Audit 379957

Finding 2025-003 – Significant Deficiency and Noncompliance – Federal Equipment Program Information: Assistance to Firefighters, U.S. Department of Homeland Security, EMW- 2022-FG-06581 and EMW-2023-FG-08163, 2024, ALN #97.044 Criteria: Per 2 CFR §200.313(d), non-federal entities must maintain accurate property records for equipment acquired with federal funds including certain information. Additionally, entities must conduct a physical inventory of equipment at least once every two years and reconcile the results with equipment records. Condition: The auditee did not maintain a complete and accurate listing of equipment purchased with federal funds under ALN 97.044. Furthermore, the auditee did not perform, or document physical inventory counts of such equipment during the audit period. Questioned Costs: None identified at this time. However, due to the lack of inventory controls, there is an increased risk of misappropriation or loss of federally funded equipment. Cause and Effect: The auditee lacked adequate internal controls and procedures to ensure compliance with federal equipment management requirements. There was no designated responsibility for maintaining equipment records or conducting inventory counts. Failure to maintain equipment records and conduct inventory counts may result in: Inability to verify the existence and condition of federally funded equipment, Increased risk of asset loss or misuse, Potential disallowance of costs by the federal awarding agency, Noncompliance with Uniform Guidance requirements, which may impact future funding eligibility. Recommendation: We recommend the auditee: Develop and implement formal procedures for tracking equipment purchased with federal funds, Assign responsibility to staff for maintaining equipment records in accordance with 2 CFR §200.313(d), Conduct and document physical inventory counts at least biennially, reconciling results with equipment records, Train relevant personnel on federal equipment management requirements to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding Corrective Action Plan: See attached corrective action plan.

Finding 2025-002 – Significant Deficiency and Noncompliance – Federal Policies Criteria: Per 2 CFR Part 200 (Uniform Guidance), non-federal entities expending federal awards must establish and maintain written policies and procedures that comply with federal requirements, including procurement, allowable costs, cash management, and internal controls. Condition: The City does not have documented federal policies that comply with Uniform Guidance requirements. Existing policies are either incomplete or do not address key compliance areas such as procurement standards, subrecipient monitoring, and allowable cost principles. Questioned Costs: None identified at this time; however, the absence of compliant policies increases the risk of noncompliance with federal award requirements and potential questioned costs in the future. Cause and Effect: Management has not developed or updated written policies to align with Uniform Guidance requirements, possibly due to resource constraints or lack of awareness of the updated federal standards. Without UG-compliant policies, the entity is at risk of noncompliance with federal award requirements, increased likelihood of improper expenditures, and potential disallowance of costs and repayment of federal funds Recommendation: Develop and implement written policies and procedures that fully comply with Uniform Guidance (2 CFR Part 200). Views of Responsible Officials: Management agrees with the finding Corrective Action Plan: See attached corrective action plan.