FAC Explorer

Audit 302063

FY End
2023-06-30
Total Expended
$1.36M
Findings
6
Programs
10
Organization: City of Eureka (CA)
Year: 2023 Accepted: 2024-04-01
Auditor: Moss Levy & Hartzheim LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
391611 2023-004 Material Weakness - B
391612 2023-005 Material Weakness - I
391613 2023-006 Material Weakness - F
968053 2023-004 Material Weakness - B
968054 2023-005 Material Weakness - I
968055 2023-006 Material Weakness - F

Programs

ALN Program Spent Major Findings
14.231 Emergency Solutions Grant Program $711,241 Yes 3
20.205 Highway Planning and Construction $255,820 - 0
66.818 Brownfields Assessment and Cleanup Cooperative Agreements $200,405 - 0
14.218 Community Development Block Grants/entitlement Grants $78,377 - 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $36,444 - 0
97.039 Hazard Mitigation Grant $26,960 - 0
16.738 Edward Byrne Memorial Justice Assistance Grant Program $15,931 - 0
15.657 Endangered Species Conservation Ð Recovery Implementation Funds $10,445 - 0
20.600 State and Community Highway Safety $8,007 - 0
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $5,228 - 0

Contacts

Name Title Type
RLLXTF29T163 Lane Millar Auditee
7074414114 Hadley Hui Auditor
No contacts on file

Notes to SEFA

Title: REPORTING ENTITY Accounting Policies: The audit was conducted in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). The responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10 percent minimis indirect cost rate. The financial reporting entity consists of (a) the primary government, City of Eureka (City), and (b) component units which include organizations for which the primary government is financially accountable, and other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The component unit of the City is the Eureka Public Financing Authority.
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: The audit was conducted in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). The responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10 percent minimis indirect cost rate. Basis of Accounting Funds received under the various grant programs have been recorded within the General, Special Revenue, Capital projects, and Enterprise funds of the City. The City utilizes the modified accrual method of accounting for the general, special revenue, and capital project funds, and the accrual method for the enterprise funds. Expenditures of Federal Awards, reported on the accompanying Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred. Schedule of Expenditures of Federal Awards The accompanying schedule presents the activity of all Federal financial assistance programs of the City, Federal financial assistance received directly from Federal agencies,as well as Federal financial assistance passed through the State of California. The Schedule was prepared from only the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City as a whole.
Title: AMOUNTS PROVIDED TO SUBRECIPIENTS Accounting Policies: The audit was conducted in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). The responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10 percent minimis indirect cost rate. For the fiscal year ended June 30, 2023, the City did not have payments passed through to other agencies.
Title: INDIRECT COST RATES Accounting Policies: The audit was conducted in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit 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). The responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10 percent minimis indirect cost rate. The City has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance.

Finding Details

Finding 2023-004
Finding – The City did not have adequate internal controls to ensure compliance with time and effort requirements. Identification of the Federal Program: Assistance Listing Number and Title: 14.231, Emergency Solutions Grant Coronavirus Program Federal Grantor Name: U.S. Department of Housing and Urban Development Pass-through Entity Name: California Department of Housing and Community Development Pass-through Award/Contract Number: 20-ESGCV-3-00002 Compliance Requirement – Allowable Costs/Cost Principles Condition: We reviewed payroll transactions to determine whether the City retained adequate time and effort documentation for salaries and benefits charged to federal grants, as required by the granting agency. Depending on the number and type of activities an employee works on, documentation can be a semi annual certification or monthly personnel activity report, such as a timesheet. Our audit found that the City did not design an effective process to monitor employees whose positions were funded with federal grant funds to ensure all required time and effort documentation were completed in a timely manner. We consider this deficiency in internal controls to be a significant deficiency. Criteria: 2 CFR Part 200 in general and 2 CFR section 200.303(a) require non-Federal entities to establish and maintain effective internal controls over Federal awards, including the requirements for allowable costs, cost principles, and matching. Cause: The City did not have the time and effort documentation to support time worked on the program. Effect: Without proper time and effort documentation, federal grantors cannot be assured salaries and benefits charged to their programs are accurate and valid. The City’s noncompliance with grant requirements can jeopardize future federal funding and may require it to return federal funds to the grantor. Our audit found that the City did not complete the required time and effort documentation for all employees who were fully funded through this program. Questioned Costs: $308,013 Context: See condition above for the context of the finding. Identification of a repeat finding: Not applicable. Recommendation: We recommend the City improve its monitoring process to ensure all employees paid through federal grants submit required documentation to support time worked. Views of responsible officials: Management concurs with the finding.
Finding 2023-005
Finding – Internal control deficiencies over procurement requirements Identification of the Federal Program: Assistance Listing Number and Title: 14.231, Emergency Solutions Grant Coronavirus Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: NA Pass-through Entity Name: California Department of Housing and Community Development Pass-through Award/Contract Number: 20-ESGCV-3-00002 Compliance Requirement – Procurement and Suspension and Debarment Condition: The City did not comply with 2 CFR 200.320 or with City procurement policies. The City did not obtain quotes for vehicles purchased. Criteria: Grant recipients must comply with Uniform Guidance for procurement, specifically with 2 CFR sections 200.318 thru 200.326 including ensuring the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320(a)(1) and (2). Cause: The City did not have proper internal control over the procurement requirements of this federal program. Effect: The City is out of compliance with procurement requirements. Questioned Costs: $199,274 Context: A small purchase could have been applied as the total amount spent under the contract was more than the micro-purchase amount but less than the simplified acquisition threshold. Under small purchase procedures price or rate quotes must be obtained. Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that the City establish and maintain effective internal control ensuring an understanding of procurement compliance requirements prior to entering into contracts with vendors with the intention of using grant monies. Views of responsible officials: Management concurs with the finding.
Finding 2023-006
Finding – Internal control deficiencies over tracking equipment Identification of the Federal Program: Assistance Listing Number and Title: 14.231, Emergency Solutions Grant Coronavirus Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: NA Pass-through Entity Name: California Department of Housing and Community Development Pass-through Award/Contract Number: 20-ESGCV-3-00002 Compliance Requirement – Equipment and Real Property Management Condition: The City was unable to produce a list of equipment purchased with federal funds. A physical inventory has not been performed for federally purchased equipment. Criteria: Equipment Use, Management, and Disposition Requirements at 2 CFR 200.313(c), 2 CFR 200.313(d), and 2 CFR 200.313(e); A list of equipment and real property purchased with federal funds should be maintained for tracking purposes as there are specific federal guidelines and requirements regarding these purchases and dispositions. Cause: The City is not maintaining adequate records regarding the use, management, and disposition of equipment purchased with ESG-CV funds. Effect: The City may not be in compliance with the Uniform Guidance if federally acquired equipment has been sold and the proceeds were either not reimbursed to the Federal awarding agency or set aside to be used towards the purchase of similar equipment. Questioned Costs: $199,274 Context: The program requires that for dispositions of equipment acquired under grants with a current per-unit fair market value of $5,000 or more, the Federal awarding agency is to be reimbursed for the Federal portion of the current market value or sales proceeds. Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that the City prepare policies and procedures to ensure adequate equipment records are being maintained. Views of responsible officials: Management concurs with the finding.
Finding 2023-004
Finding – The City did not have adequate internal controls to ensure compliance with time and effort requirements. Identification of the Federal Program: Assistance Listing Number and Title: 14.231, Emergency Solutions Grant Coronavirus Program Federal Grantor Name: U.S. Department of Housing and Urban Development Pass-through Entity Name: California Department of Housing and Community Development Pass-through Award/Contract Number: 20-ESGCV-3-00002 Compliance Requirement – Allowable Costs/Cost Principles Condition: We reviewed payroll transactions to determine whether the City retained adequate time and effort documentation for salaries and benefits charged to federal grants, as required by the granting agency. Depending on the number and type of activities an employee works on, documentation can be a semi annual certification or monthly personnel activity report, such as a timesheet. Our audit found that the City did not design an effective process to monitor employees whose positions were funded with federal grant funds to ensure all required time and effort documentation were completed in a timely manner. We consider this deficiency in internal controls to be a significant deficiency. Criteria: 2 CFR Part 200 in general and 2 CFR section 200.303(a) require non-Federal entities to establish and maintain effective internal controls over Federal awards, including the requirements for allowable costs, cost principles, and matching. Cause: The City did not have the time and effort documentation to support time worked on the program. Effect: Without proper time and effort documentation, federal grantors cannot be assured salaries and benefits charged to their programs are accurate and valid. The City’s noncompliance with grant requirements can jeopardize future federal funding and may require it to return federal funds to the grantor. Our audit found that the City did not complete the required time and effort documentation for all employees who were fully funded through this program. Questioned Costs: $308,013 Context: See condition above for the context of the finding. Identification of a repeat finding: Not applicable. Recommendation: We recommend the City improve its monitoring process to ensure all employees paid through federal grants submit required documentation to support time worked. Views of responsible officials: Management concurs with the finding.
Finding 2023-005
Finding – Internal control deficiencies over procurement requirements Identification of the Federal Program: Assistance Listing Number and Title: 14.231, Emergency Solutions Grant Coronavirus Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: NA Pass-through Entity Name: California Department of Housing and Community Development Pass-through Award/Contract Number: 20-ESGCV-3-00002 Compliance Requirement – Procurement and Suspension and Debarment Condition: The City did not comply with 2 CFR 200.320 or with City procurement policies. The City did not obtain quotes for vehicles purchased. Criteria: Grant recipients must comply with Uniform Guidance for procurement, specifically with 2 CFR sections 200.318 thru 200.326 including ensuring the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320(a)(1) and (2). Cause: The City did not have proper internal control over the procurement requirements of this federal program. Effect: The City is out of compliance with procurement requirements. Questioned Costs: $199,274 Context: A small purchase could have been applied as the total amount spent under the contract was more than the micro-purchase amount but less than the simplified acquisition threshold. Under small purchase procedures price or rate quotes must be obtained. Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that the City establish and maintain effective internal control ensuring an understanding of procurement compliance requirements prior to entering into contracts with vendors with the intention of using grant monies. Views of responsible officials: Management concurs with the finding.
Finding 2023-006
Finding – Internal control deficiencies over tracking equipment Identification of the Federal Program: Assistance Listing Number and Title: 14.231, Emergency Solutions Grant Coronavirus Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: NA Pass-through Entity Name: California Department of Housing and Community Development Pass-through Award/Contract Number: 20-ESGCV-3-00002 Compliance Requirement – Equipment and Real Property Management Condition: The City was unable to produce a list of equipment purchased with federal funds. A physical inventory has not been performed for federally purchased equipment. Criteria: Equipment Use, Management, and Disposition Requirements at 2 CFR 200.313(c), 2 CFR 200.313(d), and 2 CFR 200.313(e); A list of equipment and real property purchased with federal funds should be maintained for tracking purposes as there are specific federal guidelines and requirements regarding these purchases and dispositions. Cause: The City is not maintaining adequate records regarding the use, management, and disposition of equipment purchased with ESG-CV funds. Effect: The City may not be in compliance with the Uniform Guidance if federally acquired equipment has been sold and the proceeds were either not reimbursed to the Federal awarding agency or set aside to be used towards the purchase of similar equipment. Questioned Costs: $199,274 Context: The program requires that for dispositions of equipment acquired under grants with a current per-unit fair market value of $5,000 or more, the Federal awarding agency is to be reimbursed for the Federal portion of the current market value or sales proceeds. Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that the City prepare policies and procedures to ensure adequate equipment records are being maintained. Views of responsible officials: Management concurs with the finding.