Audit 391648

Criteria: Pursuant to Contract No. C-200956 Section 601.B, Grant Requirements, Reporting Requirements, between MCS and the City of Los Angeles EWDD, “Contractor shall submit to the City all required documents in accordance with all City procedures and Directives, which are incorporated herein by reference. 1. Monthly Fiscal Report and Closeout Report: a. Expenditure Report - Due on or before the 15th day of each month, Contractor shall submit the Expenditure Report to the City, which reflects accrued expenditures as of the previous month on forms provided by the City. b. Cash Request - Due on or before the 15th day of the month, a cash request shall be submitted on forms provided.” Condition: During our review of the submission of monthly expenditure and cash request reports, we noted one monthly fiscal report was not submitted to EWDD in a timely manner. Cause: Due to the late execution of the contract, the total contract amount was not finalized, making it impossible for MCS to establish an accurate, binding budget which led to the late submission of the monthly fiscal report. Furthermore, there were changes made to the contract amount which caused the delay in the submission of the reports. Effect: Failure to submit timely the required monthly fiscal reports results in noncompliance with the reporting requirement of the grant agreement. Questioned Costs: None. Context: Of the seven (7) monthly fiscal reports selected for testing, one (1) monthly fiscal report was not submitted to City of Los Angeles EWDD within the required due date. The samples tested were not statistically valid samples. Recommendation: We recommend that MCS strengthens its internal controls by establishing procedures to ensure that the monthly expenditure and cash request reports are properly prepared and submitted by the due date required by City of Los Angeles EWDD in accordance with the grant agreement. Also, we recommend MCS to do the following when there is a late execution of the contract and change in the funding amount: 1) to document in writing (i.e., email, formal amendment, etc.); and 2) to formally request time extensions for the submission of the monthly fiscal reports. Management Response and Corrective Action Plan: Management’s response is included in the “Management Response and Corrective Action Plan” found at the end of this report after the Summary Schedule of Prior Year Audit Findings.

Criteria: Pursuant to Contract No. C-145793 Section 301.A, Payment, Compensation and Method of Payment - Expenditure Reporting, between MCS and the City of Los Angeles EWDD, “Contractor shall comply with the expenditure and reporting requirements as follows: 1. Expenditure Reporting: a. Expenditure Report - Contractor shall submit the Expenditure Report to the City, which reflects accrued expenditures on City approved forms. b. Cash Request - Due as cash is necessary, a Cash Request shall be submitted on standard City forms by the 15th of the following month.” Condition: During our review of the submission of monthly expenditure and cash request reports, we noted one monthly fiscal report was not submitted to EWDD in a timely manner. Cause: There was a late contract provision on the final required budget allocation for participant-related training cost. As a result, the budget submission was delayed causing the late submission of the monthly fiscal report. Effect: Failure to submit timely the required monthly fiscal reports results in noncompliance with the reporting requirement of the grant agreement. Questioned Costs: None. Context: Of the five (5) monthly fiscal reports selected for testing, one (1) monthly fiscal report was not submitted to City of Los Angeles EWDD within the required due date. The samples tested were not statistically valid samples. Recommendation: We recommend that MCS strengthens its internal controls by establishing procedures to ensure that the monthly expenditure and cash request reports are properly prepared and submitted by the due date required by City of Los Angeles EWDD in accordance with the grant agreement. Also, we recommend MCS to do the following when there is a delay in receiving the budget cost allocation: 1) to document in writing (i.e., email, formal amendment, etc.); and 2) to formally request time extensions for the submission of the monthly fiscal reports. Management Response and Corrective Action Plan: Management’s response is included in the “Management Response and Corrective Action Plan” found at the end of this report after the Summary Schedule of Prior Year Audit Findings.