Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Allowable Costs
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
2 CFR 200.430(g)(vii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: a) the system for establishing the estimates produces reasonable approximations of the activity performed; b) significant changes in the related work activity (as defined by the recipient’s written policies) are promptly identified and entered in to the records, and c) the recipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Condition:
We found that although the City charged 50% of the budgeted amount of an employees compensation to the program, the City did not perform a lookback to ensure that only 50% of the employees actual compensation was charged to the program.
Cause:
The City did not have procedures in place to perform a lookback of budgeted costs charged to grant programs.
Effect:
The City overcharged the program by the excess of the budgeted costs against the actual costs.
Questioned Costs:
None reported.
Context/Sampling:
We selected 100% of the City’s payroll costs of the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City establish procedures to perform a lookback of budgeted expenditures charged to grants.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.
Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Procurement
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
Per 2 CFR part 200, subpart D, section 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award is compliance with federal statues, regulations, and the terms and conditions of the federal award.
Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300.
Condition:
We identified that the City’s purchasing and contracting policy does not require the verification of the debarment and suspension status of vendors prior to entering into agreements. We also noted that the City did not maintain documentation that they verified that the contractor was not suspended or debarred prior to entering into a covered transaction.
Cause:
The City’s policy does not require the verification of the debarment and suspension of a vendor prior to entering into a covered transaction, nor does it address on what type of documentation should be maintained to ensure they are not suspended and debarred.
Effect:
Noncompliance with these requirements could result in disbursements of Federal funds to suspended and debarred parties.
Questioned Costs:
None reported.
Context/Sampling:
We selected 2 out of 4 of the City’s procurement transactions associated with the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City include policies and procedures within their procurement policy to check whether or not vendors are suspended and debarred and to maintain that documentation within the procurement file.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.
Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Reporting
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
2 CFR 200.303(a) requires that the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition:
We noted that the supporting documentation provided did not tie to the annual report submitted by the City or evidence of review.
Cause:
The City’s internal control environment was impacted by a shortage of staff necessary to fully conduct the program.
Effect:
The City’s reports on the awards were not reviewed for accuracy.
Questioned Costs:
None reported.
Context/Sampling:
We selected 100% of the City’s reports for the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City continue to strengthen its policies and procedures over reporting to ensure that that the supporting documentation and evidence of review is maintained.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.
Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Allowable Costs
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
2 CFR 200.430(g)(vii) states that budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: a) the system for establishing the estimates produces reasonable approximations of the activity performed; b) significant changes in the related work activity (as defined by the recipient’s written policies) are promptly identified and entered in to the records, and c) the recipient’s system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Condition:
We found that although the City charged 50% of the budgeted amount of an employees compensation to the program, the City did not perform a lookback to ensure that only 50% of the employees actual compensation was charged to the program.
Cause:
The City did not have procedures in place to perform a lookback of budgeted costs charged to grant programs.
Effect:
The City overcharged the program by the excess of the budgeted costs against the actual costs.
Questioned Costs:
None reported.
Context/Sampling:
We selected 100% of the City’s payroll costs of the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City establish procedures to perform a lookback of budgeted expenditures charged to grants.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.
Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Procurement
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
Per 2 CFR part 200, subpart D, section 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award is compliance with federal statues, regulations, and the terms and conditions of the federal award.
Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300.
Condition:
We identified that the City’s purchasing and contracting policy does not require the verification of the debarment and suspension status of vendors prior to entering into agreements. We also noted that the City did not maintain documentation that they verified that the contractor was not suspended or debarred prior to entering into a covered transaction.
Cause:
The City’s policy does not require the verification of the debarment and suspension of a vendor prior to entering into a covered transaction, nor does it address on what type of documentation should be maintained to ensure they are not suspended and debarred.
Effect:
Noncompliance with these requirements could result in disbursements of Federal funds to suspended and debarred parties.
Questioned Costs:
None reported.
Context/Sampling:
We selected 2 out of 4 of the City’s procurement transactions associated with the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City include policies and procedures within their procurement policy to check whether or not vendors are suspended and debarred and to maintain that documentation within the procurement file.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.
Program: Coronavirus State and Local Fiscal Recovery Funds
Federal Financial Assistance Listing No.: 21.027
Federal Agency: U.S. Department of Treasury
Passed-through: California Department of Finance
Award Number and Year: CSLFRF
Compliance Requirement: Reporting
Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance
Criteria:
2 CFR 200.303(a) requires that the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Condition:
We noted that the supporting documentation provided did not tie to the annual report submitted by the City or evidence of review.
Cause:
The City’s internal control environment was impacted by a shortage of staff necessary to fully conduct the program.
Effect:
The City’s reports on the awards were not reviewed for accuracy.
Questioned Costs:
None reported.
Context/Sampling:
We selected 100% of the City’s reports for the program.
Repeat Finding from Prior Year(s):
No.
Recommendation:
We recommend that the City continue to strengthen its policies and procedures over reporting to ensure that that the supporting documentation and evidence of review is maintained.
Views of Responsible Officials:
Management agrees with the finding. See separate corrective action plan.