Audit 372580

Finding 2023-001: Material Weakness - Untimely Audit Submission in Accordance with OMB Uniform Guidance Federal Grantor: U.S. Department of Treasury Passed-through: City and County of Sacramento Compliance Requirement: Reporting Condition: The Chamber did not electronically submit their December 31, 2023 Single Audit reporting package (Single Audit Report, Data Collection Form, Status of Prior Year Findings, and a Corrective Action Plan) within the required time period. Criteria: The Chamber was required to submit its December 31, 2023 audited financial statements and single audit reporting package to the federal audit clearinghouse no later than September 30, 2024, 9 months after the fiscal year-end (2 Code of Federal Regulations 200.512(a)). Cause: The Chamber was not able to complete its single audit by the reporting deadline due to staff shortages. Effect: Federal awarding agencies may deny the Chamber future federal awards or subject the Chamber to additional monitoring requirements. Recommendation: We recommended that management strengthen the related internal controls over monitoring of its year-end reconciliation of its financial statements to ensure that the general ledger accounts reflect proper and complete activity consistent with their basis of accounting. We believe that reviews, evaluations of transactions, and reconciliations of accounts should be performed on a regular basis during the year. This would expedite the year-end closing process and ensure compliance with the audit report submission requirements of OMB Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing processes to ensure timely close-out of the books.

Finding 2023-002: Material Weakness – Revised Schedule of Expenditures of Federal Awards Federal Grantor: U.S. Department of Treasury Passed-through: City and County of Sacramento Compliance Requirement: Reporting Condition: Expenditures reported on the SEFA were revised during the single audit. Criteria: Per 2 CFR § 200.510(b), the SEFA must include a complete and accurate accounting of all federal awards expended during the fiscal year, including correct CDFI numbers, program names, and total expenditures. Cause: The issues appear to result from a lack of comprehensive review and reconciliation procedures during SEFA preparation. Effect: Incomplete and inaccurate SEFA reporting leads to noncompliance with Uniform Guidance and increases the risk of omitted federal programs, incorrect major program determination, and errors in reporting to federal oversight agencies. Recommendation: The Chamber needs to strengthen internal control over SEFA preparation by implementing a formal review process, verifying expenditures are properly reported. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing a better review process that will be effective in 2025.

Finding 2023-003: Material Weakness and Questioned Cost – Grant Claim Support Federal Grantor: U.S. Department of Treasury Passed-through: City and County of Sacramento Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the City and County of Sacramento. The amounts billed were more than the general ledger detail supported. Criteria: A reconciliation of grant project expenses to the grant revenue billed should be performed. The supporting documentation of any reconciling items should be maintained with the grant bills. Also, 2 CFR 200.400 states that accounting practices of the entity be consistent with cost principals required under the CFR and support the accumulation of costs and provide adequate documentation to support costs charged to the Federal award. Cause: The Chamber billed costs to the grant that were not allocated in the accounting system to that grant and a reconciliation was not performed comparing the grant billings to the expense detail. Effect: The expenses billed to the grant may not be correct. Recommendation: The Chamber needs to ensure that expenses to be reimbursed by federal grant funds are recorded in the class code in the accounting system for that grant so that federal grant revenue in the accounting system match the expenses allocated to that grant. The Chamber needs to include in their year-end reconciliations a comparison of grant revenue and expense and ensure they match or can be reconciled. Views of Responsible Officials and Planned Corrective Action: The Chamber agrees with this finding and is in the process of implementing a system for improved grant tracking.

Finding 2023-004: Significant Deficiency – Payroll Allocations Federal grantor: U.S. Department of Treasury Passed-through: City and County of Sacramento Compliance Requirement: Allowable Costs Condition: The allocation of payroll costs to programs are done manually using spreadsheets instead of done based on entity-wide timesheets. Criteria: Under 2 CFR 200.400, direct cost allocation principles state that if a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then the costs may be allocated or transferred to benefitted projects on any reasonable documented basis. Further, a cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. Costs are required to be adequately documented. Cause: The Chamber is not able to readily determine the amount of payroll costs billable to the grants. Effect: The approach of manually allocating payroll costs to grant projects leaves room for error, and makes it difficult to determine that costs are not being reimbursed by more than one source. Recommendation: The Chamber needs to prepare time studies or require employees to prepare timesheets on an automated system to support the payroll costs allocated to programs. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with the finding and is in the process of implementing a better time and expense tracking system that will be effective in 2024.