended only for allowable activities and that the costs of goods and services charged to Federal awards are allowable and in accordance with the applicable cost principles. An employee whose salary is paid in part from federal grant funds and in part from other revenue sources must maintain time and effort distribution records, such as activity reports or timesheets, that document the portion of time spent working on tasks related to the federal grant program and time spent on programs supported by the other revenue sources. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow 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. Condition and Context During our audit, we tested a sample of payroll disbursements in order to determine if adequate time and effort records were maintained and to determine if internal controls over the maintenance of time and effort documentation were followed. As a result of our testing, we determined that time and effort certifications for salaried individuals paid in part from federal grant funds and in part from other revenue sources for the period under audit were not properly approved. Effect or Potential Effect Internal controls over time and effort documentation were not followed. There is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Cause Weaknesses in the operation of controls. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 004. Recommendation The Planning Department should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal awards are expended only for allowable activities, and that the costs services charged to federal awards are allowable and in accordance with the applicable cost principles.Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-005 Improve Compliance with American Rescue Plan Reporting Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees are required to report financial information to the grantor agency in accordance with the requirements set forth by the Federal awarding agency. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow 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. Condition and Context We tested the City’s use of American Rescue Plan Act funds with amounts reported to the Treasury Department as of June 30, 2023. We determined that life-to-date expenditures reported were understated by approximately $21 million. Effect or Potential Effect The City is not in compliance with grant requirements over reporting. No questioned costs are noted as the issue relates only to the amount reported to the Treasury Department. Cause Weaknesses in the operation of controls.Recommendation The City should accurately report life-to-date expenditures in quarterly and annual Project and Expenditures Reports in order to comply with reporting guidelines. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-004 Improve Time and Effort Documentation Federal Agency: U.S. Department of Housing and Urban Development Cluster/Program: Community Development Block Grants/Entitlement Cluster Award Name: Community Development Block Grants/Entitlement AL Number(s): 14.218 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Internal Control over Compliance – Significant DeficiencyCriteria or Specific Requirement Grantees must provide reasonable assurance that Federal awards are expended only for allowable activities and that the costs of goods and services charged to Federal awards are allowable and in accordance with the applicable cost principles. An employee whose salary is paid in part from federal grant funds and in part from other revenue sources must maintain time and effort distribution records, such as activity reports or timesheets, that document the portion of time spent working on tasks related to the federal grant program and time spent on programs supported by the other revenue sources. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow 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. Condition and Context During our audit, we tested a sample of payroll disbursements in order to determine if adequate time and effort records were maintained and to determine if internal controls over the maintenance of time and effort documentation were followed. As a result of our testing, we determined that time and effort certifications for salaried individuals paid in part from federal grant funds and in part from other revenue sources for the period under audit were not properly approved. Effect or Potential Effect Internal controls over time and effort documentation were not followed. There is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Cause Weaknesses in the operation of controls. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 004. Recommendation The Planning Department should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal awards are expended only for allowable activities, and that the costs services charged to federal awards are allowable and in accordance with the applicable cost principles.Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-005 Improve Compliance with American Rescue Plan Reporting Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees are required to report financial information to the grantor agency in accordance with the requirements set forth by the Federal awarding agency. Management is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow 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. Condition and Context We tested the City’s use of American Rescue Plan Act funds with amounts reported to the Treasury Department as of June 30, 2023. We determined that life-to-date expenditures reported were understated by approximately $21 million. Effect or Potential Effect The City is not in compliance with grant requirements over reporting. No questioned costs are noted as the issue relates only to the amount reported to the Treasury Department. Cause Weaknesses in the operation of controls.Recommendation The City should accurately report life-to-date expenditures in quarterly and annual Project and Expenditures Reports in order to comply with reporting guidelines. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.

2023-003 Improve Controls and Documentation over Payroll Process Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Local Entitlement AL Number(s): 84.027/84.173 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Education Stabilization Fund Cluster Award Name: Elementary and Secondary Emergency Relief Funds AL Number(s): 84.425D/84.425U Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Federal Agency: U.S. Department of Treasury Cluster/Program: State and Local Fiscal Recovery Funds Award Name: State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance - Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles.Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Questioned Number(s) Name of Federal Program or Cluster Costs 84.027/84.173 Special Education Cluster $2,105,321 84.425D/84.425U Education Stabilization Fund Cluster $5,695,516 21.027 State and Local Fiscal Recovery Funds $442,467 Cause Weaknesses in the design and operation of controls over payroll processing in the School Department. Identification as Repeat Finding As identified in Section IV, the Schedule of Prior Year Findings, this is a repeat of finding 2022- 003. Recommendation The School Department must re-design the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid. Views of Responsible Official and Planned Corrective Action Management’s views and corrective action plan is included at the end of this report after the summary schedule of prior year audit findings and status.