FAC Explorer

Audit 352165

FY End
2024-06-30
Total Expended
$770,294
Findings
2
Programs
1
Organization: City of Scotts Valley (CA)
Year: 2024 Accepted: 2025-03-31
Auditor: Badawi & Associates CPAS

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
553483 2024-001 Material Weakness - L
1129925 2024-001 Material Weakness - L

Programs

ALN Program Spent Major Findings
14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants $770,294 Yes 1

Contacts

Name Title Type
SHZSAMUA2K86 Stephanie Hill Auditee
8314405600 Ahmed Badawi Auditor
No contacts on file

Notes to SEFA

Title: A. Reporting Entity Accounting Policies: Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis indirect cost rate. The Schedule of Expenditure of Federal Awards (the Schedule) includes expenditures of federal awards for the City of Scotts Valley, California as disclosed in the notes to the Basic Financial Statements.
Title: B. Basis of Accounting Accounting Policies: Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis indirect cost rate. Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred.
Title: C. Relationship of Schedule of Expenditures of Federal Awards to Financial Statements Accounting Policies: Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis indirect cost rate. The accompanying Schedule presents the activity of all federal financial assistance programs of the City. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through the State of California is included in the Schedule. The Schedule was prepared only from the accounts of various grant programs and, therefore, does not present the financial position or results of operations of the City.
Title: D. Pass-Through Entities’ Identifying Number Accounting Policies: Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis indirect cost rate. When federal awards were received from a pass-through entity, the Schedule shows, if available, the identifying number assigned by the pass-through entity. When no identifying number is shown, the City determined that no identifying number is assigned for the program, or the City was unable to obtain an identifying number from the pass-through entity.
Title: E. Indirect Costs Accounting Policies: Funds received under the various grant programs have been recorded within the general, special revenue, and capital projects funds of the City. The City utilizes the modified accrual basis of accounting for the general, special revenue, and capital projects funds. Expenditures of federal awards reported on the Schedule of Expenditures of Federal Awards (Schedule) are recognized when incurred. De Minimis Rate Used: N Rate Explanation: The City did not elect to use the 10% de minimis indirect cost rate. The City did not elect to use the 10% de minimis indirect cost rate.

Finding Details

Finding 2024-001
Criteria: The grant requires that the performance report along with Federal Financial report be submitted to DRGR system every six months. Condition: For the year 2024, the City was required to submit two performance reports and Federal Financials reports, however city failed to submit any report. Cause: The City missed the deadline for the submission of the report. Context and Effect: Timely submission of the Performance report and Federal financial report is one of the grant requirements. Failure to meet this deadline impacts the City’s compliance with the grant requirements and may affect future funding. Recommendation: We recommend the City implement strong internal controls to ensure that all reporting requirements are met within the prescribed timelines. Management Response: The grant was executed in October 2023, making the first reporting period to start January 2024. The City was unable to access the DRGR portal until late April 2024. During this period, the City maintained regular communication with the HUD representative . After gaining access the data was entered into the portal and the City has remained in communications with HUD representatives. While the report was entered, there are additional steps to be able to submit. The City is actively working with DRGR staff to resolve a system issue that is not allowing us to complete the submitting process. To date, the City has not received any notification from HUD indicating that the performance reports are overdue, and they have been able to proceed with processing the reimbursement requests. The City has gained better knowledge in relation to the steps for full report submissions on the DRGR website and has strengthened internal controls on reporting requirements, and grants management in general to avoid cases like this in the future
Finding 2024-001
Criteria: The grant requires that the performance report along with Federal Financial report be submitted to DRGR system every six months. Condition: For the year 2024, the City was required to submit two performance reports and Federal Financials reports, however city failed to submit any report. Cause: The City missed the deadline for the submission of the report. Context and Effect: Timely submission of the Performance report and Federal financial report is one of the grant requirements. Failure to meet this deadline impacts the City’s compliance with the grant requirements and may affect future funding. Recommendation: We recommend the City implement strong internal controls to ensure that all reporting requirements are met within the prescribed timelines. Management Response: The grant was executed in October 2023, making the first reporting period to start January 2024. The City was unable to access the DRGR portal until late April 2024. During this period, the City maintained regular communication with the HUD representative . After gaining access the data was entered into the portal and the City has remained in communications with HUD representatives. While the report was entered, there are additional steps to be able to submit. The City is actively working with DRGR staff to resolve a system issue that is not allowing us to complete the submitting process. To date, the City has not received any notification from HUD indicating that the performance reports are overdue, and they have been able to proceed with processing the reimbursement requests. The City has gained better knowledge in relation to the steps for full report submissions on the DRGR website and has strengthened internal controls on reporting requirements, and grants management in general to avoid cases like this in the future