Audit 371801

Reporting Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027) Criteria: Internal controls should be in place to ensure the reporting requirements of the grant are timely and accurately completed. Condition: The City is required to complete quarterly project & expenditure reporting for the Coronavirus State and Local Fiscal Recovery Funds (CLSFRF). These reports are to include the current period’s obligations and expenditures. Context/Cause: During the testing of the current year reports, it was noted the City’s process for identifying the current period’s obligations and expenditures did not include procedures to identify any expenditures which were made without purchase orders. As such, there payments made to local beneficiary non-profits which did not include a purchase order, and therefore were not included in the reports. Effects: In accordance with the guidance from US Treasury on report corrections, any errors in the reporting period that is closed are to be made in a future reporting quarter. As such, the error on the reporting in the year ended June 30, 2024, will be corrected in subsequent reporting periods. Recommendation: We recommend the City ensure the project & expenditure reports are reconciled each quarter to the expenditures reported in the City’s ARPA Fund to ensure the accuracy and completeness of the reporting required by the grant. Auditee’s Response: We will ensure future reports include all previously omitted expenditures and work to implement controls sufficient to reconcile the programmatic reporting to the general ledger on a quarterly basis.

Internal Control Documentation Related to Allowable Activities, Allowable Costs, Period of Performance, and Procurement Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing No. 21.027) Criteria: The City is required to maintain effective internal controls over compliance with the requirements of federal awards. These controls are essential to provide reasonable assurance that the City can comply with federal statutes, regulations, and the terms and conditions of its federal awards, as outlined in the Uniform Guidance (2 CFR Part 200). Condition: During our testing of the City’s internal controls over compliance, we noted several instances where the City was unable to provide auditable evidence of compliance. Specifically, for a sample of transactions tested, either the documentation did not include evidence of required approval, or the supporting documentation was not available for review. Context/Cause: The City’s internal controls over compliance were not operating effectively during the audit period. The lack of adherence to established procedures resulted in a breakdown of the control environment. This breakdown allowed transactions to be processed and recorded without complete documentation, preventing us from verifying that the transactions were appropriate and complied with the City's internal control policies. The absence of documentation and approvals is a direct result of the City’s failure to enforce its internal controls. Effects: While the lack of auditable evidence creates a risk that the City's transactions may not be in compliance with the requirements of its federal awards, we did not identify any instances of noncompliance. Without proper documentation and approval, we cannot verify the City complied with their internal policies and procedures surrounding the allowable activities & cost (3 instances from 40 items tested), period of performance (3 instances from 40 items tested), and procurement (1 of 8 items tested) requirements for this program. This type of breakdown in controls could lead to questioned costs, potential repayment of federal funds, or other corrective actions by the grantor agency. Recommendation: We recommend the City review its internal control procedures and implement enhanced monitoring to ensure all transactions are properly documented and include evidence of approval. The City should require all personnel responsible for federal award compliance to receive training on the importance of maintaining proper documentation and the risks associated with non-compliance. This includes ensuring all documentation is readily available and accessible for audit and review.