Audit 368234

Assistance Number: 16.753 Congressionally Recommended Awards (CRA) Year: 2024 Name of Federal Agency: U.S. Department of Justice Name of Pass-Thru Agency: Direct award Type of Compliance Finding: B – Allowable Costs/Cost Principles Condition: 2 CFR Part 200, section 200.510 requires the City to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the financial statements. The City’s Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2024, included expenditures that were incurred in the prior fiscal year. These prior year expenditures were not reported on the 2023 SEFA and incorrectly reported in the current year Criteria: An entity that expends federal awards must have controls in place that would enable the entity to prepare a SEFA including controls that determine the accuracy of the amount of expenditures reported for each federal program. In accordance with 2 CFR §200.502(a), expenditures are to be reported on the SEFA in the fiscal year in which the activity related to the federal award occurs. Questioned Costs: N/A Context: The City did not report $705,791 of expenses on the 2023 SEFA and instead reported these amounts on the 2024 SEFA. Cause: The error occurred due to inadequate review procedures over the preparation of the SEFA. Specifically, the City did not reconcile SEFA amounts to program reports to ensure expenditures were reported correctly at year-end. Effect: The SEFA understated expenditures in the prior year and overstated expenditures in the current year, potentially misleading federal agencies and pass-through entities about the City’s use of federal funds. This could impact risk assessments, reporting accuracy, and decisions regarding future funding. The lack of an accurate and complete SEFA could lead to grant noncompliance and noncompliance with Subpart F, Audit Requirements, of 2 CFR Part 200. Recommendation: We recommend the City strengthen its SEFA preparation and review process by: • Reconciling federal expenditures reported on the SEFA to the general ledger by program and grant year. • Implementing a secondary review to verify that no prior year expenditures are included in current year reporting. • Providing staff with training on SEFA preparation requirements under 2 CFR Part 200. Views of Responsible Officials (Unaudited): City leadership agrees with the auditor’s finding and appreciates the recommendations for improvements. The same root causes identified in Finding 2024-003 – system transition, staff turnover, and decentralized grant management – contributed to this compliance issue. The City recognizes the need for stronger internal controls, centralized oversight, and consistent review of grant management.

Assistance Number: 16.753 Congressionally Recommended Awards (CRA) Year: 2024 Name of Federal Agency: U.S. Department of Justice Name of Pass-Thru Agency: Direct award Type of Compliance Finding: I – Procurement and Suspension and Debarment Condition: During our testing, we noted that the City did not perform or document required suspension and debarment checks for certain vendors and contractors paid with federal funds. The City did not obtain or retain evidence, such as a certification from the vendor or a verification from the System for Award Management (SAM), to ensure that vendors were not suspended, debarred, or otherwise excluded from federal programs. Criteria: The Uniform Guidance (2 CFR §200.213) requires non-federal entities to ensure that federal funds are not awarded to or expended with parties that are suspended, debarred, or otherwise excluded. This requirement can be satisfied by obtaining a vendor certification or by checking the SAM.gov system prior to entering into a covered transaction. Questioned Costs: N/A Context: The City did not document the suspension and debarment check on one of the five transactions tested. The sample size was determined based upon guidelines provided by the AICPA which is not a statistically valid sample. Cause: The City did not have adequate procedures in place to ensure that suspension and debarment checks were consistently performed and documented. Effect: Without performing suspension and debarment checks, the City risks expending federal funds on ineligible vendors, which could result in questioned costs and potential repayment of federal funds. Recommendation: We recommend that the City implement procedures to ensure suspension and debarment checks are performed for all covered transactions and that evidence of such checks is retained in the procurement files. Views of Responsible Officials (Unaudited): The City is in agreement with the finding and appreciates the auditor’s recommendations for improvements. While federal contract compliance language is included in agreements that are being paid with federal funds, this case occurred because the original contract (2020) predated knowledge that federal funds would later be applied (2022). The oversight highlights the need for additional training and coordination to ensure procurement and legal staff are notified whenever federal funding is applied to an existing contract or amendment.

Assistance Number: 93.493 Mobile Integrated Health Year: 2024 Name of Federal Agency: U.S. Department of Health and Human Services Name of Pass-Thru Agency: Direct award Type of Compliance Finding: I – Procurement and Suspension and Debarment Condition: During our testing, we noted that the City did not perform or document required suspension and debarment checks for certain vendors and contractors paid with federal funds. The City did not obtain or retain evidence, such as a certification from the vendor or a verification from the System for Award Management (SAM), to ensure that vendors were not suspended, debarred, or otherwise excluded from federal programs. Criteria: The Uniform Guidance (2 CFR §200.213) requires non-federal entities to ensure that federal funds are not awarded to or expended with parties that are suspended, debarred, or otherwise excluded. This requirement can be satisfied by obtaining a vendor certification or by checking the SAM.gov system prior to entering into a covered transaction. Questioned Costs: N/A Context: The City did not document the suspension and debarment check on one of four transactions tested. The sample size was determined based upon guidelines provided by the AICPA which is not a statistically valid sample. Cause: The City did not have adequate procedures in place to ensure that suspension and debarment checks were consistently performed and documented. Effect: Without performing suspension and debarment checks, the City risks expending federal funds on ineligible vendors, which could result in questioned costs and potential repayment of federal funds. Recommendation: We recommend that the City implement procedures to ensure suspension and debarment checks are performed for all covered transactions and that evidence of such checks is retained in the procurement files. Views of Responsible Officials (Unaudited): The City is in agreement with the finding and appreciates the auditor’s recommendations for improvements. While the City does have standard procedures in place to prevent this issue from happening, this payment was made under a competition exception process that did not provide the procurement or legal team an opportunity to ensure compliance with the Uniform Guidance. This issue highlighted a need for stronger training and enhanced internal controls to capture nontraditional purchases funded with federal dollars and ensure that all purchases with federal funds follow a competitive procurement process.