Identification of the Federal Program - Coronavirus State and Local Fiscal Recovery Funds - Assistance Listing Number 21.027
Criteria - The criteria is based on the guidelines and regulations set forth by the funding agency, the Department of the Treasury, in the Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds document. According to these requirements, recipients must include the total of both the current period expenditure and the cumulative expenditure as of the end of each quarter on each quarterly Project and Expenditure report. These amounts should agree to amounts recorded in the City’s trial balance and amounts reported on the SEFA. The recipients must also include detailed obligation and expenditure information for contracts and grants awarded.
2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Condition - There was a lack of monitoring and appropriate review by the City of certain reports prepared by the grant department.
Effect - The following reporting errors were identified:
• For the reporting period ended September 30, 2023, current expenditures of $2,138,225 were excluded from the report.
• For the reporting period ended September 30, 2023, cumulative expenditures were understated by $4,286,504.
• For the reporting period ended September 30, 2023, there were subrecipients listed on the report that were not true subrecipients. The entities incorrectly listed as subrecipients had subawards totaling $7,098,989 incorrectly reported on the report.
• There were four reporting periods during the fiscal year under audit. The reports for two out of the four reporting periods were not submitted timely. The report for the period October to December 2022 was due on January 31, 2023 but was not submitted until February 28, 2023. The report for the period April to June 2023 was due on July 31, 2023, but it was not submitted until August 3, 2023.
• The City reported that they calculated their Actual General Revenue using fiscal year amounts while the City actually used calendar year amounts to calculate their Actual General Revenue.
• Six out of the nine projects reported have expected capital expenditures. Out of those six, four reported expected or actual capital expenditures of over $1,000,000 and required written justification of capital expenditures. Two of those four projects did not have written justification of capital expenditures.
Cause - The reporting errors attributed to a lack of understanding/interpretation of the reporting guidelines by the responsible personnel.
Recommendation - The City should ensure responsible personnel has a clear understanding of the reporting guidance. The City should implement policies and procedures to monitor and review all reports prepared and submitted by the grants department or its designee.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional review procedures over grant reporting requirements, including more adequate review of reports prepared by third-party grant administrators.
Identification of the Federal Program - Coronavirus State and Local Fiscal Recovery Funds - Assistance Listing Number 21.027
Criteria - 2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Per the City’s Ethics and Fiscal Policy and Procedures Manual, all contracts that create a commitment between the City and another party are to be routed from the originating department through the appropriate departments for signature approval prior to execution of the agreement by the Mayor. The signatures should be listed on the pre-numbered routing sheet obtained from the Finance Department. The signatures should include the appropriate individuals: department head, Director of Finance, legal department, Chief of Staff, Mayor, and City Clerk. This policy is designed to prevent unauthorized commitments and ensure compliance with procurement regulations.
Condition - The City entered into a contract with a consulting firm which obligated the City to pay a monthly fee of $20,668 for a period of two years. Instead of following the typical contract approval, the contract was only signed by one individual.
Effect - The failure to obtain the other approvals undermines the internal controls established by the City’s procurement policy. This increases the risk of unauthorized or improper contractual commitments and potentially exposes the city to legal and financial liabilities. Additionally, it diminishes the accountability and transparency of the procurement process.
Cause - The deviation from the established procurement procedure appears to be due to a lack of awareness and oversight. The Mayor assumed sole responsibility for contract execution, without seeking the necessary additional approval. There may also be insufficient training or reminders regarding the contract routing requirement.
Recommendation - The City should reinforce its procurement policies through regular training and clear communication to all relevant staff members. Specifically, the importance of using a contract routing sheet and obtaining all required signatures on contracts should be emphasized. Additionally, implementing a periodic review process to ensure compliance with this policy can help prevent future occurrences. Steps should also be taken to review past contracts for similar issues and take corrective action where necessary.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional review procedures over contract approvals.
Identification of the Federal Program - Community Programs to Improve Minority Health Grant Program - Assistance Listing Number 93.137Criteria - Financial reports are required to be submitted within 30 days after the end of each quarter in which the grant is open. 2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Condition - There was a lack of monitoring and appropriate review by the City of certain reports. Effect - The financial reports for quarters one and two were not submitted within 30 days after quarters end. Cause - The City’s policies and procedures over federal award reporting were not adequate. Recommendation - The City should strengthen its policies and procedures related to federal award reporting to comply with reporting requirements. Views of Responsible Officials - The City agrees with the finding. The City will implement additional oversight over the timely preparation and submittal of required grant reporting documents.
Identification of the Federal Program - Community Programs to Improve Minority Health Grant Program- Assistance Listing Number 93.137 Criteria - Per 2 CFR 200.332, Requirements for Pass-Through Entities, the City is required to monitor the subrecipients activities to ensure that the grant funds are used for authorized purposes by reviewing financial and performance reports that were required by the City. The City was also required by 2 CFR 200.332 to verify that each of their subrecipients had a single audit performed if their federal expenditures exceeded $750,000. In the Notice of Award, the Department of Health and Human Services required the City to create and provide to the Department a subrecipient monitoring plan as well as use that plan to monitor each of the City’s subrecipients. In the subrecipient monitoring plan, the City was required to perform the following steps:
•Regularly communicate at least once a month with subrecipients to ensure that the project is beingcarried out as proposed and according to schedule.
•Review and approve periodic technical/performance reports.
•Review and approve subrecipient invoices.
•Monitor general rate of expenditures and implementation of activities.
•Review each subrecipient monthly through the subrecipients preparation of the City’s SubrecipientDesk Review form.
•Perform an annual review for each subrecipient through the preparation of the Annual SubrecipientField Review form using the monthly desk review forms.
2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Condition - There was a lack of subrecipient monitoring and appropriate review by the City. The City did not effectively monitor subrecipient activities to ensure the proper utilization of grant funds. There was a lack of documented evidence demonstrating the monitoring of subrecipients.
The City also failed to verify whether each of their subrecipients met the threshold of $750,000 in federal expenditures and subsequently underwent a single audit. There is no documented evidence indicating that the City systematically reviewed the subrecipient expenditures to ensure compliance with this requirement.
Effect - Without proper documentation and monitoring, there is an increased likelihood of financial mismanagement, misuse of funds, and noncompliance with grant terms and regulations. Additionally, the absence of adequate records impedes transparency and accountability in the use of federal funds. This deficiency also may result in undetected instances of subrecipients failing to undergo required single audits.
Cause - The absence of robust monitoring procedures may stem from insufficient staff training on federal grant requirements, a lack of awareness regarding the importance of maintaining accurate records and conducting thorough monitoring of subrecipient activities, a lack of established processes for reviewing financial and performance reports, or inadequate internal controls. Additionally, there may be a lack of clear communication and accountability regarding subrecipient monitoring roles and responsibilities.
Recommendation - The City should establish and enforce comprehensive subrecipient monitoring protocols. This includes developing standardized monitoring procedures, providing staff training on monitoring requirements, allocating sufficient resources for monitoring activities, and implementing mechanisms for regular review and documentation of monitoring efforts. By strengthening subrecipient monitoring practices, the City can mitigate risks, ensure compliance with grant requirements, and safeguard the effective utilization of grant funds.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional subrecipient monitoring procedures.
Identification of the Federal Program - Staffing for Adequate Fire and Emergency Response (SAFER) - Assistance Listing Number 97.083
Criteria - Financial reports are required to be submitted each July 30 (for period January 1 - June 30) and January 31 (for period July 1 - December 31). The last report is required to be submitted no later than 90 days after the end of the performance period.
2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Condition - There was a lack of monitoring and appropriate review by the City of certain reports.
Effect - The financial report for the period July 1, 2022 - December 31, 2022 was not submitted timely.
Cause - The City’s policies and procedures over federal award reporting were not adequate.
Recommendation - The City should strengthen its policies and procedures related to federal award reporting to comply with reporting requirements. Views of Responsible Officials - The City agrees with the finding. The City will implement additional oversight over the timely preparation and submittal of required grant reporting documents.
Identification of the Federal Program - Coronavirus State and Local Fiscal Recovery Funds - Assistance Listing Number 21.027
Criteria - The criteria is based on the guidelines and regulations set forth by the funding agency, the Department of the Treasury, in the Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds document. According to these requirements, recipients must include the total of both the current period expenditure and the cumulative expenditure as of the end of each quarter on each quarterly Project and Expenditure report. These amounts should agree to amounts recorded in the City’s trial balance and amounts reported on the SEFA. The recipients must also include detailed obligation and expenditure information for contracts and grants awarded.
2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Condition - There was a lack of monitoring and appropriate review by the City of certain reports prepared by the grant department.
Effect - The following reporting errors were identified:
• For the reporting period ended September 30, 2023, current expenditures of $2,138,225 were excluded from the report.
• For the reporting period ended September 30, 2023, cumulative expenditures were understated by $4,286,504.
• For the reporting period ended September 30, 2023, there were subrecipients listed on the report that were not true subrecipients. The entities incorrectly listed as subrecipients had subawards totaling $7,098,989 incorrectly reported on the report.
• There were four reporting periods during the fiscal year under audit. The reports for two out of the four reporting periods were not submitted timely. The report for the period October to December 2022 was due on January 31, 2023 but was not submitted until February 28, 2023. The report for the period April to June 2023 was due on July 31, 2023, but it was not submitted until August 3, 2023.
• The City reported that they calculated their Actual General Revenue using fiscal year amounts while the City actually used calendar year amounts to calculate their Actual General Revenue.
• Six out of the nine projects reported have expected capital expenditures. Out of those six, four reported expected or actual capital expenditures of over $1,000,000 and required written justification of capital expenditures. Two of those four projects did not have written justification of capital expenditures.
Cause - The reporting errors attributed to a lack of understanding/interpretation of the reporting guidelines by the responsible personnel.
Recommendation - The City should ensure responsible personnel has a clear understanding of the reporting guidance. The City should implement policies and procedures to monitor and review all reports prepared and submitted by the grants department or its designee.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional review procedures over grant reporting requirements, including more adequate review of reports prepared by third-party grant administrators.
Identification of the Federal Program - Coronavirus State and Local Fiscal Recovery Funds - Assistance Listing Number 21.027
Criteria - 2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Per the City’s Ethics and Fiscal Policy and Procedures Manual, all contracts that create a commitment between the City and another party are to be routed from the originating department through the appropriate departments for signature approval prior to execution of the agreement by the Mayor. The signatures should be listed on the pre-numbered routing sheet obtained from the Finance Department. The signatures should include the appropriate individuals: department head, Director of Finance, legal department, Chief of Staff, Mayor, and City Clerk. This policy is designed to prevent unauthorized commitments and ensure compliance with procurement regulations.
Condition - The City entered into a contract with a consulting firm which obligated the City to pay a monthly fee of $20,668 for a period of two years. Instead of following the typical contract approval, the contract was only signed by one individual.
Effect - The failure to obtain the other approvals undermines the internal controls established by the City’s procurement policy. This increases the risk of unauthorized or improper contractual commitments and potentially exposes the city to legal and financial liabilities. Additionally, it diminishes the accountability and transparency of the procurement process.
Cause - The deviation from the established procurement procedure appears to be due to a lack of awareness and oversight. The Mayor assumed sole responsibility for contract execution, without seeking the necessary additional approval. There may also be insufficient training or reminders regarding the contract routing requirement.
Recommendation - The City should reinforce its procurement policies through regular training and clear communication to all relevant staff members. Specifically, the importance of using a contract routing sheet and obtaining all required signatures on contracts should be emphasized. Additionally, implementing a periodic review process to ensure compliance with this policy can help prevent future occurrences. Steps should also be taken to review past contracts for similar issues and take corrective action where necessary.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional review procedures over contract approvals.
Identification of the Federal Program - Community Programs to Improve Minority Health Grant Program - Assistance Listing Number 93.137Criteria - Financial reports are required to be submitted within 30 days after the end of each quarter in which the grant is open. 2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Condition - There was a lack of monitoring and appropriate review by the City of certain reports. Effect - The financial reports for quarters one and two were not submitted within 30 days after quarters end. Cause - The City’s policies and procedures over federal award reporting were not adequate. Recommendation - The City should strengthen its policies and procedures related to federal award reporting to comply with reporting requirements. Views of Responsible Officials - The City agrees with the finding. The City will implement additional oversight over the timely preparation and submittal of required grant reporting documents.
Identification of the Federal Program - Community Programs to Improve Minority Health Grant Program- Assistance Listing Number 93.137 Criteria - Per 2 CFR 200.332, Requirements for Pass-Through Entities, the City is required to monitor the subrecipients activities to ensure that the grant funds are used for authorized purposes by reviewing financial and performance reports that were required by the City. The City was also required by 2 CFR 200.332 to verify that each of their subrecipients had a single audit performed if their federal expenditures exceeded $750,000. In the Notice of Award, the Department of Health and Human Services required the City to create and provide to the Department a subrecipient monitoring plan as well as use that plan to monitor each of the City’s subrecipients. In the subrecipient monitoring plan, the City was required to perform the following steps:
•Regularly communicate at least once a month with subrecipients to ensure that the project is beingcarried out as proposed and according to schedule.
•Review and approve periodic technical/performance reports.
•Review and approve subrecipient invoices.
•Monitor general rate of expenditures and implementation of activities.
•Review each subrecipient monthly through the subrecipients preparation of the City’s SubrecipientDesk Review form.
•Perform an annual review for each subrecipient through the preparation of the Annual SubrecipientField Review form using the monthly desk review forms.
2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Condition - There was a lack of subrecipient monitoring and appropriate review by the City. The City did not effectively monitor subrecipient activities to ensure the proper utilization of grant funds. There was a lack of documented evidence demonstrating the monitoring of subrecipients.
The City also failed to verify whether each of their subrecipients met the threshold of $750,000 in federal expenditures and subsequently underwent a single audit. There is no documented evidence indicating that the City systematically reviewed the subrecipient expenditures to ensure compliance with this requirement.
Effect - Without proper documentation and monitoring, there is an increased likelihood of financial mismanagement, misuse of funds, and noncompliance with grant terms and regulations. Additionally, the absence of adequate records impedes transparency and accountability in the use of federal funds. This deficiency also may result in undetected instances of subrecipients failing to undergo required single audits.
Cause - The absence of robust monitoring procedures may stem from insufficient staff training on federal grant requirements, a lack of awareness regarding the importance of maintaining accurate records and conducting thorough monitoring of subrecipient activities, a lack of established processes for reviewing financial and performance reports, or inadequate internal controls. Additionally, there may be a lack of clear communication and accountability regarding subrecipient monitoring roles and responsibilities.
Recommendation - The City should establish and enforce comprehensive subrecipient monitoring protocols. This includes developing standardized monitoring procedures, providing staff training on monitoring requirements, allocating sufficient resources for monitoring activities, and implementing mechanisms for regular review and documentation of monitoring efforts. By strengthening subrecipient monitoring practices, the City can mitigate risks, ensure compliance with grant requirements, and safeguard the effective utilization of grant funds.
Views of Responsible Officials - The City agrees with the finding. The City will implement additional subrecipient monitoring procedures.
Identification of the Federal Program - Staffing for Adequate Fire and Emergency Response (SAFER) - Assistance Listing Number 97.083
Criteria - Financial reports are required to be submitted each July 30 (for period January 1 - June 30) and January 31 (for period July 1 - December 31). The last report is required to be submitted no later than 90 days after the end of the performance period.
2 CFR 200.303, Internal Controls, requires that recipients establish and maintain effective internal control over Federal awards that provides reasonable assurance that the recipient is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards.
Condition - There was a lack of monitoring and appropriate review by the City of certain reports.
Effect - The financial report for the period July 1, 2022 - December 31, 2022 was not submitted timely.
Cause - The City’s policies and procedures over federal award reporting were not adequate.
Recommendation - The City should strengthen its policies and procedures related to federal award reporting to comply with reporting requirements. Views of Responsible Officials - The City agrees with the finding. The City will implement additional oversight over the timely preparation and submittal of required grant reporting documents.