Audit 304404

2023-002 GRANT REPORTING U.S. Department of Housing and Urban Development ALN 14.228 – Community Development Block Grants Contract No. IR052 (2022) Passed through the Florida Department of Commerce Criteria: Section (8) of the agreement with the Florida Department of Commerce (DOC), formerly referred to as the Florida Department of Economic Opportunity (DEO), specifies requirements for the submission of monthly, quarterly and administrative reports and other required information. These reports are detailed in Attachment G to the agreement. Section (18) of the agreement with the DOC requires the City to comply with procurement standards in 2 CFR Section 200.318 – 200.327 and Section 200.330. The agreement further requires the City to provide the DOC copies of all proposed procurement documents for their review and approval prior to the obligation or disbursement of any funds (except for administrative expenses). 2 CFR 200.303(a) requires non-Federal entities to establish and maintain effective internal controls over compliance with laws and regulations applicable to Federal funding. Condition: The Audit Certification Memo for fiscal year 2022 (due June 30, 2023) and the Section 3 Summary Report (due July 31, 2023) were not filed with the DOC. Further, the Contract and Subcontract Activity report (due on April 15, 2023) was not filed timely (filed September 7, 2023). With regards to the reimbursement request, the initial reporting was rejected due to noncompliance with procurement provisions in the grant agreement. As a result, the DOC denied $74,813 of the City’s request as ineligible expenditures. Cause of condition: The City did not have effective controls in place to ensure that all required reports were submitted on a timely basis to the DOC; nor were effective controls in place to ensure that only vendors that had been procured in accordance with the provisions of the grant agreement were included in the reimbursement request. Potential effect of condition: The City is not in compliance with the reporting requirements set forth by the grantor, nor with the procurement requirements set forth in the contract. Perspective: The City has been in communication with the DOC regarding the Section 3 requirements to assist the City and its contractor to better understand the qualitative efforts needed for hiring and recruitment of Section 3 workers. These communications have been documented on the monthly progress reports submitted to the DOC. Further, the City is in the process of negotiating an amendment to the grantor agreement. An unexecuted draft of this agreement includes language that removes the requirement for the City to file semi-annual Contract and Subcontract Activity forms, replacing them with a close-out report due at completion of the project. The proposed amendment also includes language that will require the Section 3 Summary Report to be filed quarterly rather than annually. With regards to the reimbursement request, the City resubmitted the reimbursement request subsequent to year-end to exclude the vendor identified as ineligible by the DOC. The expenditures reported on the 2023 SEFA were adjusted to reflect only eligible expenditures. Questioned costs: None. Recommendation: The City should review and revise, as needed, its current control structure over grant reporting to ensure that all required reports are prepared, independently reviewed and remitted to the grantor on a timely basis. Once the City obtains an executed amendment to the agreement, the City should update its controls to ensure the changes to the grant reporting are incorporated into their procedures. While reviewing grant agreements prior to being signed, the program manager should coordinate with the Finance Department to ensure that the City has controls in place over compliance with procurement provisions contained in the grant agreement. Management’s Response: The City has filled a position focused mainly on projects and grants reporting. The employee will verify all grant requirements are fulfilled on time and according to the grant contract. Processes are being put in place that will include conversations with the project manager which will ensure they are notified of the necessary steps to fulfill the requirements, as well as final Finance review to ensure compliance.

2023-002 GRANT REPORTING U.S. Department of Housing and Urban Development ALN 14.228 – Community Development Block Grants Contract No. IR052 (2022) Passed through the Florida Department of Commerce Criteria: Section (8) of the agreement with the Florida Department of Commerce (DOC), formerly referred to as the Florida Department of Economic Opportunity (DEO), specifies requirements for the submission of monthly, quarterly and administrative reports and other required information. These reports are detailed in Attachment G to the agreement. Section (18) of the agreement with the DOC requires the City to comply with procurement standards in 2 CFR Section 200.318 – 200.327 and Section 200.330. The agreement further requires the City to provide the DOC copies of all proposed procurement documents for their review and approval prior to the obligation or disbursement of any funds (except for administrative expenses). 2 CFR 200.303(a) requires non-Federal entities to establish and maintain effective internal controls over compliance with laws and regulations applicable to Federal funding. Condition: The Audit Certification Memo for fiscal year 2022 (due June 30, 2023) and the Section 3 Summary Report (due July 31, 2023) were not filed with the DOC. Further, the Contract and Subcontract Activity report (due on April 15, 2023) was not filed timely (filed September 7, 2023). With regards to the reimbursement request, the initial reporting was rejected due to noncompliance with procurement provisions in the grant agreement. As a result, the DOC denied $74,813 of the City’s request as ineligible expenditures. Cause of condition: The City did not have effective controls in place to ensure that all required reports were submitted on a timely basis to the DOC; nor were effective controls in place to ensure that only vendors that had been procured in accordance with the provisions of the grant agreement were included in the reimbursement request. Potential effect of condition: The City is not in compliance with the reporting requirements set forth by the grantor, nor with the procurement requirements set forth in the contract. Perspective: The City has been in communication with the DOC regarding the Section 3 requirements to assist the City and its contractor to better understand the qualitative efforts needed for hiring and recruitment of Section 3 workers. These communications have been documented on the monthly progress reports submitted to the DOC. Further, the City is in the process of negotiating an amendment to the grantor agreement. An unexecuted draft of this agreement includes language that removes the requirement for the City to file semi-annual Contract and Subcontract Activity forms, replacing them with a close-out report due at completion of the project. The proposed amendment also includes language that will require the Section 3 Summary Report to be filed quarterly rather than annually. With regards to the reimbursement request, the City resubmitted the reimbursement request subsequent to year-end to exclude the vendor identified as ineligible by the DOC. The expenditures reported on the 2023 SEFA were adjusted to reflect only eligible expenditures. Questioned costs: None. Recommendation: The City should review and revise, as needed, its current control structure over grant reporting to ensure that all required reports are prepared, independently reviewed and remitted to the grantor on a timely basis. Once the City obtains an executed amendment to the agreement, the City should update its controls to ensure the changes to the grant reporting are incorporated into their procedures. While reviewing grant agreements prior to being signed, the program manager should coordinate with the Finance Department to ensure that the City has controls in place over compliance with procurement provisions contained in the grant agreement. Management’s Response: The City has filled a position focused mainly on projects and grants reporting. The employee will verify all grant requirements are fulfilled on time and according to the grant contract. Processes are being put in place that will include conversations with the project manager which will ensure they are notified of the necessary steps to fulfill the requirements, as well as final Finance review to ensure compliance.