Audit 390700

Criteria: Management is responsible for establishing and maintaining effective internal controls over financial reporting. Federal regulations and the City’s internal policies require that all expenses be supported by original invoices and adequate documentation to ensure transactions are recorded accurately, timely, and in the proper reporting period, thereby providing reliable financial data Condition: The City has not performed complete reconciliations for key balance sheet accounts, including cash, accounts receivable, fixed assets, debt, deferred revenues, other accrued liabilities, and net position, resulting in material audit adjustments. In addition, we identified instances where invoices and supporting documentation for certain expenses were missing or incomplete. Automatic payments and deposits were not recorded, and other entries required reclassification to correct the balances. Effect: The absence of regular and thorough reconciliations, as well as missing invoices and supporting documentation, increases the risk of misstatements, undetected errors, and misleading financial information that could impair management’s decision-making. Cause: There was a lack of staff training and a failure to prioritize financial reporting, reconciliations of critical balance sheet accounts, and the retention of supporting documentation for expense transactions. Recommendation: We recommend that finance personnel reconcile all balance sheet accounts for accuracy and maintain supporting documentation for all expenses. Procedures should be implemented to ensure that all invoices and supporting documents are retained and reviewed prior to payment and that all balance sheet accounts are reconciled to the general ledger on a timely basis Views of responsible official and planned corrective actions: The City has implemented additional procedures to ensure all balance sheet accounts are being reconciled in a timely basis. Additional training and supervision will be provided to the appropriate personnel. The City will also strengthen its documentation retention policies to ensure all expenses are properly supported.

Criteria: In accordance with federal regulations (Uniform Guidance 2 CFR 200), recipients of federal awards are required to submit their single audit within the stipulated timeframe, usually nine months after the end of the fiscal year. Condition: During the 2024 audit, it was identified that the City failed to submit its single audit report for the fiscal year ending September 30, 2024 within the required timeframe, which is a violation of the Uniform Guidance requirements. Effect: The late submission of the single audit report has resulted in a breach of compliance with federal regulations. This non-compliance has the potential to disallow funding from federal agencies. Cause: The delay in submitting the single audit report was primarily attributed to a change in finance personnel. Recommendation: We recommend the City develop a system of monitoring grant requirements and establish a timeline for meeting deadlines related to reporting in compliance with the Uniform Guidance. Views of responsible official and planned corrective actions: The City will prepare for financial statement audits to ensure audits are completed timely.

Criteria: In accordance with federal regulation (Uniform Guidance 2 CFR 200.328 and CFR 35.4(c), recipients of federal awards are required to submit a Project and Expenditure Report on a quarterly or annually basis as specified in the SLFRF Compliance and Reporting Guidance. Condition: During the 2024 audit the City did not file the required Project and Expenditure Report for the period ending September 30, 2024, within the required timeframe, which is a violation of the Uniform Guidance requirements. Effect: Failure to submit the required report may result in the withholding of federal funds, increased oversight, or other administrative actions by the U.S. Department of the Treasury. It also impairs transparency and accountability for the use of federal funds Cause: The delay in submitting the expenditure report was primarily attributed to a change in finance personnel. Recommendation: We recommend that the City develop a system of monitoring grant requirements and establish a timeline for meeting deadlines related to reporting in compliance with the Uniform Guidance. Views of responsible official and planned corrective actions: The City will file the required closeout project and expenditure report immediately, and staff will receive training in reporting requirements to ensure timely submissions in the future.