2024-009 U.S. Department of Agriculture, For the period July 1, 2023, through June 30, 2024, Assistance Listing #10.553, 10.555, 10.556, 10.559, and 10.582 - Internal Controls over Child Nutrition Cluster Criteria: The School Department receives federal reimbursement for free and reduced price meals provided to children at established reimbursement rates. Monthly claims for reimbursement must be based on lunch counts taken daily at the point of service, which correctly identify the number of free, reduced price, and paid lunches served to eligible students. Condition: There was no internal control process in place to ensure the monthly claim details are reviewed prior to submission to the CNPWeb system. A new control process has been created for fiscal year 2025, but this was not in place during fiscal year 2024. Cause: The Business Manager approves all monthly claims in the CNPWeb system prior to submission to the State. However, the School Department does not have a procedure to provide supporting claim documentation to the Business Manager to verify the accuracy of the monthly claim. Effect: Errors in monthly claims may be incorrect and may not be detected and corrected in a timely basis resulting in potential questioned costs. Recommendation: We recommend the School Department follow their newly established policies and procedures for fiscal year 2025 to ensure the Business Manager has adequate supporting documentation to verify monthly nutrition claims before they are submitted to the State. Questioned Costs: None.
2024-008 U.S. Department of Housing and Urban Development, For the period July 1, 2023, through June 30, 2024, ALN # 14.218 – Internal Controls over Community Development Block Grant Entitlements Cluster Criteria: Federal regulations require grantees to maintain accurate financial records and submit timely reports. Specifically, HUD guidance for the PR-29 Cash on Hand Quarterly Report requires submission within 30 days of the end of each quarter and accurate reporting of program income balances. In addition, Uniform Guidance requires the City to have adequate internal controls over grant management. Condition: The City submitted the required PR-29 Cash on Hand Quarterly Reports late for all quarters reviewed. Specifically, all quarterly reports were submitted after the 30-day deadline following the end of the reporting period. Additionally, the beginning balance of program income was reported incorrectly for all quarters reviewed, resulting in inaccurate financial reporting to the U.S. Department of Housing and Urban Development (HUD). In addition, we found there was no secondary review of either the PR-29 Cash on Hand Quarterly Report or the PR-26 Financial Summary Report. Cause: The delays and inaccuracies were due to insufficient oversight, a lack of formalized timelines for report preparation and submission, staff turnover, and inadequate reconciliation of balances prior to report completion. Effect: The City did not comply with HUD’s reporting requirements for the PR-29 Cash on Hand Quarterly Report, which may impair program oversight and transparency. Late and inaccurate reporting can hinder HUD’s ability to monitor program performance and financial management. In addition, lack of review procedures increases the risk of untimely or inaccurate reporting. Recommendation: We recommend the City: • Establish and enforce internal deadlines to ensure timely submission of required reports. • Implement a reconciliation and review process to verify the accuracy of reported balances prior to submission. • Provide training to staff responsible for preparing and reviewing HUD reports to ensure compliance with federal requirements. Questioned Costs: none
2024-010 U.S. Department of Housing and Urban Development, For the period July 1, 2023, through June 30, 2024, ALN # 14.218 – Internal Controls over Community Development Block Grant Entitlements Cluster Criteria: In accordance with 24 CFR § 570.506, when CDBG and CDBG-CV funds are used for rehabilitation, the grantee must ensure the work is properly completed in accordance with applicable laws, codes and other requirements relating to housing safety, quality, or habitability. Pre-rehabilitation inspections are conducted to identify the deficiencies to be corrected. Deficiencies noted in the pre-rehabilitation inspections are required to be incorporated into the rehabilitation contract. Condition: During the audit period, it was noted that the City failed to retain documentation of pre-rehabilitation inspection reports for multiple CDBG-funded rehabilitation projects. These reports are essential to verify the initial condition of the properties and to support the justification for the scope of work and use of federal funds. Cause: The missing documentation was attributed to staff turnover within the City. Key personnel responsible for maintaining and organizing project files departed during the project period, and adequate transition procedures were not in place to ensure continuity of recordkeeping. Effect: Although formal pre-rehabilitation inspection reports were not retained, there was evidence that inspections were conducted. Specifically, deficiencies identified during inspections were incorporated into the scope of work outlined in the City’s contract with the grant recipient. However, the absence of formal documentation limits the ability to fully verify compliance with federal recordkeeping requirements and may result in questioned costs if eligibility cannot be clearly substantiated. Recommendation: We recommend the City implement procedures to ensure consistent documentation of preliminary inspections, including standardized templates and centralized digital storage. Staff should be cross-trained, and transition protocols should be established to maintain continuity during personnel changes. The City should ensure future inspections are properly recorded and retained. Questioned Costs: none
2024-011 U.S. Department of Housing and Urban Development, For the period July 1, 2023, through June 30, 2024, ALN # 14.239– HOME Investment Partnerships Program Criteria: Per 2 CFR §200.331(b), pass-through entities must evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. Furthermore, 2 CFR §200.332(d) requires pass-through entities to follow up on any audit findings identified in subrecipients’ Single Audit reports that pertain to the federal award. Condition: The City did not perform a documented risk assessment of subrecipients under the HOME program to determine the appropriate level and type of monitoring. Additionally, the City did not obtain or review subrecipients’ Single Audit reports to identify and follow up on any findings related to the HOME program. Two of the four contracts with expenditures in fiscal year 2024 were tested. Cause: The City has not established formal procedures to assess subrecipient risk or to review and follow up on audit findings related to the HOME program. Effect: Without a documented risk assessment and review of subrecipient audit reports: • The City may not tailor its monitoring procedures appropriately, increasing the risk of undetected noncompliance. • Potential issues identified in subrecipient audits may go unaddressed, jeopardizing the integrity of the program and federal funding. Recommendation: The City should implement formal procedures to conduct and document risk assessments for all subrecipients of the HOME program, obtain and review subrecipient Single Audit reports annually, follow up on any findings related to the HOME program to ensure corrective actions are taken. Questioned Costs: none
2024-006 U.S. Department of the Treasury, For the period July 1, 2023, through June 30, 2024, Assistance Listing #21.027 – Internal Controls over State and Local Fiscal Recovery Fund Criteria: As a recipient of State and Local Fiscal Recovery Funds (SLRF), the City is required to submit quarterly Project and Expenditure Reports to the U.S. Department of the Treasury. These submissions report cumulative and quarterly obligations and expenditures by project, project income, and subaward and vendor information. Condition: During the audit of the SLFRF program, it was noted that the City submitted expenditure reports containing inaccurate financial data. Several reported amounts did not reconcile with the underlying accounting records, resulting in material misstatements in the quarterly project and expenditure reports submitted to the U.S. Department of the Treasury. Cause: The inaccuracies were primarily due to the volume and complexity of City projects funded under the CSLFRF program. The decentralized nature of project management and reporting across departments contributed to challenges in compiling accurate and complete expenditure data. Effect: Inaccurate reporting may impair transparency and accountability and could affect future oversight actions by the federal awarding agency. Recommendation: We recommend that the City enhance its internal controls over SLFRF reporting by implementing centralized review procedures, improving coordination among departments, and providing additional training to staff responsible for compiling and submitting expenditure reports. We also recommend a secondary review of the reported encumbrances and expenditures by an individual in the accounting department before the report is transmitted to the Treasury. Questioned Costs: None.
2024-007 U.S. Department of the Treasury, For the period July 1, 2023, through June 30, 2024, Assistance Listing #21.027 – Internal Controls over State and Local Fiscal Recovery Fund Criteria: As required under 2 CFR §200.320, the City must follow Federal procurement standards to ensure contracts are procured at the lowest price and with adequate competition. In addition, as required by 2 CFR §180.300, the City is not allowed to use grant funds to contract with vendors who are suspended or disbarred from receiving Federal funds. Condition: Of the six contracts tested under the SLFRF program: • Three contracts lacked documentation demonstrating that appropriate bidding procedures were followed or that a cost or price analysis was performed prior to award. • Two contracts had no evidence that suspension and debarment procedures were followed, such as checking the System for Award Management (SAM.gov) or obtaining certifications from contractors. Cause: The City’s procurement documentation practices were inconsistent across departments. The high volume of SLFRF-funded projects and decentralized contract management contributed to lapses in maintaining required procurement records and verifying contractor eligibility. Effect: The City did not comply with federal procurement standards, increasing the risk of awarding contracts to ineligible vendors, procuring contracts with unfavorable terms, and potentially incurring unallowable costs. Recommendation: We recommend the City strengthen its procurement procedures by: • Ensuring all departments consistently document bidding processes and cost/price analyses. • Implementing centralized oversight or checklists to verify compliance with suspension and debarment requirements. • Providing targeted training to procurement staff on federal requirements under the Uniform Guidance. Questioned Costs: None.