FAC Explorer

Audit 350217

FY End
2024-06-30
Total Expended
$348.12M
Findings
2
Programs
32
Organization: City of San Diego (CA)
Year: 2024 Accepted: 2025-03-28
Auditor: Crowe LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
540343 2024-001 Significant Deficiency - L
1116785 2024-001 Significant Deficiency - L

Programs

ALN Program Spent Major Findings
66.958 Water Infrastructure Finance and Innovation (wifia) $183.46M Yes 0
97.067 Homeland Security Grant Program $11.41M Yes 0
14.218 Community Development Block Grants/entitlement Grants $2.98M Yes 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $1.90M - 0
97.025 National Urban Search and Rescue (us&r) Response System $1.37M - 0
14.239 Home Investment Partnerships Program $1.34M Yes 0
11.307 Economic Adjustment Assistance $1.13M - 0
16.922 Equitable Sharing Program $955,990 - 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $742,721 Yes 0
14.231 Emergency Solutions Grant Program $526,302 - 0
14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants $520,094 - 0
21.016 Equitable Sharing $501,765 - 0
16.543 Missing Children's Assistance $501,629 - 0
20.600 State and Community Highway Safety $483,136 - 0
20.616 National Priority Safety Programs $340,150 - 0
97.044 Assistance to Firefighters Grant $319,066 - 0
16.741 Dna Backlog Reduction Program $243,529 - 0
20.205 Highway Planning and Construction $205,015 - 0
97.042 Emergency Management Performance Grants $193,224 - 0
11.473 Office for Coastal Management $191,985 - 0
97.041 National Dam Safety Program $178,750 - 0
20.106 Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and Covid-19 Airports Programs $157,000 - 0
16.742 Paul Coverdell Forensic Sciences Improvement Grant Program $60,872 - 0
16.738 Edward Byrne Memorial Justice Assistance Grant Program $51,923 - 0
93.497 Family Violence Prevention and Services/ Sexual Assault/rape Crisis Services and Supports $39,370 - 0
93.879 Medical Library Assistance $30,000 - 0
20.608 Minimum Penalties for Repeat Offenders for Driving While Intoxicated $22,814 - 0
45.024 Promotion of the Arts Grants to Organizations and Individuals $20,000 - 0
16.301 Law Enforcement Assistance FBI Crime Laboratory Support $19,824 - 0
45.310 Grants to States $13,009 - 0
16.609 Project Safe Neighborhoods $11,639 - 0
32.009 Emergency Connectivity Fund Program $-74,333 - 0

Contacts

Name Title Type
L4FACR9F6GK7 Jeffrey Peelle Auditee
6192366712 Kathy Lai Auditor
No contacts on file

Notes to SEFA

Title: NOTE 1 - BASIS OF PRESENTATION Accounting Policies: Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1.c. in the notes to the City’s basic financial statements. 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 in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The negative amount of $74,333 reported for Assistance Listing Number (ALN) 32.009, Emergency Connectivity Fund Program grant number ECF202203096 represents a correction of prior year’s federal expenditures that were ineligible and moved to another funding source in the current fiscal year. De Minimis Rate Used: Both Rate Explanation: The City elected not to use the 10 percent de minims indirect cost rate allowed under the Uniform Guidance, except for the Homeland Security Grant Program passed through the California Governor’s Office of Emergency Services (ALN 97.067, Homeland Security Grant Program grant numbers 2020-0095/073-66000, 2021-0081/073-66000, and 2022-0043/073-66000). The accompanying Schedule of Expenditures of Federal Awards (Schedule) presents the activity of all federal award programs of the City of San Diego, California (City). The Schedule excludes the federal award programs of the San Diego Housing Commission (refer to Note 5). Federal awards received directly from federal agencies as well as federal awards passed through other nonfederal agencies, primarily the State of California (State), are included in the Schedule. The City’s reporting entity is defined in Note 1.a. in the notes to the City’s basic financial statements. Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not, present the financial position of the City. 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 (Uniform Guidance). Therefore, some amounts presented in this Schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements.
Title: NOTE 3 – ASSISTANCE LISTING NUMBERS Accounting Policies: Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1.c. in the notes to the City’s basic financial statements. 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 in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The negative amount of $74,333 reported for Assistance Listing Number (ALN) 32.009, Emergency Connectivity Fund Program grant number ECF202203096 represents a correction of prior year’s federal expenditures that were ineligible and moved to another funding source in the current fiscal year. De Minimis Rate Used: Both Rate Explanation: The City elected not to use the 10 percent de minims indirect cost rate allowed under the Uniform Guidance, except for the Homeland Security Grant Program passed through the California Governor’s Office of Emergency Services (ALN 97.067, Homeland Security Grant Program grant numbers 2020-0095/073-66000, 2021-0081/073-66000, and 2022-0043/073-66000). The ALNs included in the accompanying Schedule were determined based on the federal program name, review of grant contract information, and the Office of Management and Budget’s Catalog of Assistance Listings.
Title: NOTE 5 – SAN DIEGO HOUSING COMMISSION (DISCRETELY PRESENTED COMPONENT UNIT) FEDERAL EXPENDITURES Accounting Policies: Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1.c. in the notes to the City’s basic financial statements. 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 in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The negative amount of $74,333 reported for Assistance Listing Number (ALN) 32.009, Emergency Connectivity Fund Program grant number ECF202203096 represents a correction of prior year’s federal expenditures that were ineligible and moved to another funding source in the current fiscal year. De Minimis Rate Used: Both Rate Explanation: The City elected not to use the 10 percent de minims indirect cost rate allowed under the Uniform Guidance, except for the Homeland Security Grant Program passed through the California Governor’s Office of Emergency Services (ALN 97.067, Homeland Security Grant Program grant numbers 2020-0095/073-66000, 2021-0081/073-66000, and 2022-0043/073-66000). The San Diego Housing Commission (SDHC) federal expenditures of $358,996,226 are excluded from the City’s Schedule because the SDHC federal expenditures are separately audited by other auditors and reported in a separate Uniform Guidance report.
Title: NOTE 6 – ECONOMIC ADJUSTMENT ASSISTANCE PROGRAM (ALN 11.307) Accounting Policies: Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1.c. in the notes to the City’s basic financial statements. 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 in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The negative amount of $74,333 reported for Assistance Listing Number (ALN) 32.009, Emergency Connectivity Fund Program grant number ECF202203096 represents a correction of prior year’s federal expenditures that were ineligible and moved to another funding source in the current fiscal year. De Minimis Rate Used: Both Rate Explanation: The City elected not to use the 10 percent de minims indirect cost rate allowed under the Uniform Guidance, except for the Homeland Security Grant Program passed through the California Governor’s Office of Emergency Services (ALN 97.067, Homeland Security Grant Program grant numbers 2020-0095/073-66000, 2021-0081/073-66000, and 2022-0043/073-66000). In accordance with guidance provided by the U.S. Department of Commerce contained in the OMB Compliance Supplement, the City has reported federal award expenditures of $4,754,965. $3,173,468 out of the $4,754,965 in the Schedule are for the Revolving Loan Fund (RLF) Program under the Economic Adjustment Assistance program. Expenditures reported in the Schedule were calculated as follows:
Title: NOTE 7 – FEDERAL AWARD PROGRAM EXPENDITURES BY GRANT AWARD Accounting Policies: Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1.c. in the notes to the City’s basic financial statements. 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 in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The negative amount of $74,333 reported for Assistance Listing Number (ALN) 32.009, Emergency Connectivity Fund Program grant number ECF202203096 represents a correction of prior year’s federal expenditures that were ineligible and moved to another funding source in the current fiscal year. De Minimis Rate Used: Both Rate Explanation: The City elected not to use the 10 percent de minims indirect cost rate allowed under the Uniform Guidance, except for the Homeland Security Grant Program passed through the California Governor’s Office of Emergency Services (ALN 97.067, Homeland Security Grant Program grant numbers 2020-0095/073-66000, 2021-0081/073-66000, and 2022-0043/073-66000). The following table presents the expenditures for the City’s federal award programs when there are multiple grant awards.
Title: NOTE 8 – WATER INFRASTRUCTURE FINANCE AND INNOVATION (WIFIA) LOAN AGREEMENT Accounting Policies: Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for grants accounted for in the governmental fund types and the accrual basis of accounting for grants accounted for in the proprietary fund types, as described in Note 1.c. in the notes to the City’s basic financial statements. 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 in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The negative amount of $74,333 reported for Assistance Listing Number (ALN) 32.009, Emergency Connectivity Fund Program grant number ECF202203096 represents a correction of prior year’s federal expenditures that were ineligible and moved to another funding source in the current fiscal year. De Minimis Rate Used: Both Rate Explanation: The City elected not to use the 10 percent de minims indirect cost rate allowed under the Uniform Guidance, except for the Homeland Security Grant Program passed through the California Governor’s Office of Emergency Services (ALN 97.067, Homeland Security Grant Program grant numbers 2020-0095/073-66000, 2021-0081/073-66000, and 2022-0043/073-66000). In November 2018, the City and the U.S. Environmental Protection Agency (USEPA) executed the WIFIA Program loan in the amount of up to $614,000,000 payable from the Net System Revenues of the Water Utility Fund for the first phase of the Pure Water project. In September 2020, the City and USEPA executed another agreement to replace the previous agreement, with a majority of the terms staying exactly the same, but with a lower interest rate of 1.29%. Construction is anticipated to be completed in March 2027 with annual principal and interest payments on this loan commencing in August, 2024 through August, 2057. For the fiscal year ended June 30, 2024, the City received and expended $183,463,144 from the USEPA related to ALN 66.958. The outstanding loan balance as of June 30, 2024 is $372,680,411.

Finding Details

Finding 2024-001
Finding 2024-001: Federal Funding Accountability and Transparency Act – Significant Deficiency Program: Community Development Block Grants/Entitlement Grants Program Assistance Listing No.: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Award No.: B-23-MC-06-0542 Category of Finding: Reporting Criteria or Specific Requirement: As a condition of receiving Federal awards, non-Federal entities agree to comply with laws, regulations, and the provisions of grant agreements and contracts, and to maintain internal control to provide reasonable assurance of compliance with these requirements. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). In addition, Title 2 CFR Appendix A to Part 170 a.2.ii. requires that for subaward information, [the City] needs to report no later than the end of the month following the month in which the obligation was made. Condition: For the Community Development Block Grants/Entitlement Grants Program, the City did not submit the required key data elements in FSRS in a timely manner. The City did not comply with the requirement to report the information no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award modification was made. The total amount of thirty-one subawards not reported timely was $7,616,069. We selected four subawards for compliance testing noting the wrong obligation date was reported for each subaward tested. The date recorded as the obligation date in FSRS was July 1, 2023 for all four subawards, while based on source documents the obligation dates are August 7, 2023, September 12, 2023, September 19, 2023, and October 3, 2023. Cause: Management’s understanding of reporting of Federal Funding Accountability and Transparency Act relied on expectations from the federal awarding agency (HUD) to ensure timely and accurate submission of the reports. Based on conversations with management, there was a staff vacancy in 2023 of the individual who had access to the FFATA reporting system (FSRS.gov). Management indicated that CDBG guidance regarding the FSRS Roles and Responsibilities found on www.hud.gov states that the HUD Program Office enters the grant award in FSRS and is expected to communicate FSRS reporting timelines and send deadline reminders to grantee recipients. Additionally, this guidance indicates a “prime recipient of a HUD grant” is responsible for reporting subrecipient data in FSRS.gov in accordance with the reporting deadlines communicated for the HUD program office. This was the information available to any new staff intending to understand the reporting process. Controls to ensure timely and accurate submission of reports in the event that the awarding federal agency communications were not provided or received were not designed and implemented to meet the timeliness requirements of the Act. Effect: The City did not have effective controls in place to timely submit report information no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Questioned Costs: None. Context: During our walkthrough of the internal control assessment of the Federal Funding Accountability and Transparency Act (FFATA) reporting for the grant, we had noted there were no evidence of internal control in place to ensure the FFATA reporting was reported timely in the FSRS portal. We requested submission information for all thirty-one new or amended subrecipient agreements executed during FY24. Further, we sampled four of the thirty-one submissions for accuracy of reporting. Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that management establish and maintain effective internal control ensuring timely and accurate submission required under the Federal Funding Accountability and Transparency Act. Management Response: Management believes that the intent of transparency was met with the data staff entered into IDIS and made available on the city’s website and SAM.gov. The fact that the FSRS.gov system has since been retired and integrated into the SAM.gov system acknowledges the need for reducing duplicate recording in favor of an integrated system. Staff’s understanding of the process was in line with available guidance currently still posted on HUD’s website (https://www.hud.gov/sites/dfiles/CPD/documents/CPD_FSRS_Learning_Session_Final_8.26.21.pdf). The City of San Diego did not receive notification of the FSRS deadline from HUD for Fiscal Year (FY) 2024. With regard to the dates entered in the FSRS.gov system, the agreements’ effective dates cover the entire fiscal year, and the awards were approved by our City Council to be in effect for the full fiscal year. Hence, staff entered the date July 1, 2023. Management accepts that going forward, dates should be entered based on the date the agreements are fully executed. Management agrees to include specific FFATA training and procedures in all CDBG manuals and checklists including procedures for compliance, if and when federal agency communication is late or lacking.
Finding 2024-001
Finding 2024-001: Federal Funding Accountability and Transparency Act – Significant Deficiency Program: Community Development Block Grants/Entitlement Grants Program Assistance Listing No.: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Award No.: B-23-MC-06-0542 Category of Finding: Reporting Criteria or Specific Requirement: As a condition of receiving Federal awards, non-Federal entities agree to comply with laws, regulations, and the provisions of grant agreements and contracts, and to maintain internal control to provide reasonable assurance of compliance with these requirements. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). In addition, Title 2 CFR Appendix A to Part 170 a.2.ii. requires that for subaward information, [the City] needs to report no later than the end of the month following the month in which the obligation was made. Condition: For the Community Development Block Grants/Entitlement Grants Program, the City did not submit the required key data elements in FSRS in a timely manner. The City did not comply with the requirement to report the information no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award modification was made. The total amount of thirty-one subawards not reported timely was $7,616,069. We selected four subawards for compliance testing noting the wrong obligation date was reported for each subaward tested. The date recorded as the obligation date in FSRS was July 1, 2023 for all four subawards, while based on source documents the obligation dates are August 7, 2023, September 12, 2023, September 19, 2023, and October 3, 2023. Cause: Management’s understanding of reporting of Federal Funding Accountability and Transparency Act relied on expectations from the federal awarding agency (HUD) to ensure timely and accurate submission of the reports. Based on conversations with management, there was a staff vacancy in 2023 of the individual who had access to the FFATA reporting system (FSRS.gov). Management indicated that CDBG guidance regarding the FSRS Roles and Responsibilities found on www.hud.gov states that the HUD Program Office enters the grant award in FSRS and is expected to communicate FSRS reporting timelines and send deadline reminders to grantee recipients. Additionally, this guidance indicates a “prime recipient of a HUD grant” is responsible for reporting subrecipient data in FSRS.gov in accordance with the reporting deadlines communicated for the HUD program office. This was the information available to any new staff intending to understand the reporting process. Controls to ensure timely and accurate submission of reports in the event that the awarding federal agency communications were not provided or received were not designed and implemented to meet the timeliness requirements of the Act. Effect: The City did not have effective controls in place to timely submit report information no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Questioned Costs: None. Context: During our walkthrough of the internal control assessment of the Federal Funding Accountability and Transparency Act (FFATA) reporting for the grant, we had noted there were no evidence of internal control in place to ensure the FFATA reporting was reported timely in the FSRS portal. We requested submission information for all thirty-one new or amended subrecipient agreements executed during FY24. Further, we sampled four of the thirty-one submissions for accuracy of reporting. Identification of a repeat finding: Not a repeat finding. Recommendation: We recommend that management establish and maintain effective internal control ensuring timely and accurate submission required under the Federal Funding Accountability and Transparency Act. Management Response: Management believes that the intent of transparency was met with the data staff entered into IDIS and made available on the city’s website and SAM.gov. The fact that the FSRS.gov system has since been retired and integrated into the SAM.gov system acknowledges the need for reducing duplicate recording in favor of an integrated system. Staff’s understanding of the process was in line with available guidance currently still posted on HUD’s website (https://www.hud.gov/sites/dfiles/CPD/documents/CPD_FSRS_Learning_Session_Final_8.26.21.pdf). The City of San Diego did not receive notification of the FSRS deadline from HUD for Fiscal Year (FY) 2024. With regard to the dates entered in the FSRS.gov system, the agreements’ effective dates cover the entire fiscal year, and the awards were approved by our City Council to be in effect for the full fiscal year. Hence, staff entered the date July 1, 2023. Management accepts that going forward, dates should be entered based on the date the agreements are fully executed. Management agrees to include specific FFATA training and procedures in all CDBG manuals and checklists including procedures for compliance, if and when federal agency communication is late or lacking.