Audit 398567

2025-002 DISALLOWED COSTS ALN 97.083 Staffing for Adequate Fire and Emergency Response (SAFER) Grant Program U.S. Department of Homeland Security Federal Emergency Management Agency (FEMA) Federal Award No. EMW-2022-FF-00868 2024/2025 Funding Criteria: 2 CFR 200.303(a) requires non-federal entities to establish and maintain effective internal controls over federal awards. The award terms allow for reimbursement of personnel costs including wages, the employer portion of payroll taxes, and fringe benefits (health insurance, life insurance, and retirement benefits. Compensation for a firefighter’s normal, contracted work schedule is reimbursable, but overtime costs are not eligible for reimbursement by the SAFER grant award (including overtime for holdovers, extra shifts, to attend training, etc.). Only costs for overtime that the fire department routinely pays as a part of the base salary or a firefighter’s regularly scheduled and contracted shift hours, in order to comply with the Fair Labor Standards Act (FLSA), are eligible. Semi-annual financial reporting is required of all grant award recipients (per the award agreement terms). Condition: There was no independent review of reimbursement requests or semi-annual financial reports prior to submission to the grantor. Reimbursement requests included disallowed costs related to overtime (associated fringe benefits expense) but not the overtime itself. Additionally, semi-annual financial reports were based on reimbursement requests which resulted in reporting errors. Cause: There was no independent review of reimbursement requests or semi-annual financial reports prior to submission to the grantor. Effect: Lack of review increases the likelihood that reports are incomplete, inaccurate, or not submitted timely. Reimbursement requests and financial reports included errors and the City was inadvertently reimbursed for disallowable costs Questioned Costs: Known questioned costs are $10,551. Questioned costs computed through recalculation of fiscal year 2025 reimbursement requests. Perspective: Disallowed costs impacted all fiscal year 2025 reimbursement requests and semi-annual financial reports. Recommendation: Independent review of program reimbursement requests and reports should be consistently performed and documented prior to submission the grantor. Management Response: The City agrees with this finding and will establish internal procedures for review of program reimbursement requests before submission to the grantor. The Grant Compliance Manager will prepare the reimbursement requests and semi-annual reports and provide to the Director of Finance for review and approval prior to submission. This corrective action will take effect immediately.

2025-001 REPORTING ALN 20.106 Airport Improvement Program U.S. Department of Transportation Federal Aviation Administration Federal Award No. 3-12-0046-064-2024 2024/2025 Funding Criteria: 2 CFR 200.303(a) requires non-federal entities to establish and maintain effective internal controls over federal awards. The award terms require submission of quarterly construction and inspection reports within 30 days of the end of each Federal fiscal quarter. Condition: A quarterly report was not submitted for the period January 2025 – March 2025. Cause: The staff member who typically prepared the report was out on medical leave during this period. Effect: The Airport, a component unit of the City, was out of compliance with award requirements which could jeopardize its ability to be reimbursed for this award or obtain additional awards in the future. Questioned Costs: None. Reported finding is for noncompliance in the reporting compliance requirement that does not affect the amount expended or received for the federal award. Perspective: All other quarterly reports sampled were appropriately submitted timely. When we brought this issue to the attention of management they submitted the quarterly report late. Recommendation: The Airport, a component unit of the City, should develop a process to ensure reports are submitted timely for all awards including re-assigning tasks when personnel are on leave. Management Response: Airport management has set up a process whereby the quarterly reports are reviewed by another team member to ensure the reports are completed and submitted in the time frame required by the Federal Aviation Administration. This review will be completed by the Accounting Manager who understands the importance of submitting the information and, if they are not completed, will complete and submit the reports. Any issues or omissions observed by the Accounting Manager with submitting the required reports will be reported to the Director of Finance and Administration for further follow-up with the staff member who is primarily responsible for this task.