Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal Program Information:
Funding Agency: Department of the Treasury
Title: Coronavirus State and Local Fiscal Recovery Fund Program
Assistance Listing Number: 21.027
Compliance Requirement: Reporting
Award Year: July 1, 2022 to June 30, 2023
Condition: During our audit, we noted that the Project and Expenditures Report was not submitted to the
Department of the Treasury in a timely manner.
Criteria: The City must fill out and submit the Project and Expenditures Report by April 30 of each fiscal year
that they receive Coronavirus State and Local Fiscal Recovery Funds (2 CFR 200.328 & 31 CFR
section35.4(c)).
Effect: The City did not submit its required annual report for the fiscal year 2023.
Questioned Costs: None
Cause: The City had turnover in its upper management that handled this duty during the time that the report
was due to be submitted and so it was never completed.
Auditors’ Recommendation: We recommend that the City ensure that it has more than one position
responsible for submitting these annual reports to the federal government to ensure that they are always
completed even if one position is vacant.
Agency’s Response: The City of acknowledges the audit finding regarding the untimely submission of the
Project Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. The
report for fiscal year 2023 was not submitted due to turnover in upper management and the grants manager
position, resulting in the report being neither completed nor submitted during that time.
Since taking office in fiscal year 2024, the current Finance Director has prioritized compliance with federal
reporting requirements. As of fiscal year 2025, all required project and expenditures reporting has been
completed and submitted in accordance with U.S. Department of Treasury guidelines. To prevent future
occurrences, the Finance Department has implemented internal controls ensuring multiple staff members are
responsible for federal reporting. Specifically, both the Finance Director and the Financial Analyst now share
the responsibility and authority to complete and submit these annual reports.
This new process ensures continuity in reporting, even in the event of staff turnover, and strengthens the
City’s commitment to compliance with federal funding requirements. In addition, The City’s Procurement
officer now maintains responsibility for grants from award to reversion date. A tracking file is maintained for
all active grants at the point it is awarded, expended, and reimbursement received to ensure this process is
properly managed. Additionally, the Finance Director oversees this responsibility so there are now multiple
controls to ensure timely completion.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal Program Information:
Funding Agency: Department of the Treasury
Title: Coronavirus State and Local Fiscal Recovery Fund Program
Assistance Listing Number: 21.027
Compliance Requirement: Procurement
Award Year: July 1, 2022 to June 30, 2023
Condition: During our testing of compliance over the Procurement requirements we noted the following:
From review of 2 of the vendors paid with the Coronavirus State and Local Fiscal Recovery Fund
Program that were paid over $60,000 during the year, there was no evidence that the City went
through the proper required procurement process to select the vendors.
Criteria: Per 2 CFR sections 200.318 through 200.327, all procurement functions, including but not limited to
preparation of specifications, solicitation of sources, qualification or disqualification of sources, preparation
and award of contract and contract administration must be done for the vendors used for the federal
expenditures based off the City’s procurement policies and procedures.
Effect: The City violated its established procurement code and may not have obtained the best price for the
goods and services received during the year for the Coronavirus State and Local Fiscal Recovery Fund
Program.
Cause: There was management override and lack of proper training in CPO and accounts payable positions,
and therefore, the process was not properly followed during the fiscal year.
Auditors’ Recommendations: We recommend the City implement policies and procedures as soon as possible
to ensure compliance with procurement requirements pertain to each procurement that occurs during the
fiscal year and no payments are made through direct voucher.
Agency’s Response: Since taking office in fiscal year 2024, the current Finance Director has implemented a
Standard Operating Procedure (SOP) in alignment with the Procurement Policy adopted in 2022 to ensure
compliance with the State Procurement Code, internal controls, and the proper segregation of duties in
procurement. This SOP outlines the specific roles and responsibilities of the Certified Procurement Officer
(CPO), Finance Director, City Manager, and City Council when applicable in the procurement process.
In addition, a procurement workflow has been created to be utilized by the (CPO) to ensure compliance with
the City of Espanola’s procurement policy, the State Procurement Code, and appropriate checks and balances
at varying thresholds. The (CPO) is responsible for ensuring all policies and state procurement laws are
followed throughout the process. Additionally, all documentation from initiation to the issuance of a
Purchase Order (PO) is retained electronically in a complete packet for record-keeping and audit purposes.
In order to address direct payment voucher controls, the City has restricted the use of direct payment
vouchers for high-volume purchases. All procurements must follow the purchase order process, unless an
exception is authorized in accordance with policy. The finance department has also implemented issuing
procurement violations to any department head or staff who authorizes a purchase in the absence of an
approved purchase order, which aligns with the 2022 Adopted Procurement Policy. By enforcing these
measures, the City ensures procurement policy compliance, transparency, and financial accountability,
thereby addressing the audit findings and preventing future violations.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: During our procedures over the Schedule of Expenditures of Federal Awards we noted the City did
not accurately complete a Schedule of Expenditures and Federal Awards for audit purposes in a timely
manner.
The City did not made progress in this area during fiscal year 2023. However, in fiscal year 2025, the City was
able to complete an accurate Schedule of Expenditures of Federal Awars for fiscal year 2023.
Criteria: OMB Uniform Guidance section 200.508 (b) requires auditees in to prepare the schedule of federal
awards in accordance with OMB Uniform Guidance section200.510.
Cause: The City had a large turnover in the finance area and was not required to create a Schedule of Federal
Awards in prior years as they have just recently started receiving federal funding and so they were not
familiar with the process.
Effect: The City is in violation of the Uniform Guidance requirements.
Auditor’s Recommendation: We recommend that the City implement a system to ensure the preparation of the
Schedule of Expenditure and Federal Awards be done in the closing process so that when the audit starts the
Schedule of Expenditure and Federal Awards is ready to be audited and is complete.
Agency’s Response: The City did complete the Schedule of Expenditures of Federal Awards (SEFA) for the year
ended June 30, 2023 (fiscal year 2023) and was not completed timely as a result of staff turnover during fiscal
year 2023. The schedule was completed, and no modifications were noted as a result of audit procedures to
the completeness and accuracy of the SEFA. The City’s Procurement officer now maintains responsibility for
grants from award to reversion date. A tracking file has been created and is maintained for all active grants at
the point of award, expenditure, reimbursement, and close out.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal program information:
Funding agency: All Programs included in SEFA
Title: All Programs included in SEFA
Federal Assistance Listing Number: All Programs included in SEFA
Compliance Requirement Reporting
Award Period: July 1, 2022 to June 30, 2023
Condition: The City’s fiscal year ended June 30, 2023, single audit reporting package was not submitted to the
Federal Audit Clearinghouse within nine months after the end of the audit period.
The City has not made progress in this area during 2023 fiscal year.
Criteria: 2 CFR Section 200.50(c) of the Uniform Guidance requires that the Single Audit reporting package be
submitted within nine months after the end of the audit period.
Effect: The City is not in compliance with reporting requirements of the Uniform Guidance.
Questioned Costs: None
Cause: The City experienced significant turnover during this fiscal year, and it resulted in both operations and
closing of the previous fiscal year to be delayed which made everything late.
Auditors’ Recommendation: We recommend that the City should work to catch up the closing process in order
to ensure that the next year’s audit is performed timely in order for the next year’s audit reporting package to
be submitted by the federal clearing house due date.
Agency’s Response: The City is working to get current with the accounting processes and financials that would
enable the timely performance of the annual financial audit. The Finance Director has contracted a public
accounting firm for assistance to accelerate this process and ensure future timely audit completion. In
addition, the Finance Department has implemented multiple monthly and annual reconciliation processes to
ensure the general ledger is completely accurately and timely. Training of City staff on completion of monthly
processes is ongoing and will continue with oversight by the Finance Director.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal Program Information:
Funding Agency: Department of the Treasury
Title: Coronavirus State and Local Fiscal Recovery Fund Program
Assistance Listing Number: 21.027
Compliance Requirement: Reporting
Award Year: July 1, 2022 to June 30, 2023
Condition: During our audit, we noted that the Project and Expenditures Report was not submitted to the
Department of the Treasury in a timely manner.
Criteria: The City must fill out and submit the Project and Expenditures Report by April 30 of each fiscal year
that they receive Coronavirus State and Local Fiscal Recovery Funds (2 CFR 200.328 & 31 CFR
section35.4(c)).
Effect: The City did not submit its required annual report for the fiscal year 2023.
Questioned Costs: None
Cause: The City had turnover in its upper management that handled this duty during the time that the report
was due to be submitted and so it was never completed.
Auditors’ Recommendation: We recommend that the City ensure that it has more than one position
responsible for submitting these annual reports to the federal government to ensure that they are always
completed even if one position is vacant.
Agency’s Response: The City of acknowledges the audit finding regarding the untimely submission of the
Project Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. The
report for fiscal year 2023 was not submitted due to turnover in upper management and the grants manager
position, resulting in the report being neither completed nor submitted during that time.
Since taking office in fiscal year 2024, the current Finance Director has prioritized compliance with federal
reporting requirements. As of fiscal year 2025, all required project and expenditures reporting has been
completed and submitted in accordance with U.S. Department of Treasury guidelines. To prevent future
occurrences, the Finance Department has implemented internal controls ensuring multiple staff members are
responsible for federal reporting. Specifically, both the Finance Director and the Financial Analyst now share
the responsibility and authority to complete and submit these annual reports.
This new process ensures continuity in reporting, even in the event of staff turnover, and strengthens the
City’s commitment to compliance with federal funding requirements. In addition, The City’s Procurement
officer now maintains responsibility for grants from award to reversion date. A tracking file is maintained for
all active grants at the point it is awarded, expended, and reimbursement received to ensure this process is
properly managed. Additionally, the Finance Director oversees this responsibility so there are now multiple
controls to ensure timely completion.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025
Federal Program Information:
Funding Agency: Department of the Treasury
Title: Coronavirus State and Local Fiscal Recovery Fund Program
Assistance Listing Number: 21.027
Compliance Requirement: Procurement
Award Year: July 1, 2022 to June 30, 2023
Condition: During our testing of compliance over the Procurement requirements we noted the following:
From review of 2 of the vendors paid with the Coronavirus State and Local Fiscal Recovery Fund
Program that were paid over $60,000 during the year, there was no evidence that the City went
through the proper required procurement process to select the vendors.
Criteria: Per 2 CFR sections 200.318 through 200.327, all procurement functions, including but not limited to
preparation of specifications, solicitation of sources, qualification or disqualification of sources, preparation
and award of contract and contract administration must be done for the vendors used for the federal
expenditures based off the City’s procurement policies and procedures.
Effect: The City violated its established procurement code and may not have obtained the best price for the
goods and services received during the year for the Coronavirus State and Local Fiscal Recovery Fund
Program.
Cause: There was management override and lack of proper training in CPO and accounts payable positions,
and therefore, the process was not properly followed during the fiscal year.
Auditors’ Recommendations: We recommend the City implement policies and procedures as soon as possible
to ensure compliance with procurement requirements pertain to each procurement that occurs during the
fiscal year and no payments are made through direct voucher.
Agency’s Response: Since taking office in fiscal year 2024, the current Finance Director has implemented a
Standard Operating Procedure (SOP) in alignment with the Procurement Policy adopted in 2022 to ensure
compliance with the State Procurement Code, internal controls, and the proper segregation of duties in
procurement. This SOP outlines the specific roles and responsibilities of the Certified Procurement Officer
(CPO), Finance Director, City Manager, and City Council when applicable in the procurement process.
In addition, a procurement workflow has been created to be utilized by the (CPO) to ensure compliance with
the City of Espanola’s procurement policy, the State Procurement Code, and appropriate checks and balances
at varying thresholds. The (CPO) is responsible for ensuring all policies and state procurement laws are
followed throughout the process. Additionally, all documentation from initiation to the issuance of a
Purchase Order (PO) is retained electronically in a complete packet for record-keeping and audit purposes.
In order to address direct payment voucher controls, the City has restricted the use of direct payment
vouchers for high-volume purchases. All procurements must follow the purchase order process, unless an
exception is authorized in accordance with policy. The finance department has also implemented issuing
procurement violations to any department head or staff who authorizes a purchase in the absence of an
approved purchase order, which aligns with the 2022 Adopted Procurement Policy. By enforcing these
measures, the City ensures procurement policy compliance, transparency, and financial accountability,
thereby addressing the audit findings and preventing future violations.
Responsible Parties: The Director of Finance.
Timeline: June 30, 2025