Audit 388755

Federal Agency: U.S. Department of Transportation Federal Program Name: Airport Improvement Program Assistance Listing Number: 20.106 Federal Award Identification Number and Year: Multiple Award Period: 8/23/2020 –1/28/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the Federal Aviation Administration's Advisory Circular 150-1500-19D, Guide for Airport Financial Reports Filed by Airport Sponsors, Financial Reports 5100-126 & 5100-127 "are due within 120 days of the end of the airport's fiscal year. A sponsor may request an automatic 60-day extension on the website. An airport that cannot file within the 60-day expensive should send a written explanation to Airport Compliance and Management Analysis" of the FAA. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure timely report submission. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, it was noted that two of the six financial reports were not submitted timely. Form 5100-126 and Form 5100-127 were submitted on 02/26/2025 and 02/28/2025, respectively. These submissions occurred 61 and 63 days beyond the prescribed filing deadline of 180-days following the fiscal year end. Cause: Management oversight. The City did not submit the performance report by the due date. Effect: The auditor noted an instance of noncompliance. Noncompliance results in untimely submission of information to the federal agency. Recommendation: We recommend the City establish a reporting calendar and perform periodic reviews of the completeness, accuracy and adherence to the reporting calendar. Management Response: The City concurs with the finding. Beginning in December 2025, the Aviation Revenue and Finance Officer has implemented an internal control to strengthen compliance with federal reporting requirements. A centralized spreadsheet has been created to track all required financial report deadlines, including FAA Forms 5100-126 and 5100-127. This spreadsheet identifies the due dates, responsible personnel, and submission status to help ensure reports are prepared, reviewed, and submitted timely in accordance with applicable federal regulations. The Aviation Revenue and Finance Officer will also perform periodic reviews of the reporting calendar to monitor completeness, accuracy, and compliance to required deadlines. Timeline and Responsible Position: June 2026 – Aviation Department Revenue and Finance Officer

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Federal Award Identification Number and Year: M20-MC350209 - 2020 M21-MC350209 - 2021 Award Period: 5/29/2020 - 9/01/2028 8/03/2021 - 9/01/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.403 Factors affecting allowability of costs of 2 CFR Part 200, costs must conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. Additionally, according to §200.431 costs of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences should be equitably allocated to all related activities, including Federal awards. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure proper allocation of fringe benefits. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: $973.77 Context: During our testing, it was noted that for one of twenty-four samples, the City applied incorrect fringe benefits to the grant, resulting in $371.11 that should have been allocated to the grant. Additionally, for one of twenty-four samples, the City did not accurately apply sick leave conversion to wages, resulting in $973.77 of wages improperly allocated to the grant. Cause: Management oversight. The city did not have adequate controls in place to ensure proper allocation of fringe benefits. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential pay back of federal funds. Recommendation: We recommend the City review fringe benefits charged to the grant to equitably allocate fringe benefits between federal and city funding sources. Management Response: The City concurs with the finding. The Department of Health, Housing & Homelessness will review the allocation of fringe benefits to grant payroll charges on a quarterly basis to ensure fringe benefits are properly allocated to funding sources. The reconciliations will be prepared by fiscal staff and approved by the Fiscal Manager. Additionally, the DFAS Grant Administrator will perform a semi-annual review of excess leave payouts to ensure they are charged to the correct grant funding string. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Fiscal Manager

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: NM0014L6B002316 NM0015L6B002316 NM0017L6B002215 NM0101L6B002308 NM0156L6B002200 Award Period:7/1/24-6/30/25 7/1/24-6/30/25 10/1/23-9/3/24 7/1/24-6/30/25 10/1/23-9/3/24 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.306 The fair market value of third-party in-kind contributions must be documented and, to the extent feasible, supported by the same methods used internally by the recipient or subrecipient. Condition: During our testing, we noted the City lacked sufficient internal controls to ensure subrecipients complied with cost‑sharing and matching requirements. We also noted that the City did not maintain documentation to substantiate the fair market value of in‑kind contributions. Questioned costs: None Context: During our testing, we noted the following: • For one of 5 samples tested, we noted the City did not have sufficient documentation for the values placed on in-kind contributions. • For 5 of 5 samples tested, the City only performed one monitoring review of subrecipient related match expenditures, resulting in partial coverage of the award period. Additionally, there was a lack of documentation of the City's process for selecting match samples to review. Finally, there was no review performed at the close out of the grant to ensure the subrecipient met the match requirement. • For 5 of 5 grant awards tested, we noted the amount of match reported on the HUD Annual Performance Report (APR) did not agree to underlying City records. Cause: Management oversight. The City did not have adequate controls in place to ensure proper monitoring of matching expenditures for subrecipients. 2025 – 007 Matching/Cost Sharing (continued) Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City design controls to ensure monitoring occurs related to subrecipient's adherence to the Continuum of Care program's Match requirements and the eligibility of the program's match expenditures. Additionally, we recommend implementing a tracking mechanism to ensure match expenditures are accurately reported to HUD. Management Response: The City concurs with the finding. The City will update Continuum of Care procedures related to subrecipient monitoring, in-kind contribution documentation, match tracking and reporting, and grant closeout review to strengthen compliance and oversight. Additionally, the City will provide additional grants training and a list of subject matter experts within each department that can work with auditors during the single audit. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Deputy Director of Social Services and Connections and Department of Finance & Administrative Services Grant Administrator