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 May 2023 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 (CSLFRF) 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 that the project and expenditure
report for quarter July through September 2022 was submitted.
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 grants, 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: According to City's consultant, the report was drafted but not submitted.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: Yes, 2022-001 and 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 concurs
Corrective Action Plan: City is onboarding qualified individuals to ensure reports are submitted
in a timely manner and retained by the City.
Planned Implementation Date: Q1 of Fiscal Year 2025
Responsible Person: Director of Finance
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: Procurement and Suspension and Debarment
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3.2-I-1 through 3.2-I-3:
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
in
contracting, awarding contracts only to responsible contractors, and maintaining records to
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
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's Conflict of Interest Code does 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 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, and 2022-004
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.
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: Policy and Procedures manual was updated and approved by City Council on
December 5, 2023 to include 2 CFR part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requirements.
Corrective Action Plan: Update policies and procedures manual.
Planned Implementation Date: December 5, 2023
Responsible Person: Director of Finance
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: Subrecipient Monitoring
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3-M-1 and 3-M-2:
"A pass-through entity (PTE) must:
Monitor - Monitor the activites of the subrecipient as necessary to ensure that the subaward is
used for authorized purposes, complies with the terms and conditions of the subaward, and
achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures
identified as necessary based upon the evaluation of subrecipient risk or specifically required by
the terms and conditions of the award, subaward monitoring must include the following:
1. Reviewing financial and programmatic (performance and special reports) required by the PTE.
2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all
deficiencies pertaining to the federal award provided to the subrecipient from the PTE
detected through audits, on-site reviews, and other means.
3. Issuing a management decision for audit findings pertaining to the federal award provided to
the subrecipient from the PTE as required by 2 CFR section 200.521.
Condition: The City does not have a current written policy for subrecipient monitoring conforming to
applicable Federal statutes per 2 CFR part 200, Appendix XI, Compliance Supplement May 2023,
sections 3-M-1 and 3-M2. 1 of 3 invoices selected for testing did not have department head review and
approval to ensure that subrecipient reimbursement request comply with the CSLFRF allowable costs.
Cause: Lack of formal policies and procedures over federal requirement for subrecipient monitoring.
Effect or Potential Effect: City may be sending funds to subrecipients for activities and services that are
nonconforming to allowed costs under the Uniform Guidance.
Questioned Cost: None
Context: During the audit, we found one instance of subrecipient reimbursement that lacked evidence of
review and approval.
Statistical Sampling Validity: Non-statistical sampling was performed in relation to this finding.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City establish an official written policy for subrecipient monitoring
that is in line with the requirements of the Uniform Guidance. The policy should contain components for
compliance with and references to Federal requirements, such as review of reports requested from the
subrecipient regarding project status, reviewing invoices to ensure spending is limited to expenses
involving approved projects, and proper approval procedures key personnel perform to ensure these
invoices are valid.
Management Response and Corrective Action Plan
City's Response: The City concurs with the finding.
Corrective Action Plan: The City will establish an official written policy for subrecipient monitoring
that is in line with the requirements of the Uniform Guidance.
Planned Implementation Date: December 2024
Responsible Person: Finance & Community Development Departments
Federal Program Title: Community Development Block Grants/Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3.2-L-1 and 4-14.218-10:
"Recipients must use the standard financial reporting forms or such other forms as may be authorized by
OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the
Federal awarding agency. Each recipient must report program outlays and program income on a cash or
accrual basis, as prescribed by the Federal awarding agency."
For CDBG, the City is required to submit the following reports:
SF-425 - Federal Financial Report
C04PR03 - Activity Summary Report
C04PR26 - CDBG Financial Summary
HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income
Persons, (OMB No. 2529-0043)
Per HUD Notice CPD-12-012, submission of Federal Financal Report - Standard Form 425: "A hard copy (or a pdf file if transmitted electronically) of the SF-425 report shall be submitted to the CDBG recipient's local field office, which will review it for completeness and accuracy... Quarterly Federal
Financial Reports (FFRs) must be submitted to the respective field office within 30 days after the end of
the reporting period. The following reporting-period end dates shall be used for quarterly reports: 3/31, 6/30, 9/30, or 12/31."
Per HUD Section 3 Overview for Recipients of HUD Housing & Community Development Funding:
"Annually, each direct recipient of Housing and Community Development funding is required to submit form HUD-60002 to HUD's Economic Opportunity Division in Washington DC. Where the program
providing Section 3 covered funding requires the submission of an annual performance report (e.g.,
Condition: The required quarterly SF-425 Federal Financial Reports and HUD 60002, Section 3
Summary Report were filed after the required deadline.
Cause: Lack of sufficient internal control over the timely preparation, review, and submission of the
financial and performance reports.
Effect or Potential Effect: The City's failure to comply with stated rules and regulations over the required
reports increases the risk that inaccurate or incomplete information will be reported.
Questioned Cost: None
Context: The SF-425 Federal Financial Reports and HUD 60002, Section 3 Summary Report were
prepared and submitted after we requested them, which was after these reports were due to HUD.
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2020-003, 2019-006, 2018-005, and 2017-006
Recommendation: The City should strengthen its process over the preparation of its reports to ensure
the reports are based on the applicable accounting and performance records. City staff should ensure
that these reports are not only prepared, but also reviewed for accuracy and completeness prior to
submission. The City should have a process to ensure that all required reports are prepared, reviewed,
and submitted on a timely basis.
Management Response and Corrective Action Plan
City's Response: The City submitted the reports late that can cause federal and state funding to
be affected.
Corrective Action Plan: The City has contracted with third party vendors to ensure timeliness of
filing reports. Departments are aware of deadlines and have organized records to meet the
deadlines.
Planned Implementation Date: Implemented during Fiscal Year 2023.
Responsible Person: Finance & Community Development department.
Federal Program Title: Community Development Block Grants / Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Special Tests and Provisions
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, Part 4-14.218, CDBG funds (and local funds to be reimbursed with
CDBG funds) cannot be obligated or expended before receipt of HUD's approval of a Request for Release
of Funds (RROF) and environmental certification, except for exempt activities under 24 CFR section
58.34 and categorically excluded activities under section 58.35(b) (24 CFR section 58.22).
Also, on page 4-14.219-29, it states that projects must have an environmental review unless they meet
criteria specified in the regulations that would exempt or exclude them from RROF and environmental
certification requirements (24 CFR sections 58.1, 58.22, 58.34, 58.35, and 570.604).
Condition: During our audit the City was unable to provide evidence of HUD's approval of a Request for
Release of Funds and environmental certifications prior to expenditure of funds for fiscal year 2023.
Cause: Lack of appropriate control over special tests and provisions, 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 able to provide environmental reviews for three out of four projects. However, the City was unable to provide evidence of HUD's approval of a Request for Release of Funds, and
environmental certification for these four projects.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City should design and establish internal control over special
tests and provisions, which should include maintaining copies of reports submitted for audit purposes.
Management Response and Corrective Action Plan
City's Response: The City concurs.
Corrective Action Plan: Departments will work together to document and verify all documents are
retained and centralized to ensure they are auditable.
Planned Implementation Date: January 2025
Responsible Person: Finance & Community Development Department
Federal Program Title: Community Development Block Grants/Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Activities Allowed or Unallowed and Allowable Costs/Cost
Criteria: In order to receive cost reimbursement under federal awards, costs must meet the criteria
contained in 2 CFR Part 200, section 4-14.218, including that the cost has been adequately documented.
Condition: Documentation of salaries and wages claimed as CDBG expenditures was lacking. Several
personnel action forms for employee records were missing and not all timesheets provided had evidence
of review by a supervisor.
Cause: Lack of internal controls and a consistent timesheet reporting and approval process over payroll.
Effect or Potential Effect: The City could be charging inaccurate or unallowable amount of payroll
expenditures to the CDBG program.
Questioned Cost: None
Context: We selected a sample of 25 payroll records. Our review identified the following:
1 out of 25 payroll selections did not have an approved timesheet. Necessary signature of
department head/supervisor not found on employee timecard.
3 out of the 25 payroll selections did not have accurate Personnel Action Form (PAF) information
in the employee records to match the pay rate of the employee. 1 employee used twice in testing
had no record of PAF in employee files. The other exceptions are due to a discrepancy in pay
rate per the employee payroll register and the employee updated PAF. Per Employee MOU, this
employee should only have a pay increase of 2.5%, however the employee payroll register
showed an increase of 3%.
Statistical Sampling Validity: Yes
Repeat of a Prior-Year Finding: Yes, 2020-001, 2019-001.
Recommendation:
We recommend the City to strengthen their procedures in place in relation to the timesheet
approval process by implementing uniform policies and procedures across all departments to
only process time records after proper review and approval has been completed and signed off.
The City should implement a secure way for retaining documentation vital to employee records
and be able to update documentation when any changes to employee information is made.
The City should have a documentation in place to support allocation method and calculations
used during the year.
City's Response: There has been a turnover in staff that were responsible for applying the
internal control during the Fiscal Year 2020. The City is in the process of finalizing an official
timesheet approval process beginning in Fiscal Year 2024.
Corrective Action Plan: The City will be updating the payroll process in FY 2024, to include a
centralized retention plan related to payroll records.
Planned Implementation Date: Fiscal Year 2024
Responsible Person: Finance & Human Resources Department
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 May 2023 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 (CSLFRF) 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 that the project and expenditure
report for quarter July through September 2022 was submitted.
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 grants, 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: According to City's consultant, the report was drafted but not submitted.
Statistical Sampling Validity: Not applicable. No sampling was performed.
Repeat of a Prior-Year Finding: Yes, 2022-001 and 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 concurs
Corrective Action Plan: City is onboarding qualified individuals to ensure reports are submitted
in a timely manner and retained by the City.
Planned Implementation Date: Q1 of Fiscal Year 2025
Responsible Person: Director of Finance
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: Procurement and Suspension and Debarment
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3.2-I-1 through 3.2-I-3:
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
in
contracting, awarding contracts only to responsible contractors, and maintaining records to
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
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's Conflict of Interest Code does 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 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, and 2022-004
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.
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: Policy and Procedures manual was updated and approved by City Council on
December 5, 2023 to include 2 CFR part 200, Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requirements.
Corrective Action Plan: Update policies and procedures manual.
Planned Implementation Date: December 5, 2023
Responsible Person: Director of Finance
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: Subrecipient Monitoring
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3-M-1 and 3-M-2:
"A pass-through entity (PTE) must:
Monitor - Monitor the activites of the subrecipient as necessary to ensure that the subaward is
used for authorized purposes, complies with the terms and conditions of the subaward, and
achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures
identified as necessary based upon the evaluation of subrecipient risk or specifically required by
the terms and conditions of the award, subaward monitoring must include the following:
1. Reviewing financial and programmatic (performance and special reports) required by the PTE.
2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all
deficiencies pertaining to the federal award provided to the subrecipient from the PTE
detected through audits, on-site reviews, and other means.
3. Issuing a management decision for audit findings pertaining to the federal award provided to
the subrecipient from the PTE as required by 2 CFR section 200.521.
Condition: The City does not have a current written policy for subrecipient monitoring conforming to
applicable Federal statutes per 2 CFR part 200, Appendix XI, Compliance Supplement May 2023,
sections 3-M-1 and 3-M2. 1 of 3 invoices selected for testing did not have department head review and
approval to ensure that subrecipient reimbursement request comply with the CSLFRF allowable costs.
Cause: Lack of formal policies and procedures over federal requirement for subrecipient monitoring.
Effect or Potential Effect: City may be sending funds to subrecipients for activities and services that are
nonconforming to allowed costs under the Uniform Guidance.
Questioned Cost: None
Context: During the audit, we found one instance of subrecipient reimbursement that lacked evidence of
review and approval.
Statistical Sampling Validity: Non-statistical sampling was performed in relation to this finding.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City establish an official written policy for subrecipient monitoring
that is in line with the requirements of the Uniform Guidance. The policy should contain components for
compliance with and references to Federal requirements, such as review of reports requested from the
subrecipient regarding project status, reviewing invoices to ensure spending is limited to expenses
involving approved projects, and proper approval procedures key personnel perform to ensure these
invoices are valid.
Management Response and Corrective Action Plan
City's Response: The City concurs with the finding.
Corrective Action Plan: The City will establish an official written policy for subrecipient monitoring
that is in line with the requirements of the Uniform Guidance.
Planned Implementation Date: December 2024
Responsible Person: Finance & Community Development Departments
Federal Program Title: Community Development Block Grants/Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Reporting
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, sections 3.2-L-1 and 4-14.218-10:
"Recipients must use the standard financial reporting forms or such other forms as may be authorized by
OMB (approval is indicated by an OMB paperwork control number on the form) when reporting to the
Federal awarding agency. Each recipient must report program outlays and program income on a cash or
accrual basis, as prescribed by the Federal awarding agency."
For CDBG, the City is required to submit the following reports:
SF-425 - Federal Financial Report
C04PR03 - Activity Summary Report
C04PR26 - CDBG Financial Summary
HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income
Persons, (OMB No. 2529-0043)
Per HUD Notice CPD-12-012, submission of Federal Financal Report - Standard Form 425: "A hard copy (or a pdf file if transmitted electronically) of the SF-425 report shall be submitted to the CDBG recipient's local field office, which will review it for completeness and accuracy... Quarterly Federal
Financial Reports (FFRs) must be submitted to the respective field office within 30 days after the end of
the reporting period. The following reporting-period end dates shall be used for quarterly reports: 3/31, 6/30, 9/30, or 12/31."
Per HUD Section 3 Overview for Recipients of HUD Housing & Community Development Funding:
"Annually, each direct recipient of Housing and Community Development funding is required to submit form HUD-60002 to HUD's Economic Opportunity Division in Washington DC. Where the program
providing Section 3 covered funding requires the submission of an annual performance report (e.g.,
Condition: The required quarterly SF-425 Federal Financial Reports and HUD 60002, Section 3
Summary Report were filed after the required deadline.
Cause: Lack of sufficient internal control over the timely preparation, review, and submission of the
financial and performance reports.
Effect or Potential Effect: The City's failure to comply with stated rules and regulations over the required
reports increases the risk that inaccurate or incomplete information will be reported.
Questioned Cost: None
Context: The SF-425 Federal Financial Reports and HUD 60002, Section 3 Summary Report were
prepared and submitted after we requested them, which was after these reports were due to HUD.
Statistical Sampling Validity: Not applicable. Sampling was not performed in relation to this finding.
Repeat of a Prior-Year Finding: Yes, 2020-003, 2019-006, 2018-005, and 2017-006
Recommendation: The City should strengthen its process over the preparation of its reports to ensure
the reports are based on the applicable accounting and performance records. City staff should ensure
that these reports are not only prepared, but also reviewed for accuracy and completeness prior to
submission. The City should have a process to ensure that all required reports are prepared, reviewed,
and submitted on a timely basis.
Management Response and Corrective Action Plan
City's Response: The City submitted the reports late that can cause federal and state funding to
be affected.
Corrective Action Plan: The City has contracted with third party vendors to ensure timeliness of
filing reports. Departments are aware of deadlines and have organized records to meet the
deadlines.
Planned Implementation Date: Implemented during Fiscal Year 2023.
Responsible Person: Finance & Community Development department.
Federal Program Title: Community Development Block Grants / Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Special Tests and Provisions
Criteria: Pursuant to the Office of Management and Budget (OMB) 2 CFR Part 200, Appendix XI,
Compliance Supplement May 2023, Part 4-14.218, CDBG funds (and local funds to be reimbursed with
CDBG funds) cannot be obligated or expended before receipt of HUD's approval of a Request for Release
of Funds (RROF) and environmental certification, except for exempt activities under 24 CFR section
58.34 and categorically excluded activities under section 58.35(b) (24 CFR section 58.22).
Also, on page 4-14.219-29, it states that projects must have an environmental review unless they meet
criteria specified in the regulations that would exempt or exclude them from RROF and environmental
certification requirements (24 CFR sections 58.1, 58.22, 58.34, 58.35, and 570.604).
Condition: During our audit the City was unable to provide evidence of HUD's approval of a Request for
Release of Funds and environmental certifications prior to expenditure of funds for fiscal year 2023.
Cause: Lack of appropriate control over special tests and provisions, 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 able to provide environmental reviews for three out of four projects. However, the City was unable to provide evidence of HUD's approval of a Request for Release of Funds, and
environmental certification for these four projects.
Repeat of a Prior-Year Finding: No
Recommendation: We recommend the City should design and establish internal control over special
tests and provisions, which should include maintaining copies of reports submitted for audit purposes.
Management Response and Corrective Action Plan
City's Response: The City concurs.
Corrective Action Plan: Departments will work together to document and verify all documents are
retained and centralized to ensure they are auditable.
Planned Implementation Date: January 2025
Responsible Person: Finance & Community Development Department
Federal Program Title: Community Development Block Grants/Entitlement Grants
Federal Catalog Number: 14.218
Federal Agency: U.S. Department of Housing and Urban Development
Category of Finding: Activities Allowed or Unallowed and Allowable Costs/Cost
Criteria: In order to receive cost reimbursement under federal awards, costs must meet the criteria
contained in 2 CFR Part 200, section 4-14.218, including that the cost has been adequately documented.
Condition: Documentation of salaries and wages claimed as CDBG expenditures was lacking. Several
personnel action forms for employee records were missing and not all timesheets provided had evidence
of review by a supervisor.
Cause: Lack of internal controls and a consistent timesheet reporting and approval process over payroll.
Effect or Potential Effect: The City could be charging inaccurate or unallowable amount of payroll
expenditures to the CDBG program.
Questioned Cost: None
Context: We selected a sample of 25 payroll records. Our review identified the following:
1 out of 25 payroll selections did not have an approved timesheet. Necessary signature of
department head/supervisor not found on employee timecard.
3 out of the 25 payroll selections did not have accurate Personnel Action Form (PAF) information
in the employee records to match the pay rate of the employee. 1 employee used twice in testing
had no record of PAF in employee files. The other exceptions are due to a discrepancy in pay
rate per the employee payroll register and the employee updated PAF. Per Employee MOU, this
employee should only have a pay increase of 2.5%, however the employee payroll register
showed an increase of 3%.
Statistical Sampling Validity: Yes
Repeat of a Prior-Year Finding: Yes, 2020-001, 2019-001.
Recommendation:
We recommend the City to strengthen their procedures in place in relation to the timesheet
approval process by implementing uniform policies and procedures across all departments to
only process time records after proper review and approval has been completed and signed off.
The City should implement a secure way for retaining documentation vital to employee records
and be able to update documentation when any changes to employee information is made.
The City should have a documentation in place to support allocation method and calculations
used during the year.
City's Response: There has been a turnover in staff that were responsible for applying the
internal control during the Fiscal Year 2020. The City is in the process of finalizing an official
timesheet approval process beginning in Fiscal Year 2024.
Corrective Action Plan: The City will be updating the payroll process in FY 2024, to include a
centralized retention plan related to payroll records.
Planned Implementation Date: Fiscal Year 2024
Responsible Person: Finance & Human Resources Department