FAC Explorer

Audit 354021

FY End
2024-09-30
Total Expended
$913,425
Findings
4
Programs
4
Organization: City of Headland (AL)
Year: 2024 Accepted: 2025-04-21
Auditor: Carr Riggs & Ingram LLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
555517 2024-001 Material Weakness - P
555518 2024-002 Material Weakness - I
1131959 2024-001 Material Weakness - P
1131960 2024-002 Material Weakness - I

Programs

ALN Program Spent Major Findings
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $622,563 Yes 2
20.106 Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and Covid-19 Airports Programs $255,294 - 0
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $19,170 - 0
20.600 State and Community Highway Safety $1,237 - 0

Contacts

Name Title Type
DC8VV288MBP7 Heather Shippey Auditee
3347855601 Brian Free Auditor
No contacts on file

Notes to SEFA

Title: Note 1: BASIS OF PRESENTATION Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. The SEFA summarizes the federal expenditures of the City under programs of the federal government for the year ended September 30, 2024. The amounts reported as federal expenditures were obtained from the City’s general ledger. Because the SEFA presents only a selected portion of the operations of the Board, it is not intended to and does not present the financial position and changes in net position of the Board. For purposes of the SEFA, federal awards include all grants, contracts, and similar agreements entered into directly with the federal government and other pass through entities. The City has obtained Assistance Listing (AL) numbers to ensure that all programs have been identified in the SEFA. AL numbers have been appropriately listed by applicable programs. Federal programs with different AL numbers that are closely related because they share common compliance requirements are defined as a cluster by the Uniform Guidance. One cluster is identified in the SEFA as follows: Highway Safety Cluster – Includes awards that assist cities in providing a coordinated national highway safety program to reduce traffic accidents, death, injuries and property damage.
Title: Note 3: RELATIONSHIP OF THE SEFA TO FINANCIAL REPORTS Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. The amounts reflected in the financial reports submitted to the awarding Federal, State and/or pass-through agencies and the SEFA may differ. Some of the factors that may account for any difference include the following: • The City’s fiscal year end may differ from the program's year end. • Accruals recognized in the SEFA, because of year-end procedures, may not be reported in the program financial reports until the next program reporting period. • Fixed asset purchases and the resultant depreciation charges are recognized as fixed assets in the City's financial statements and as expenditures in the program financial reports
Title: Note 5: CONTINGENCIES Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. Grant monies received and disbursed by the City are for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowed expenditures. Based upon prior experience, management does not believe that such disallowance, if any, would have a material effect on the financial position of the Board. As of September 30, 2024, there were no material questioned or disallowed costs as a result of grant audits in process or completed.
Title: Note 6: NONCASH ASSISTANCE Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. The City did not receive any federal noncash assistance for the fiscal year ended September 30, 2024
Title: Note 7: SUBRECIPIENTS Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. The City did not provide federal funds to subrecipients for the fiscal year ending September 30, 2024
Title: Note 8: LOANS AND LOAN GUARANTEES Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. The City did not have any loans and loan guarantees required to be reported on the SEFA for the fiscal year ending September 30,2024.
Title: Note 9: FEDERALLY FUNDED INSURANCE Accounting Policies: Note 4: BASIS OF ACCOUNTING This Schedule was prepared on the modified accrual basis of accounting. The modified accrual basis differs from the full accrual basis of accounting in that expenditures for property and equipment are expensed when incurred, rather than being capitalized and depreciated over their useful lives, and expenditures for the principal portion of debt service are expensed when incurred, rather than being applied to reduce the outstanding principal portion of debt, which conforms to the basis of reporting to grantors for reimbursement under the terms of the City of Headland’s (the City) federal grants. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10% de minimums indirect cost rate for the fiscal year ended September 30, 2024. The City did not have any federally funded insurance required to be reported on the SEFA for the fiscal year ending September 30, 2024.

Finding Details

Finding 2024-001
Item 2024-001 Uniform Guidance Written Policies, Procedures and Standards of Conduct U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds Listing #21.027 Year Ended September 30, 2024 Criteria – Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non-Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: • § 200.302 Financial management • § 200.305 Payment Condition – The City does not have written policies, procedures and standards of conduct. Cause – The entity has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Questioned Costs – None noted Effect – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the Commission prepare written policies, procedures, and standards of conduct to include all the required elements as provided in 2 CFR 200, Subparts D & E of the Uniform Guidance. Management’s Response – The City is evaluating the auditor’s recommendations and will implement the necessary corrective action based on a cost benefit analysis.
Finding 2024-002
Item 2024-002 – Suspension and Debarment U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds Listing #21.027 Year Ended September 30, 2024 Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” 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. Condition – Adequate controls were not in place to provide for proper review of covered transactions for suspension and debarment. Covered transactions, over $25,000 paid with grant funding were not reviewed for suspension and debarment. Cause – The City lacked sufficient controls to ensure evidence of compliance with suspension and debarment. Questioned Costs – None noted Effect – Failure to properly verify that a potential vendor has not been suspended or debarred could result in unallowable expenditures and disallowed costs. Recommendation – We recommend that controls should be put into place to better monitor and document the compliance of vendors for suspension and debarment. Management’s Response – The City will implement additional controls to ensure there is evidence of review of covered transactions over $25,000 for suspension and debarment prior to payment. City’s Financial Officer will be responsible for the corrective action and anticipates completion of corrective action will be taken before September 30, 2025.
Finding 2024-001
Item 2024-001 Uniform Guidance Written Policies, Procedures and Standards of Conduct U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds Listing #21.027 Year Ended September 30, 2024 Criteria – Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non-Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: • § 200.302 Financial management • § 200.305 Payment Condition – The City does not have written policies, procedures and standards of conduct. Cause – The entity has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Questioned Costs – None noted Effect – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the Commission prepare written policies, procedures, and standards of conduct to include all the required elements as provided in 2 CFR 200, Subparts D & E of the Uniform Guidance. Management’s Response – The City is evaluating the auditor’s recommendations and will implement the necessary corrective action based on a cost benefit analysis.
Finding 2024-002
Item 2024-002 – Suspension and Debarment U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds Listing #21.027 Year Ended September 30, 2024 Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” 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. Condition – Adequate controls were not in place to provide for proper review of covered transactions for suspension and debarment. Covered transactions, over $25,000 paid with grant funding were not reviewed for suspension and debarment. Cause – The City lacked sufficient controls to ensure evidence of compliance with suspension and debarment. Questioned Costs – None noted Effect – Failure to properly verify that a potential vendor has not been suspended or debarred could result in unallowable expenditures and disallowed costs. Recommendation – We recommend that controls should be put into place to better monitor and document the compliance of vendors for suspension and debarment. Management’s Response – The City will implement additional controls to ensure there is evidence of review of covered transactions over $25,000 for suspension and debarment prior to payment. City’s Financial Officer will be responsible for the corrective action and anticipates completion of corrective action will be taken before September 30, 2025.