66.958 - Water Infrastructure Finance and Innovation - Significant deficiency in internal controls and noncompliance over reporting. Criteria The WIFIA Loan Agreement dated June 20, 2023, requires the City to submit an updated financial model/plan and annual financial statements no later than 180 days after the end of the City’s fiscal year. The Agreement also requires the City to submit quarterly construction monitoring reports within 30 days of quarter end. Condition The City submitted the updated financial model/plan for the fiscal year ended June 30, 2024, on January 31, 2025, and submitted the annual financial statements for the fiscal year ended June 30,2024, on January 29, 2025. In addition, the construction monitoring report for the quarter ended June 30, 2025, was submitted July 31, 2025. Cause The City did not have appropriate internal controls or processes in place to ensure submission by the required dates. Effect The lender relies on this information to monitor the project and without timely submission, they are unable to monitor project progress and compliance. Questioned Costs None. Recommendations We recommend the City implement processes and procedures to ensure timely submission of all reports going forward. Views of Responsible Officials Management acknowledges the missing internal control over the late submission of the updated financial model/plan for the fiscal year end June 30, 2024. Management has maintained an effective internal control tool for many years in the form of a master spreadsheet called the Annual Task Calendar that the entire Finance staff reviews at every biweekly Finance meeting, but the WIFIA deadlines were errantly not incorporated into that tool until January 2026. While management agrees with the finding, it should be noted that management was not operating without controls. Rather, the deadline being adhered to was just the wrong date. Management submitted updated financial model/plan by January 31, 2025, which was within the month following the close of the calendar year, similarly to the quarterly construction reports that are due 30 days after the end of the preceding quarter. In addition, the data on the annual model reflected current information near the time of release of the report, not June 30, 2024. So, in substance, management provided an even more current, relevant document. Management acknowledges the additional finding language that the June 30, 2025 quarterly construction monitoring report was submitted on day 31 rather than day 30 following the close of the quarter. Finally, management acknowledges that the annual updated financial model/plan for June 30, 2025, will be submitted in January 2026 as the internal control, as mentioned above, was not corrected until January 2026, which will result in the same finding on the Single Audit for June 30, 2026. However, management believes that we have taken the appropriate measures required to avoid ongoing replication.