Audit 33563

2022-001 Material Audit Adjustments Material Weakness Criteria: The City is required to provide accurate GAAP basis financial data for preparation of the annual financial statements. Additionally, a good system of internal accounting control contemplates an adequate system for recording, processing and reconciling account balances to the financial statements and ensuring cutoff is accurate for accounts receivable, deferred revenue and related revenues. Condition: Based on audit procedures performed as of December 31, 2022, we identified the following material adjustment that was recorded in order to fairly present the financial statements in accordance with GAAP: ? We identified a material audit adjustment related to recognizing intergovernmental revenue and reducing deferred revenue to match the expenditures reported in the State and Local Fiscal Recovery Funds program within the grants fund. Cause: The City?s financial statement reconciliation controls failed to prevent, or detect on a timely basis, material errors in the financial statements that were noted. Effect: Deferred revenues were overstated, and intergovernmental revenues were understated for the Grants Fund. Management has posted a correcting journal entry to correct the error and properly report the balances in the December 31, 2022 Annual Comprehensive Financial Report. Recommendation: We recommend management improve controls related to year-end financial close to ensuring grant revenues are properly reported in line with restrictions noted within grant agreements. Department heads and/or key personnel within the accounting department may also consider performing secondary reviews to ensure accuracy of financial reporting to ensure proper GAAP required cutoff procedures have been followed. Views of Responsible Officials: Agree 2022-002 U.S. Department of Treasury Passed-Through Colorado Department of Local Affairs Federal Financial Assistance Listing 21.027 COVID-19 State and Local Fiscal Recovery Funds Procurement and Suspension and Debarment Significant Deficiency in Internal Control over Compliance Criteria: The OMB Compliance Supplement states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Non-Federal entities may verify that a party is not suspended or debarred by checking the Excluded Parties List System, collecting a certification from the entity, or adding a clause or condition to the covered transaction. Condition: Suspension and debarment verification procedures were not always performed prior to entering into covered transactions. Cause: The City?s controls surrounding the procurement process failed to properly address the potential of suspension and debarment through the performance of System for Award Management (SAM) checks. Effect: Contractors may not be aware of required terms and conditions and payments could be made to recipients who were suspended or debarred. Questioned Costs: None Context/Sampling: A statistical sample of 8 of the 24 unique vendors who were paid with State and Local Fiscal Recovery Funds included 5 contracts subject to the City?s procurement policy. Of those 5 contracts, we noted 4 instances where the City had not retained documentation that a SAM check had occurred. Report Finding from Prior Year(s): No Recommendation: We recommend the City improve controls surrounding the performance of SAM checks and adhere to all aspects of their procurement policy including procurement and suspension and debarment. We recommend that the City retain documentation of all SAM checks performed before entering into contracts where vendors receive federal awards. Views of Responsible Officials: Management agrees with the finding.

2022-001 Material Audit Adjustments Material Weakness Criteria: The City is required to provide accurate GAAP basis financial data for preparation of the annual financial statements. Additionally, a good system of internal accounting control contemplates an adequate system for recording, processing and reconciling account balances to the financial statements and ensuring cutoff is accurate for accounts receivable, deferred revenue and related revenues. Condition: Based on audit procedures performed as of December 31, 2022, we identified the following material adjustment that was recorded in order to fairly present the financial statements in accordance with GAAP: ? We identified a material audit adjustment related to recognizing intergovernmental revenue and reducing deferred revenue to match the expenditures reported in the State and Local Fiscal Recovery Funds program within the grants fund. Cause: The City?s financial statement reconciliation controls failed to prevent, or detect on a timely basis, material errors in the financial statements that were noted. Effect: Deferred revenues were overstated, and intergovernmental revenues were understated for the Grants Fund. Management has posted a correcting journal entry to correct the error and properly report the balances in the December 31, 2022 Annual Comprehensive Financial Report. Recommendation: We recommend management improve controls related to year-end financial close to ensuring grant revenues are properly reported in line with restrictions noted within grant agreements. Department heads and/or key personnel within the accounting department may also consider performing secondary reviews to ensure accuracy of financial reporting to ensure proper GAAP required cutoff procedures have been followed. Views of Responsible Officials: Agree 2022-002 U.S. Department of Treasury Passed-Through Colorado Department of Local Affairs Federal Financial Assistance Listing 21.027 COVID-19 State and Local Fiscal Recovery Funds Procurement and Suspension and Debarment Significant Deficiency in Internal Control over Compliance Criteria: The OMB Compliance Supplement states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Non-Federal entities may verify that a party is not suspended or debarred by checking the Excluded Parties List System, collecting a certification from the entity, or adding a clause or condition to the covered transaction. Condition: Suspension and debarment verification procedures were not always performed prior to entering into covered transactions. Cause: The City?s controls surrounding the procurement process failed to properly address the potential of suspension and debarment through the performance of System for Award Management (SAM) checks. Effect: Contractors may not be aware of required terms and conditions and payments could be made to recipients who were suspended or debarred. Questioned Costs: None Context/Sampling: A statistical sample of 8 of the 24 unique vendors who were paid with State and Local Fiscal Recovery Funds included 5 contracts subject to the City?s procurement policy. Of those 5 contracts, we noted 4 instances where the City had not retained documentation that a SAM check had occurred. Report Finding from Prior Year(s): No Recommendation: We recommend the City improve controls surrounding the performance of SAM checks and adhere to all aspects of their procurement policy including procurement and suspension and debarment. We recommend that the City retain documentation of all SAM checks performed before entering into contracts where vendors receive federal awards. Views of Responsible Officials: Management agrees with the finding.