2022-001 - Reporting (SD, NC)
Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Catalog Number: 21.027
Federal Agency: U.S. Department of Treasury
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2022 Part 4 21.027 Coronavirus State and Local Fiscal Recovery Funds
(page 4-21.027-7), the annual reporting requirement for Coronavirus State and Local Fiscal Recovery
Funds is through the submission of the initial Interim Report, quarterly Project and Expenditure Report,
and the Recovery Plan Performance Report. The interim report is a one time report that provides an initial
overview of status and use of funding. The Project and Expenditure Report details the financial data,
projects funded, expenditures and contracts over $50,000. The Recovery Plan Performance report is not
a required report for the City due to their population size falling under the 250,000 requirement.
Condition: During our audit, the City was unable to provide evidence of reporting for fiscal year 2022.
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 2022.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: Yes, 2021-003
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. The staff responsible for this control during FY 2022 are no longer employed by the City.
Corrective Action Plan: Current City Finance staff in conjunction with a third-party organization,
Michael Baker, to ensure timely filing.
Planned Implementation Date: started in Q4 FY 2023 and has continued into FY 2024
2022-002 - Internal Control over Schedule of Expenditures of Federal Awards (SEFA) Preparation
(SD, NC)
Criteria: Pursuant to the guidance found in the Office of Management and Budget (OMB) 2 CFR Part
200, Appendix XI, the City has responsibility to:
Identify, in its accounts, all Federal awards received and expended and the Federal programs
under which they were received. Federal program and award identification shall include, as
applicable, the assistance listing title and number, award number and year, name of the Federal
agency, and name of the pass-through entity.
Prepare appropriate financial statements, including the schedule of expenditures of Federal
awards (SEFA).
Condition: One of the programs in the SEFA had an incorrect federal grantor, program name, and
assistance listing number.
Cause: Lack of adequate attention to detail of grant agreements.
Effect or Potential Effect: Failure to report expenditures by its correct federal grantor, program name
and assistance listing number exposes the City to be flagged by the awarding Federal agency, for grant
sanctions and the rectification of its reported records to the Federal Clearing House.
Questioned Cost: None
Context: The draft SEFA prepared by the City for audit reported that the City expended Coronavirus
Emergency Supplemental Fund (assistance listing number 16.034) from the US Department of Justice.
Upon review of the grant award, the grant actually came from the US Department of Housing and Urban
Development for the Community Development Block Grant program (assistance listing number 14.218)
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: 2019-012, 2021-004
Recommendation: We recommend the City implement grant award tracking procedures, which provide
information on which expenditures were drawn down from which grant award ID for an accurate reporting
of the breakdown of expenditures. We recommend the City be cognizant and obtain a thorough
understanding of current SEFA reporting guidelines and requirements under the Uniform Guidance.
Management Response and Corrective Action Plan
City's Response: The City concurs with the finding.
Corrective Action Plan: Finance staff will be trained to monitor the different grants that are
received and appropriately record the data. A third-party consultant has established a
reconciliation and tracking system for grants.
Planned Implementation Date: Began in Q4 FY 2023 and continues in FY 2024
Responsible Person: Finance Staff
2022-003 - Filing of Single Audit Report (MW, NC)
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR section 200.512(a) Report
submission... "The audit must be completed and the data collection form... must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day..."
Condition: The City did not timely submit the Single Audit Reporting Package for the fiscal years ended
June 30, 2017, 2018, 2019, 2020, 2021 and 2022 within nine months after the end of audit period.
Cause: The City had been severely behind on its recording and reconciliations for financial transactions
for the fiscal years ended June 30, 2017, 2018, 2019, 2020, 2021 and 2022 due to lack of qualified staff
within the Finance Department.
Effect or Potential Effect: Failure to submit the required Single Audit Reporting Package timely
automatically results in the City not qualifying for low-risk auditee status for the following year's single
audit. In addition, failure to file the required Single Audit Reporting Package timely could result in the loss
of Federal funding.
Questioned Cost: None
Context: The Single Audit Reporting Package for the past six years has not been submitted within the
due dates established by the Office of Management and Budget. The FY 2017 package was submitted
6 months after the due date; the FY 2018 package was submitted 11 months after the due date; the FY
2019 package was submitted 19 months after the due date; the FY 2020 package was submitted 23
months after the due date; the FY 2021 package was submitted 18 months after it was due.
The City's FY 2022 Single Audit Reporting Package was due on March 31, 2023.
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2019-013, 2021-005
Recommendation: We recommend the City bring its accounting records up to date and have financial
statement and Single Audits prepared timely. We also recommend the City develop, document, and
implement policies and procedures for timely submission of the Single Audit Reporting Package.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation
Corrective Action Plan: The Finance Department continues to bring its accounting records and
account reconciliations up to date and is working on having the financial statements and Single
Audits prepared in a timely manner. The City is also working on developing, documenting, and
implementing policies and procedures for timely submission of the Single Audit Reporting Package.
As of March 2024, the City has had all audits through FY 2022 completed and is completing the FY
2022 single audit in April 2024.
Planned Implementation Date: June 30, 2024
Responsible Person: Director of Finance
2022-004 - Internal Control over Procurement (SD, NC)
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement August 2022, sections 3.2-I-1 through 3.2-I-3:
"Non-Federal entities other than States... must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the
procurements conform to applicable Federal statutes and the procurement requirements
identified in 2 CFR part 200. A non-Federal entity must:
1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contracters' performance, maintaining written standards of conduct for employees involved in
contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements...
Cost-Reimbursement Contracts under the Federal Acquisition Regulation
subcontracts, non-Federal entities receiving cost-reimbursement contracts under the FAR must
comply with the clauses at 48 CFR section 52.244-2 (consent to subcontract), 52.244-5
(competition), 52.203-13 (code of business ethics), 52.203-16 (conflicts of interest), and
52.215.12 (cost or pricing data); and the terms and conditions of the contract. The FAR defines "subcontracts" as a contraact, i.e., a mutually binding legal relationship obligation the seller to
furnish the supplies or services (including construction) and the buyer to pay for them, entered
into by a subcontractor to furnish supplies or services for performance of a prime contract or a
subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to
purchase orders.
Condition: The City does not have a current official written policy for procurement and contracts
conforming to applicable Federal statutes and the updated procurement requirements per 2 CFR part
200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance). The City effective Conflict Interest Code did not include the required language per
the Uniform Guidance.
Cause: Lack of formal policies and procedures over current required procurement standards and lack of
internal controls and adequate staff training on effective requirements set forth by the Uniform Guidance
over procurement.
Effect or Potential Effect: Failure to document and retain evidence that procurement procedures were
followed could result in the need to reimburse Federal funds.
Questioned Cost: None
Context: The City does not have an effective purchasing manual for city-wide use. The City-provided
policy and procedure document establishing purchasing guidelines is for Finance Department use. We
noted that this document was last updated on September 7, 2004 and does not contain the language
required by the Uniform Guidance. We reviewed the City's current effective conflict of interest code and purchasing policy and procedure
document and noted no provisions containing the required language per the Uniform Guidance.
Statistical Sampling Validity: Non-statistical sampling was performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2019-014, 2021-006
Recommendation: We recommend the City establish an official written policy for procurement and
contracting and Conflict of Interest Code that are in line with the requirements of the Uniform Guidance.
(MW) (SD) (BP) (NC)
-17-
The policy should contain components for compliance with and references to Federal requirements, such
as language establishing contract files that document significant procurement history; methods of
procurement authorized including selection of contract type, contractor selection or rejection, and the
basis of contract price; verification that procurements provide full and open competition when required;
requirements for cost or price analysis, including for contract modifications; obtaining and reacting to
suspension and debarment. The City should strengthen its procurement internal controls based on this
official written policy.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City will continue to address this finding through updating of policies
and procedures for City-wide use. Update: in November 2023 the City updated the policies and
procedures manual that was accepted by the DOJ in December 2023.
Planned Implementation Date: June 30, 2024
Responsible Person: Finance Department
2022-001 - Reporting (SD, NC)
Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Catalog Number: 21.027
Federal Agency: U.S. Department of Treasury
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement July 2022 Part 4 21.027 Coronavirus State and Local Fiscal Recovery Funds
(page 4-21.027-7), the annual reporting requirement for Coronavirus State and Local Fiscal Recovery
Funds is through the submission of the initial Interim Report, quarterly Project and Expenditure Report,
and the Recovery Plan Performance Report. The interim report is a one time report that provides an initial
overview of status and use of funding. The Project and Expenditure Report details the financial data,
projects funded, expenditures and contracts over $50,000. The Recovery Plan Performance report is not
a required report for the City due to their population size falling under the 250,000 requirement.
Condition: During our audit, the City was unable to provide evidence of reporting for fiscal year 2022.
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 2022.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: Yes, 2021-003
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. The staff responsible for this control during FY 2022 are no longer employed by the City.
Corrective Action Plan: Current City Finance staff in conjunction with a third-party organization,
Michael Baker, to ensure timely filing.
Planned Implementation Date: started in Q4 FY 2023 and has continued into FY 2024
2022-002 - Internal Control over Schedule of Expenditures of Federal Awards (SEFA) Preparation
(SD, NC)
Criteria: Pursuant to the guidance found in the Office of Management and Budget (OMB) 2 CFR Part
200, Appendix XI, the City has responsibility to:
Identify, in its accounts, all Federal awards received and expended and the Federal programs
under which they were received. Federal program and award identification shall include, as
applicable, the assistance listing title and number, award number and year, name of the Federal
agency, and name of the pass-through entity.
Prepare appropriate financial statements, including the schedule of expenditures of Federal
awards (SEFA).
Condition: One of the programs in the SEFA had an incorrect federal grantor, program name, and
assistance listing number.
Cause: Lack of adequate attention to detail of grant agreements.
Effect or Potential Effect: Failure to report expenditures by its correct federal grantor, program name
and assistance listing number exposes the City to be flagged by the awarding Federal agency, for grant
sanctions and the rectification of its reported records to the Federal Clearing House.
Questioned Cost: None
Context: The draft SEFA prepared by the City for audit reported that the City expended Coronavirus
Emergency Supplemental Fund (assistance listing number 16.034) from the US Department of Justice.
Upon review of the grant award, the grant actually came from the US Department of Housing and Urban
Development for the Community Development Block Grant program (assistance listing number 14.218)
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: 2019-012, 2021-004
Recommendation: We recommend the City implement grant award tracking procedures, which provide
information on which expenditures were drawn down from which grant award ID for an accurate reporting
of the breakdown of expenditures. We recommend the City be cognizant and obtain a thorough
understanding of current SEFA reporting guidelines and requirements under the Uniform Guidance.
Management Response and Corrective Action Plan
City's Response: The City concurs with the finding.
Corrective Action Plan: Finance staff will be trained to monitor the different grants that are
received and appropriately record the data. A third-party consultant has established a
reconciliation and tracking system for grants.
Planned Implementation Date: Began in Q4 FY 2023 and continues in FY 2024
Responsible Person: Finance Staff
2022-003 - Filing of Single Audit Report (MW, NC)
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR section 200.512(a) Report
submission... "The audit must be completed and the data collection form... must be submitted within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit
period. If the due date falls on a Saturday, Sunday, or Federal holiday, the reporting package is due the next business day..."
Condition: The City did not timely submit the Single Audit Reporting Package for the fiscal years ended
June 30, 2017, 2018, 2019, 2020, 2021 and 2022 within nine months after the end of audit period.
Cause: The City had been severely behind on its recording and reconciliations for financial transactions
for the fiscal years ended June 30, 2017, 2018, 2019, 2020, 2021 and 2022 due to lack of qualified staff
within the Finance Department.
Effect or Potential Effect: Failure to submit the required Single Audit Reporting Package timely
automatically results in the City not qualifying for low-risk auditee status for the following year's single
audit. In addition, failure to file the required Single Audit Reporting Package timely could result in the loss
of Federal funding.
Questioned Cost: None
Context: The Single Audit Reporting Package for the past six years has not been submitted within the
due dates established by the Office of Management and Budget. The FY 2017 package was submitted
6 months after the due date; the FY 2018 package was submitted 11 months after the due date; the FY
2019 package was submitted 19 months after the due date; the FY 2020 package was submitted 23
months after the due date; the FY 2021 package was submitted 18 months after it was due.
The City's FY 2022 Single Audit Reporting Package was due on March 31, 2023.
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2019-013, 2021-005
Recommendation: We recommend the City bring its accounting records up to date and have financial
statement and Single Audits prepared timely. We also recommend the City develop, document, and
implement policies and procedures for timely submission of the Single Audit Reporting Package.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation
Corrective Action Plan: The Finance Department continues to bring its accounting records and
account reconciliations up to date and is working on having the financial statements and Single
Audits prepared in a timely manner. The City is also working on developing, documenting, and
implementing policies and procedures for timely submission of the Single Audit Reporting Package.
As of March 2024, the City has had all audits through FY 2022 completed and is completing the FY
2022 single audit in April 2024.
Planned Implementation Date: June 30, 2024
Responsible Person: Director of Finance
2022-004 - Internal Control over Procurement (SD, NC)
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement August 2022, sections 3.2-I-1 through 3.2-I-3:
"Non-Federal entities other than States... must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the
procurements conform to applicable Federal statutes and the procurement requirements
identified in 2 CFR part 200. A non-Federal entity must:
1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contracters' performance, maintaining written standards of conduct for employees involved in
contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements...
Cost-Reimbursement Contracts under the Federal Acquisition Regulation
subcontracts, non-Federal entities receiving cost-reimbursement contracts under the FAR must
comply with the clauses at 48 CFR section 52.244-2 (consent to subcontract), 52.244-5
(competition), 52.203-13 (code of business ethics), 52.203-16 (conflicts of interest), and
52.215.12 (cost or pricing data); and the terms and conditions of the contract. The FAR defines "subcontracts" as a contraact, i.e., a mutually binding legal relationship obligation the seller to
furnish the supplies or services (including construction) and the buyer to pay for them, entered
into by a subcontractor to furnish supplies or services for performance of a prime contract or a
subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to
purchase orders.
Condition: The City does not have a current official written policy for procurement and contracts
conforming to applicable Federal statutes and the updated procurement requirements per 2 CFR part
200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance). The City effective Conflict Interest Code did not include the required language per
the Uniform Guidance.
Cause: Lack of formal policies and procedures over current required procurement standards and lack of
internal controls and adequate staff training on effective requirements set forth by the Uniform Guidance
over procurement.
Effect or Potential Effect: Failure to document and retain evidence that procurement procedures were
followed could result in the need to reimburse Federal funds.
Questioned Cost: None
Context: The City does not have an effective purchasing manual for city-wide use. The City-provided
policy and procedure document establishing purchasing guidelines is for Finance Department use. We
noted that this document was last updated on September 7, 2004 and does not contain the language
required by the Uniform Guidance. We reviewed the City's current effective conflict of interest code and purchasing policy and procedure
document and noted no provisions containing the required language per the Uniform Guidance.
Statistical Sampling Validity: Non-statistical sampling was performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2019-014, 2021-006
Recommendation: We recommend the City establish an official written policy for procurement and
contracting and Conflict of Interest Code that are in line with the requirements of the Uniform Guidance.
(MW) (SD) (BP) (NC)
-17-
The policy should contain components for compliance with and references to Federal requirements, such
as language establishing contract files that document significant procurement history; methods of
procurement authorized including selection of contract type, contractor selection or rejection, and the
basis of contract price; verification that procurements provide full and open competition when required;
requirements for cost or price analysis, including for contract modifications; obtaining and reacting to
suspension and debarment. The City should strengthen its procurement internal controls based on this
official written policy.
Management Response and Corrective Action Plan
City's Response: The City concurs with the recommendation.
Corrective Action Plan: The City will continue to address this finding through updating of policies
and procedures for City-wide use. Update: in November 2023 the City updated the policies and
procedures manual that was accepted by the DOJ in December 2023.
Planned Implementation Date: June 30, 2024
Responsible Person: Finance Department