FAC Explorer

Audit 350078

FY End
2024-06-30
Total Expended
$1.21M
Findings
4
Programs
3
Organization: City of Cupertino (CA)
Year: 2024 Accepted: 2025-03-28
Auditor: The Pun Group LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
539538 2024-001 Significant Deficiency - I
539539 2024-002 Significant Deficiency - N
1115980 2024-001 Significant Deficiency - I
1115981 2024-002 Significant Deficiency - N

Programs

ALN Program Spent Major Findings
14.218 Community Development Block Grants/entitlement Grants $7,942 - 0
20.205 Highway Planning and Construction $5,822 Yes 0
93.008 Medical Reserve Corps Small Grant Program $4,129 - 0

Contacts

Name Title Type
DQ4CLU1A74G9 Jonathan Orozco Auditee
4087773220 Sophia Kuo Auditor
No contacts on file

Notes to SEFA

Title: Note 1 – Reporting Entity Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years De Minimis Rate Used: N Rate Explanation: The Auditee did not use de minimis cost rate The financial reporting entity, as defined by the Governmental Accounting Standard Board (“GASB”), consists of the primary government, which is the City of Cupertino, California (the “City”), organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.
Title: Note 2 – Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years De Minimis Rate Used: N Rate Explanation: The Auditee did not use de minimis cost rate The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of the City under programs of the federal government for the year ended June 30, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of City, it is not intended to and does not present the financial position of the City.
Title: Note 3 – Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years De Minimis Rate Used: N Rate Explanation: The Auditee did not use de minimis cost rate Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Title: Note 4 – Indirect Cost Rate Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years De Minimis Rate Used: N Rate Explanation: The Auditee did not use de minimis cost rate The City has not elected to use the 10-percent de minimis indirect rate as allowed under the Uniform Guidance.
Title: Note 5 – Subrecipients Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years De Minimis Rate Used: N Rate Explanation: The Auditee did not use de minimis cost rate During the year ended June 30, 2024, the City provided federal funds to the following subrecipients: Assistance Amount Provided Listing Number Program Name / Subrecipient Name to Subrecipients 14.218 CDBG - Entitlement/Special Purpose Grants Cluster: Rebuilding Together Silicon Valley $ 92,536 Live Oak Adult Day Services 19,054 West Valley Community Services 35,974 $ 147,564

Finding Details

Finding 2024-001
2024-001 – Procurement, Suspension, and Debarment – Internal Control over Procurement and Verification Against the System for Award Management (“SAM”) (Significant Deficiency) Identification of the Federal Program: Assistance Listing Number: 20.205 Assistance Listing Title: Highway Planning and Construction Federal Agency: Department of Transportation Pass-Through Entity: State of California Department of Transportation Federal Award Number and Award Year: CML-5318(033) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Suspension and Debarment, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All nonprocurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During our audit, we noted that the City did not have documentation on verifying the vendors against the SAM to ensure that they were not suspended or debarred from federally funded purchases. Cause: The City does not have a process to require departments to perform suspension or debarment over vendors that the City makes contracts with federally-funded projects. Effect or Potential Effect: Without verifying whether vendors are suspended or debarred from working on federally-funded projects, the City could be contracting with vendors that are prohibited from working on federally-funded projects. Questioned Costs: None. Context: See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City establish internal control procedures to monitor compliance requirements to ensure vendors are not suspended or debarred from federally-funded purchases. View of Responsible Officials: Management concurs the finding.
Finding 2024-002
2024-002 – Special Tests and Provisions – Internal Control over Quality Assurance Program (Significant Deficiency) Identification of the Federal Program: Assistance Listing Number: 20.205 Assistance Listing Title: Highway Planning and Construction Federal Agency: Department of Transportation Pass-Through Entity: State of California Department of Transportation Federal Award Number and Award Year: CML-5318(033) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with the City’s adopted Quality Assurance Program Manual, Quality Assurance Program (QAP) pertains to a sampling and testing program that will provide assurance that the materials and workmanship incorporated into the construction project are in conformance with the contract specifications. The main elements of a QAP are the Acceptance Testing (AT) and the Independent Assurance Program (IAP). AT refers to the sampling and testing, or inspection, to determine the degree of compliance with contract requirements while IAP refers to the verification that AT is being performed correctly by qualified testers and laboratories. The abovementioned QAP elements should be monitored through these forms/checklists: Materials Certificate (Appendix K), Checklist to Assist Local Agencies Monitor Acceptance Testing Requirements (Appendix E), and Checklist to Assist Local Agencies to Monitor Independent Assurance Requirements (Appendix L). Condition: Quality Assurance Tests were performed during the fiscal year for the federal project; however, we found that the corresponding monitoring forms and checklists were not completed in a timely manner in accordance with the adopted QAP Manual. The Appendices K, E, and L checklists were all accomplished after the project completion which deviates from the intended purpose of the QAP. Cause: The City did not follow the adopted QAP properly to complete Appendices K, E, and L forms/checklists timely. Effect or Potential Effect: Without completing the forms and checklists timely, the City might overlook some of the important matters and testing needed in monitoring the federal project. Questioned Costs: None. Context: See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City to adhere with the QAP manual on the timely accomplishment of the abovementioned forms and checklists in line with the federal project timeline. View of Responsible Officials: Management concurs the finding.
Finding 2024-001
2024-001 – Procurement, Suspension, and Debarment – Internal Control over Procurement and Verification Against the System for Award Management (“SAM”) (Significant Deficiency) Identification of the Federal Program: Assistance Listing Number: 20.205 Assistance Listing Title: Highway Planning and Construction Federal Agency: Department of Transportation Pass-Through Entity: State of California Department of Transportation Federal Award Number and Award Year: CML-5318(033) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Suspension and Debarment, Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include those procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All nonprocurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During our audit, we noted that the City did not have documentation on verifying the vendors against the SAM to ensure that they were not suspended or debarred from federally funded purchases. Cause: The City does not have a process to require departments to perform suspension or debarment over vendors that the City makes contracts with federally-funded projects. Effect or Potential Effect: Without verifying whether vendors are suspended or debarred from working on federally-funded projects, the City could be contracting with vendors that are prohibited from working on federally-funded projects. Questioned Costs: None. Context: See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City establish internal control procedures to monitor compliance requirements to ensure vendors are not suspended or debarred from federally-funded purchases. View of Responsible Officials: Management concurs the finding.
Finding 2024-002
2024-002 – Special Tests and Provisions – Internal Control over Quality Assurance Program (Significant Deficiency) Identification of the Federal Program: Assistance Listing Number: 20.205 Assistance Listing Title: Highway Planning and Construction Federal Agency: Department of Transportation Pass-Through Entity: State of California Department of Transportation Federal Award Number and Award Year: CML-5318(033) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with the City’s adopted Quality Assurance Program Manual, Quality Assurance Program (QAP) pertains to a sampling and testing program that will provide assurance that the materials and workmanship incorporated into the construction project are in conformance with the contract specifications. The main elements of a QAP are the Acceptance Testing (AT) and the Independent Assurance Program (IAP). AT refers to the sampling and testing, or inspection, to determine the degree of compliance with contract requirements while IAP refers to the verification that AT is being performed correctly by qualified testers and laboratories. The abovementioned QAP elements should be monitored through these forms/checklists: Materials Certificate (Appendix K), Checklist to Assist Local Agencies Monitor Acceptance Testing Requirements (Appendix E), and Checklist to Assist Local Agencies to Monitor Independent Assurance Requirements (Appendix L). Condition: Quality Assurance Tests were performed during the fiscal year for the federal project; however, we found that the corresponding monitoring forms and checklists were not completed in a timely manner in accordance with the adopted QAP Manual. The Appendices K, E, and L checklists were all accomplished after the project completion which deviates from the intended purpose of the QAP. Cause: The City did not follow the adopted QAP properly to complete Appendices K, E, and L forms/checklists timely. Effect or Potential Effect: Without completing the forms and checklists timely, the City might overlook some of the important matters and testing needed in monitoring the federal project. Questioned Costs: None. Context: See condition above for context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend that the City to adhere with the QAP manual on the timely accomplishment of the abovementioned forms and checklists in line with the federal project timeline. View of Responsible Officials: Management concurs the finding.