Audit 321037

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-006 The City had inadequate internal controls for ensuring compliance with federal requirements for subrecipient monitoring. Assistance Listing Number and Title: 21.023 - COVID 19 Emergency Rental Assistance Program Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: COVID-19 1505-0270 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2023, the City spent $5,187,384 in federal funding for the Emergency Rental Assistance (ERA) program, which included $2,907,074 that it passed through to nine subrecipients. The purpose of the ERA is to provide direct payments to eligible entities to assist eligible households with financial assistance and to provide housing stability services and, in the case of ERA 2 as applicable, to fund other affordable rental housing and eviction prevention activities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require the City to evaluate every subrecipient’s risk of noncompliance with federal requirements to determine the appropriate level of subrecipient monitoring. Subrecipient monitoring requirements include ensuring compliance with program requirements, ensuring the subrecipient receives a federal single audit when required, following up and ensuring the subrecipient promptly and appropriately addresses all audit findings, and issuing a management decision as required. The City did not have adequate controls for monitoring its subrecipients. Specifically, adequate controls for ensuring a subrecipient received a federal single audit when required and then reviewing subrecipients’ audits when applicable. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Employees responsible for ensuring compliance with subrecipient monitoring were unaware of the annual requirement to verify that subrecipients receive a single audit if they have total federal expenditures more than the single audit threshold of $750,000. Effect of Condition The City could not provide supporting documentation showing that it performed the following monitoring procedures to prevent or detect subrecipient noncompliance for all nine subrecipients: • Verifying if subrecipients received a federal single audit, if required • Ensuring subrecipients took corrective actions on any deficiencies • Issuing management decisions within six months of audit reports’ publication Recommendation We recommend the City establishes internal controls over subrecipient monitoring to ensure it verifies that subrecipients receives a federal single audit and develops follow-up procedures if detects deficiencies. City’s Response City staff will contact all Community Based Organizations (CBOs) that received Emergency Rental Assistance 2 funding to determine if they were required to complete a Single Audit per the Single Audit Act. This communication will include, if applicable, a request that they submit the organizations most recent audit for review by staff. Should a Single Audit identify any findings or other deficiencies, staff will ask the CBO to provide an update as to the status of the deficiency and if it has been appropriately addressed. Staff will document this communication in the electronic file of the CBO who was required to complete a Single Audit. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-001 The City’s internal controls were inadequate for ensuring compliance with federal subrecipient monitoring requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 - Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WAH20-0114, COVID-19 WAH20-F001, WAH21-F001, WAH22-F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons With AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements when passing on federal funding to subrecipients. Further, the City must monitor its subrecipients to ensure they comply with the federal award’s terms and conditions. To determine the appropriate level of monitoring, the City must evaluate each subrecipient’s risk of noncompliance with federal requirements. For this award, monitoring would include verifying subrecipients provided assistance to participants who met program eligibility requirements and performed inspections for Housing Quality Standards (HQS) outlined in 24 CFR sections 574.310(b)(1)-(2). The amount of verification would depend on each subrecipient’s risk of noncompliance. Description of Condition The City provided funds to seven local organizations to administer housing assistance programs for people living with HIV, including those with AIDS or related diseases. The City did not have internal controls to ensure compliance with subrecipient monitoring requirements. Our audit found the City did not perform risk assessments for subawards and did not sufficiently monitor subrecipients as federal regulations require. We consider these deficiencies in internal control to be a material weakness that led to material noncompliance. Cause of Condition Due to staff turnover, new staff were unaware of all monitoring requirements. Additionally, for two of the four subrecipients audited, City staff said they believed risk assessments and monitoring were not required for those contracts under the HOPWA Housing as an Intervention to Fight AIDS (HIFA) because it was a new pilot program. The City could not provide documented support that risk assessment and monitoring requirements were waived for this program. Effect of Condition The City did not perform risk assessments nor adequately monitor three of four subrecipients we reviewed during the audit. By not conducting risk assessments, the City risks inadequately monitoring its subrecipients to ensure it complies with program requirements and uses federal funds appropriately. Since the City did not monitor its subrecipients, there was no way for it to confirm the subrecipients provided funds to eligible recipients and that housing units met HQS inspection requirements. Recommendation We recommend the City perform sufficient risk assessments over its subrecipients and monitor them accordingly to verify they are complying with the award’s terms and conditions and only providing funds to eligible participants. Additionally, we recommend the City provide adequate training to staff responsible for administering federal programs and dedicate the necessary time and resources to staying updated on program guidance and ensuring compliance with all program requirements. City’s Response HSD acknowledges the identified issues, which were primarily due to a long-term vacancy of key staff responsible for conducting these duties. HSD notes that these are multi-year grants, with previously assessed contracted providers who have experience administering these funding sources for multiple years on behalf of the city. Therefore, HSD prioritized ensuring that essential services and agreements continued uninterrupted to prevent homelessness among vulnerable populations. The vacancy was filled as of October 2023. Risk assessments and monitoring plans are now in place and are expected to be completed before December 2024. Staff is trained on the most current HOPWA procedures and CAPER reporting requirements. HSD remains committed to dedicating the necessary resources to ensure ongoing compliance with all relevant program requirements, while also reinforcing its capacity to deliver essential services to those in need. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-002 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.241, Housing Opportunities for Persons With AIDS 14.241, COVID-19 Housing Opportunities for Persons With AIDS Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: WA-H20-0114 , COVID-19 WAH20- F001, WA-H21-F001, WAH22- F001 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Background The purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program is to provide states and localities with resources and incentives to devise long-term strategies for meeting the housing needs of people living with HIV, including those with AIDS or related diseases, and their families. During fiscal year 2023, the City spent $3,589,690 in program funds for emergency housing, shared housing arrangements, apartments, single room occupancy (SRO) dwellings, community residences, and essential care services and supplies such as food, medications, medical care, personal protective equipment and information. The City passed down $3,545,285 to subrecipient organizations to execute these arrangements. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System. The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and on-time FFATA reports for its subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in July 2024 and three FFATA reports in June 2024 that it should have filed by the end of December 2023. Additionally, the City did not accurately report a subaward amendment on the FFATA report. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards. However, the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time diminishes the federal government's ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a longterm position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We appreciate the City’s commitment to resolving this finding and thank the City for its cooperation and assistance during the audit. We will review the corrective action taken during the next regular audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-003 The City did not have adequate internal controls for ensuring compliance with program requirements for reimbursing subrecipients. Assistance Listing Number and Title: 14.231 – Emergency Solutions Grant Program 14.231 – COVID 19 Emergency Solutions Grant Program Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: E-20-MC-53-0005, E-21-MC-53- 0005, E-22-MC-53-0005, COVID- 19 E-20-MW-53-0005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition The City spent $2,681,349 in Emergency Solutions Grant Program (ESG) award funds in 2023. The ESG Program provides grants to states, metropolitan cities, urban counties, and territories for (1) rehabilitating or converting buildings for use as emergency homeless shelters, (2) paying certain expenses related to operating emergency shelters, (3) providing essential services related to emergency shelters and street outreach for the homeless, and (4) preventing homelessness and providing rapid rehousing assistance. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Reimbursement payments The City must pay ESG Program subrecipients for allowable costs within 30 days after receiving their complete payment requests. The City did not follow its established controls and did not reimburse at least two subrecipients’ payment requests within the required 30 days. We consider this to be a significant deficiency in internal controls. Cause of Condition The City human services department (HSD) received the two invoices from the subrecipient past the City’s required submission date and after the 2022 fiscal year end. Department staff had to consider how to process the payments after the fiscal year had closed, which led to delaying payment past the 30-day deadline. In addition, there was turnover in the department and newer staff took longer when reviewing invoice submissions. Effect of Condition We tested four out of seven subrecipient payment requests. We found two requests, totaling $263,062, that the City paid between 34 days and 56 days after it had received them. Failure to comply with these program requirements may jeopardize the City’s eligibility for future federal assistance. Recommendation We recommend the City establish and follow internal controls to ensure compliance with federal requirements for reimbursing subrecipients within established timeframes. City’s Response HSD acknowledges the identified weakness and implemented an updated Accounts Payable control procedure in 2024, that includes an additional standard monthly report and review process to ensure that reimbursements are processed with the required 30-day period. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 24 CFR Part 576, Uniform Guidance, section 203, Obligation, expenditure, and payment requirements, describes the requirements for obligation of funds, expenditures, and payments to subrecipients.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-004 The City charged payroll-related expenditures that lacked support to the Community Development Block Grants/Entitlement Grants. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $2,989 Prior Year Audit Finding: Yes, Finding 2022-001 Background The City spent $6,183,811 in Community Development Block Grants/Entitlement Grants (CDBG) funds in 2023. CDBG is intended to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. The City may use these grant funds for its program administrative costs. Federal regulations state that personnel expenditures must be supported and recipients must provide reasonable assurance that the charges are accurate, allowable and properly allocated. Further, records must support the distribution of an employee’s salary and wages among specific activities or cost objectives if the employee works on more than one federal ward. The City must base charges to federal awards for salaries and wages on records that accurately reflect the work employees performed. Description of Condition Although the City’s internal controls were adequate for ensuring it materially complied with the program’s allowable activities and costs requirements, during the audit period, the City charged salary and wage expenditures to the CDBG program based on records that did not accurately reflect the work employees performed. Supervisors in the human services department, office of housing, and parks and recreation department preapproved timesheets. Because the timesheets were preapproved, the City could not provide evidence that the timesheets accurately reflected each employee’s actual time worked in the program. Cause of Condition Human services department: The supervisor was on vacation the day payroll was due and approved the time early instead of having a proxy approve the time. Office of housing: Management said that if a supervisor is not working on the day payroll approval is due, they will preapprove the employee’s timesheet. Parks and recreation department: Payroll asked supervisors to approve the time early to ensure time for payroll processing because the pay period end on a holiday. In another instance, the preapproval occurred before management took corrective action in regard to the prior year audit finding. Effect of Condition and Questioned Costs Using a statistical sampling method, we selected 28 payroll transactions in the human services department, office of housing, and parks and recreation department. We identified seven payroll charges totaling $2,989 in known questions costs. Based upon the projection of our statistical sample, we identified an additional $38,643 in estimated overpayments. Federal regulations require the State Auditor’s Office to report known and likely questioned costs that are more than $25,000 for each type of compliance requirement. We question costs when we find the City did not comply with grant regulations and/or when it does not have adequate documentation to support expenditures. Recommendation We recommend the City ensure all payroll-related expenditures it charges to the CDBG program are only for allowable activities, are accurate, are properly allocated and comply with the cost principles set forth in 2 CFR 200 Subpart E. We further recommend the City consult with the grantor to determine whether it needs to repay the questioned costs. City’s Response The Human Services Department The Human Services Department has acknowledged the issue identified regarding timesheet pre-approvals and will take immediate steps to address the issue. HSD will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. HSD will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Office of Housing The Office of Housing has acknowledged the finding regarding timesheet preapprovals and will take immediate steps to address the issue. Office of Housing will ensure that proxy timesheet approvers are properly assigned in cases where the primary supervisor is unavailable on the day payroll approval is due. This adjustment will be incorporated into the previous improved practices, eliminating the need for pre-approving timesheets. By ensuring that proxy approvers are in place, the department will maintain compliance with payroll policies and ensure the accuracy of timesheet approvals. Parks and Recreation Department The Parks and Recreation Department acknowledges the finding regarding timesheet pre-approvals and will ensure that proxy timesheet approvers are assigned moving forward as part of the department's ongoing commitment to improved practices. In addition, the department would like to clarify that the preapproval noted occurred before the implementation of the current corrective action plan, which addressed the prior year's finding. The department reassures the State Auditor's Office (SAO) that the newly adopted practices, which prevent preapprovals, will continue to be strictly followed, ensuring compliance and accuracy in payroll processing, even during pay periods that coincide with holidays. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 403, Factors affecting allowability of costs, describes the cost principles for how direct and indirect costs should be charged to federal programs.

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-005 The City did not have adequate internal controls for ensuring compliance with federal reporting requirements. Assistance Listing Number and Title: 14.218 – Community Development Block Grants/Entitlement Grants 14.218 – COVID-19 Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B18MC530005, B20MC530005, B22MC530005, B23MC530005, COVID-19 B20MW530005 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-002 Background The purpose of the Community Development Block Grants/Entitlement Grants (CDBG) programs is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing a suitable living environment and expanded economic opportunities for people with low incomes. During fiscal year 2023, the City spent $6,183,811 for its CDBG program. Of this amount, it passed $3,483,985 through to subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City must report subawards and subaward amendments by the end of the month following the month in which it made the subawards and subaward amendments. Description of Condition The City’s internal controls were ineffective for ensuring it submitted accurate and timely FFATA reports by the due date for their subawards and subaward amendments, as federal regulations require. Specifically, the City submitted four FFATA reports in June 2024 that it should have filed by the end of December 2023. The City also made errors in information on two of the reported subawards and reported 10 subawards that it should not have reported in FSRS because they were not subawards. Additionally, the City did not submit three subaward amendments FSRS. We consider this internal control deficiency to be a material weakness that led to material noncompliance. Cause of Condition The City’s human services department is required to submit FFATA reports. Staff were aware of the federal FFATA reporting requirements for their subawards, but the City did not dedicate adequate resources to ensure it submitted the FFATA reports accurately or on time. Effect of Condition Failing to submit the required reports on time with accurate information diminishes the federal government’s ability to ensure accountability and transparency of federal spending. The following table summarizes the discrepancies we identified. Recommendation We recommend the City strengthen its internal controls to ensure it submits complete and accurate FFATA reports for all applicable subawards by the due date, as federal regulations require. City’s Response HSD acknowledges the deficiencies identified in the audit which were due to a long-term position vacancy and recruiting challenges in a competitive job market. This position was filled as of May 2024, and all outstanding reports for 2022 and 2023 CDBG, HOPWA/HIFA and ESG FFATA reports have been submitted as of July 2024. The city has the resources in place to assure timely accurate and timely FFATA reporting for all applicable sub-awards by the due date as the required by federal regulation. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS).

2023-006 The City had inadequate internal controls for ensuring compliance with federal requirements for subrecipient monitoring. Assistance Listing Number and Title: 21.023 - COVID 19 Emergency Rental Assistance Program Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: COVID-19 1505-0270 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: N/A Description of Condition During fiscal year 2023, the City spent $5,187,384 in federal funding for the Emergency Rental Assistance (ERA) program, which included $2,907,074 that it passed through to nine subrecipients. The purpose of the ERA is to provide direct payments to eligible entities to assist eligible households with financial assistance and to provide housing stability services and, in the case of ERA 2 as applicable, to fund other affordable rental housing and eviction prevention activities. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal regulations require the City to evaluate every subrecipient’s risk of noncompliance with federal requirements to determine the appropriate level of subrecipient monitoring. Subrecipient monitoring requirements include ensuring compliance with program requirements, ensuring the subrecipient receives a federal single audit when required, following up and ensuring the subrecipient promptly and appropriately addresses all audit findings, and issuing a management decision as required. The City did not have adequate controls for monitoring its subrecipients. Specifically, adequate controls for ensuring a subrecipient received a federal single audit when required and then reviewing subrecipients’ audits when applicable. We consider this internal control deficiency to be a significant deficiency. Cause of Condition Employees responsible for ensuring compliance with subrecipient monitoring were unaware of the annual requirement to verify that subrecipients receive a single audit if they have total federal expenditures more than the single audit threshold of $750,000. Effect of Condition The City could not provide supporting documentation showing that it performed the following monitoring procedures to prevent or detect subrecipient noncompliance for all nine subrecipients: • Verifying if subrecipients received a federal single audit, if required • Ensuring subrecipients took corrective actions on any deficiencies • Issuing management decisions within six months of audit reports’ publication Recommendation We recommend the City establishes internal controls over subrecipient monitoring to ensure it verifies that subrecipients receives a federal single audit and develops follow-up procedures if detects deficiencies. City’s Response City staff will contact all Community Based Organizations (CBOs) that received Emergency Rental Assistance 2 funding to determine if they were required to complete a Single Audit per the Single Audit Act. This communication will include, if applicable, a request that they submit the organizations most recent audit for review by staff. Should a Single Audit identify any findings or other deficiencies, staff will ask the CBO to provide an update as to the status of the deficiency and if it has been appropriately addressed. Staff will document this communication in the electronic file of the CBO who was required to complete a Single Audit. Auditor’s Remarks We thank the City for its response and consideration in this matter and the steps it is taking to address this issue. We will review the status of the City’s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for passthrough entities, establishes subrecipient monitoring and management requirements for pass-through entities.