Audit 37900

Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021/22 Grant Number: N/A Compliance Requirement: Other Type of Finding: Significant Deficiency in Internal Control Criteria: Title 2 CFR Section 200.303(a) of the Uniform Guidance requires all non-federal entities establish and maintain effective internal control over federal awards to provide reasonable assurance that the non-federal entity is managing the federal award in compliance with the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During the audit, it was noted the preparation of the schedule of expenditures of federal awards (SEFA) lacked evidence of review. Cause: The City?s internal controls did not allow for evidence of review of the SEFA. Effect: The SEFA lacked evidence of review, which increases the risk of error or misstatement. Questioned Costs: None reported. Context: The condition was noted during our procedures related to internal controls over the SEFA. Repeat Finding from Prior Year: No Recommendation: We recommend the City establish procedures to ensure evidence of review exists over the SEFA. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021/22 Grant Number: N/A Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control and Instance of Noncompliance Criteria: The OMB Compliance Supplement requires that reports submitted to the federal awarding agency include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements. The City of Laguna Hills (the City) must submit annual Project and Expenditure Reports that contain costs incurred during the covered period. Critical information includes: ? Obligations and Expenditures o Current period obligation o Cumulative obligation o Current period expenditure o Cumulative expenditure ? Subawards ? Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient that are greater than $50,000. For amounts less than $50,000, the recipient must report in the aggregate for these same categories of loans issued; contracts and grants awarded; transfers made to other government entities and direct payments made by the recipient. Condition: Expenditure information was reported inaccurately. Cause: The City of Laguna Hills did not have adequate internal controls to ensure the Project and Expenditure Report was prepared in accordance with governing requirements. Effect: Inaccurate information was reported to the federal awarding agency. Questioned Costs: None Context/Sampling: The entire population of one Project and Expenditure Report submitted during the year was selected for testing. The cumulative impact is as follows: Period Ended March 31, 2022 Originally Reported Actual Obligations and Expenditures: Current Period Obligations $0 $7,465,378 Period Ended March 31, 2022 Originally Reported Actual Obligations and Expenditures: Current Period Expenditures $0 $3,732,688 Repeat Finding from Prior Year: No Recommendation: We recommend the City enhance internal controls to ensure the Project and Expenditure Report is prepared in accordance with governing requirements. Views of Responsible Official: Management agrees. See separately issued Corrective Action Plan.

Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021/22 Grant Number: N/A Compliance Requirement: Other Type of Finding: Significant Deficiency in Internal Control Criteria: Title 2 CFR Section 200.303(a) of the Uniform Guidance requires all non-federal entities establish and maintain effective internal control over federal awards to provide reasonable assurance that the non-federal entity is managing the federal award in compliance with the federal statutes, regulations, and the terms and conditions of the federal award. Condition: During the audit, it was noted the preparation of the schedule of expenditures of federal awards (SEFA) lacked evidence of review. Cause: The City?s internal controls did not allow for evidence of review of the SEFA. Effect: The SEFA lacked evidence of review, which increases the risk of error or misstatement. Questioned Costs: None reported. Context: The condition was noted during our procedures related to internal controls over the SEFA. Repeat Finding from Prior Year: No Recommendation: We recommend the City establish procedures to ensure evidence of review exists over the SEFA. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021/22 Grant Number: N/A Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control and Instance of Noncompliance Criteria: The OMB Compliance Supplement requires that reports submitted to the federal awarding agency include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements. The City of Laguna Hills (the City) must submit annual Project and Expenditure Reports that contain costs incurred during the covered period. Critical information includes: ? Obligations and Expenditures o Current period obligation o Cumulative obligation o Current period expenditure o Cumulative expenditure ? Subawards ? Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient that are greater than $50,000. For amounts less than $50,000, the recipient must report in the aggregate for these same categories of loans issued; contracts and grants awarded; transfers made to other government entities and direct payments made by the recipient. Condition: Expenditure information was reported inaccurately. Cause: The City of Laguna Hills did not have adequate internal controls to ensure the Project and Expenditure Report was prepared in accordance with governing requirements. Effect: Inaccurate information was reported to the federal awarding agency. Questioned Costs: None Context/Sampling: The entire population of one Project and Expenditure Report submitted during the year was selected for testing. The cumulative impact is as follows: Period Ended March 31, 2022 Originally Reported Actual Obligations and Expenditures: Current Period Obligations $0 $7,465,378 Period Ended March 31, 2022 Originally Reported Actual Obligations and Expenditures: Current Period Expenditures $0 $3,732,688 Repeat Finding from Prior Year: No Recommendation: We recommend the City enhance internal controls to ensure the Project and Expenditure Report is prepared in accordance with governing requirements. Views of Responsible Official: Management agrees. See separately issued Corrective Action Plan.