Audit 392434

Program: Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No.: 21.027 Federal Agency: U.S. Department of Treasury Passed-through: California Department of Finance Award Number and Year: CSLFRF, 2022 Compliance Requirement: Procurement, Suspension, and Debarment Type of Finding: Material Weakness in Internal Control over Compliance, Instances of Noncompliance Criteria: Per 2 CFR part 200, subpart D, section 200.303, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award is compliance with federal statues, regulations, and the terms and conditions of the federal award. Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Condition: We identified that the City’s purchasing and contracting policy in effect during fiscal year 2025 does not require the verification of the debarment and suspension status of vendors prior to entering into agreements. We also noted that the City did not maintain documentation that they verified that the contractor was not suspended or debarred prior to entering into a covered transaction. Cause: The City’s policy does not require the verification of the debarment and suspension of a vendor prior to entering into a covered transaction, nor does it address on what type of documentation should be maintained to ensure they are not suspended and debarred. Effect: Noncompliance with these requirements could result in disbursements of Federal funds to suspended and debarred parties. Questioned Costs: None reported. Context/Sampling: We selected 3 out of 10 of the City’s procurement transactions associated with the program. Repeat Finding from Prior Year(s): Yes. Recommendation: We recommend that the City include policies and procedures within their procurement policy to check whether or not vendors are suspended and debarred and to maintain that documentation within the procurement file. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.

Program: Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing No.: 21.027 Federal Agency: U.S. Department of Treasury Passed-through: California Department of Finance Award Number and Year: CSLFRF, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) requires that the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: We noted that the supporting documentation provided did not have evidence of segregation of duties for the preparation and approval of the submitted report. Cause: The City’s internal control environment was impacted by a shortage of staff necessary to fully conduct the program. Effect: The City’s reports on the awards did not have segregation of duties between the preparer and reviewer of the reports. Questioned Costs: None reported. Context/Sampling: We selected 100% of the City’s reports for the program. Repeat Finding from Prior Year(s): Yes. Recommendation: We recommend that the City continue to strengthen its policies and procedures over reporting to ensure that there is segregation of duties between the preparer and reviewer of reports. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.