Finding 2024-014: Material Weakness in Internal Control and Material Noncompliance – Reporting Assistance Listing Program Title and Number: Community Development Block Grants (CDBG) Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Housing and Urban Development (HUD) Pass-through Entity: N/A Award year: 2023 – 2024 Criteria or specific requirement: Section 15011 of the CARES Act requires that recipients of $150,000 or more of CARES Act funding submit, not later than 10 days after the end of each calendar quarter, a report containing: information regarding the amount of funds received; the amount of funds obligated or expended for each project or activity; a detailed list of all such projects or activities, including a description of the project or activity; and detailed information on any subcontracts or subgrants awarded by the recipient. For the entitlement funding, quarterly Cash on Hand reports and an annual performance and evaluation report is required. Condition: For the entitlement funding allocated to the City, they were required to submit four quarterly reports during the year and two annual reports. Of the three entitlement reports selected for testing, each one was submitted after the deadline. For the COVID-19 funding allocated to the City, they were required to submit quarterly reports during the year for two separate awards, for a total of eight quarterly reports, and one annual report. None of the required COVID-19 funding reports were submitted during the current year. Cause: The City made their regular appropriation of CDBG monies their primary focus including coming up with a spending plan and completing and submitting the required reports. As a result, none of the reports required to be submitted for the COVID-19 funding were submitted during the current year and the other reports were submitted late or not submitted. Effect: The City is out of compliance relating to various required reports and deadlines. In turn, HUD could deny future requests for reimbursement of eligible expenses or require the City to remit portions of funding back to them. Context: The City was required to submit 15 reports during the year related to the CDBG Cluster, nine of which related to COVID-19 funding. We selected and tested three out of six reports for the non COVID-19 funding and noted they were submitted between 1 day and 3 months beyond the due date. We selected a COVID-19 funding report and noted that it was not submitted, and upon further inquiry we noted that none of the nine reports relating to COVID-19 funding were prepared and submitted. The sample was not intended to be, and was not, a statistically valid sample. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls to ensure all reports are prepared, reviewed and submitted by the due date to the requisite agency. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-011: Material Weakness and Material Noncompliance Finding, Reporting – Special Reporting Assistance Listing Program Title and Number: Coronavirus State and Local Fiscal Recovery Funds (ALN# 21.027) Federal Agency: U.S. Department of Treasury Pass-through Entity: N/A Award year: 2023-2024 Criteria or specific requirement: Generally, recipients must submit one initial Interim Report, quarterly or annual Project and Expenditure reports which include subaward reporting, and in some cases annual Recovery Plan reports. The Project and Expenditure Reports are due quarterly and/or annually based on 2 CFR 200.328 and 31 CFR section 35.4(c) Reporting and requests for other information. Cities were required to submit quarterly Project and Expenditure Reports which cover one calendar quarter and must be submitted to Treasury by the last day of the month following the end of the period covered. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Condition: None of the quarterly Project and Expenditure Reports were submitted as required, and instead the City elected to submit an annual Project and Expenditure Report that was submitted past the deadline for the fourth quarterly report. Cause: Grant management and reporting is not fully centralized within the City and there was turnover in the grant administrator position. The City did not have sufficient internal controls in place to ensure the reports were filed. Effect: Failure to file timely reports resulted in non-compliance with the Reporting requirements of the program. This could also result in the Federal government cancelling funding of the program or denying eligible expenditures. Context: There were four Project and Expenditure Reports required to be submitted during the audit period. Of the four quarterly Project and Expenditure reports required, none were submitted. The City elected to submit an annual Project and Expenditure Report, which was submitted 13 days after the deadline for the fourth quarterly report. Questioned Cost: None Repeating Finding: 2023-006 Recommendation We recommend that the City implement controls to ensure all reports are prepared, reviewed and submitted by the due date to the requisite agency, as well as contact the grantor about whether or not the delinquent reports should still be filed. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-017: Significant Deficiency in Internal Control - Earmarking Assistance Listing Program Title and Number: Coronavirus State & Local Fiscal Recovery Funds (21.027) Federal Agency: U.S. Department of Treasury Pass-through Entity: N/A Award year: 2023 – 2024 Criteria or specific requirement: Under the 2022 Final Rule, recipients can elect a one-time “standard allowance” of $10 million (not to exceed the recipient’s award amount) to spend on the “provision of government services” during the period of performance. Alternatively, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the 2022 Final Rule to determine the amount of SLFRF funds that can be used for the “provision of government services.” The City of Danbury elected to claim the standard allowance even though their initial award from Treasury exceeded that. Condition: The City was not able to provide evidence of reviews and approvals of the assignment of various projects to the allowable expense categories for Coronavirus spending. Cause: Because the tracking mechanism used to track the eligible use categories is updated in real time, RSM was not able to review the control for the earmarking requirement, as that information had been saved over with more recent updates to the City's tracking worksheet. Effect: The City could have claimed an amount greater than the standard allowance of $10 million which would not be eligible to be claimed as an allowable expense. Context: Systemic in nature. Questioned Cost: Unknown Repeat Finding: No Recommendation: We recommend the City work with their consultant to ensure that as eligible expense categories are assigned, there is documented approval for the assignment of those expenditure categories. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-016: Material Weakness in Internal Control and Material Noncompliance – Procurement and Suspension and Debarment Assistance Listing Program Title and Number: Special Education (IDEA) Cluster (84.027, 84.173), COVID 19-Coronavirus State & Local Fiscal Recovery Funds (21.027) Federal Agency: U.S. Department of Education, U.S. Department of Treasury Pass-through Entity: State of Connecticut Department of Education, State of Connecticut Department of Emergency Services and Public Protection Award year: 2023 – 2024 Criteria or specific requirement: The City, which includes Danbury Public Schools (DPS), must follow procurement standards set out at 2 CFR sections 200.318 through 200.326. There are three types of procurement methods described in this section: informal procurement methods (for micro-purchases and simplified acquisitions); formal procurement methods (through sealed bids or proposals); and noncompetitive procurement methods. For any of these methods, the recipient or subrecipient must maintain and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319. Additionally, 2 CFR Section 180 requires that recipients of federal awards have policies and procedures in place to verify contracted vendors are not on the federal suspended or debarred parties list. Condition: The DPS Grant Administration did not adhere to the Danbury Public Schools “Bids and Purchases Competitive” procurement policies, that were compliant with Federal Part 3 compliance guidelines. DPS had a procurement policy in place that was consistent with the standards of the aforementioned compliance sections; however, DPS did not follow their own procurement policy in certain instances which consists of obtaining three quotes for a small purchase procurements and advertising for bids publicly for large >$5,000 purchase procurements. They only obtained one quote for small purchases, and they did not use a public bid process for expenditures over $5,000. Additionally, DPS did not have internal controls in place to ensure vendor eligibility was verified prior to entering into a covered transaction with them. Cause: While DPS has a formal policy around required bids, the thresholds have not been updated in several years and there was a lack of controls that ensured the DPS procurement policy was being adhered to in order to be compliant with the compliance standards. Finally, the policy did not address verifying vendors were neither suspended nor debarred. Effect: Possible effects include not awarding the purchase to the lowest qualified bidder or to a vendor on the suspended or debarred parties list. Context: For the Coronavirus State and Local Fiscal Recovery Funds program, there was a population of 183 procurements during the audit period. Of these procurements, there were 29 vendors that were subject to the rules on suspension and debarment. Of those 29 vendors, we sampled eight for testing. Two out of eight vendors tested did not have documentation that DPS verified the vendors were not suspended or debarred prior to entering into a covered transaction with them. The total amount of the two was $438,885 out of the total sample of $996,779. We also selected a sample of 23 procurements totaling $2,698,309 for testing. One sample was a small purchase totaling $2,550 which required three quotes however only one quote was obtained. The sample was not intended to be, and was not, a statistically valid sample. For the IDEA Cluster, there was a population of 251 procurements during the audit period. We sampled 31 procurements for testing totaling $659,075. Three of the procurements tested totaling $293,692 did not follow the DPS procurement policy. Two exceptions (totaling $290,722) were for large purchases which did not follow the policy for procurement through a formal bid process. The other exception was a small purchase totaling $2,970 which did not follow the requirement of obtaining three or more quotes. The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: For procurement under the Coronavirus State and Local Fiscal Recovery Program- $2,550 For procurement under the IDEA Cluster- $293,692 Repeat Finding: 2023-007 Recommendation: We recommend DPS implement controls that require review of each procurement to ensure DPS obtained the adequate number of quotes or bids for each expenditure. Additionally, we recommend DPS update their procurement thresholds to be more consistent with the compliance minimum requirements. Finally, we recommend DPS modify their policy to address suspension and debarment requirements to ensure they don’t enter into a covered transaction with a suspended or debarred vendor. The policy should require documentation of the search performed. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-015: Material Weakness in Internal Control and Material Noncompliance – Reporting Assistance Listing Program Title and Number: Education Stabilization Fund- Elementary and Secondary School Emergency Relief (84.425D), American Rescue Plan Elementary and Secondary School Emergency Relief (84.425U) Federal Agency: U.S. Department of Education Pass-through Entity: State of Connecticut Department of Education Award year: 2023 – 2024 Criteria or specific requirement: ESSER, GEER, and EANS grantees must submit an annual performance report with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. LEAs/subrecipients submit data to the SEA/Governor for the SEA’s/Governor’s report. Condition: The City provided supporting documentation that was unable to be agreed to the amounts that were submitted to the State in the annual performance report ESF - ESSER Recipient Data Collection Form OMB PRA Number: OMB No. 1810-0749 for the key line items: Line 3.b1 LEA expenditures by ESSER Subgrant fund, expenditure category, and object code, Line 3.b10 Number of specific positions supported with ESSER Funds, 3. Line 3.c Allocation of ESSER funds to schools and criteria used to allocate funds to schools, and Line 5.a Full Time Equivalent positions. Cause: There was a change in personnel during the year at both the CFO level and Grants Coordinator level. The previous Grants Coordinator was responsible for compiling the information to be submitted to the State and the CFO reviewed the information prior to its submission. Because of the change in personnel, the City was not able to locate the Grant Coordinator’s supporting documentation for the information contained in the report, nor were they able to provide evidence of a review occurring prior to the reports submission. Effect: The report could contain incomplete or inaccurate information. Context: One annual report was required to be submitted. Our testing of that one report determined the condition noted above. Questioned Cost: None Repeat Finding: No Recommendation: We recommend the City implement controls to ensure appropriate document retention and recordkeeping of reports submitted for compliance purposes and ensure there is evidence of a review occurring by someone other than the individual who prepared the report. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-018: Significant Deficiency in Internal Control – Completeness and Accuracy of the SEFA Assistance Listing Program Title and Number: Education Stabilization Fund- Elementary and Secondary School Emergency Relief (84.425D), American Rescue Plan Elementary and Secondary School Emergency Relief (84.425U) (collectively ESSERS) and Community Development Block Grants (CDBG) Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Education and U.S. Department of Housing Pass-through Entity: State of Connecticut Department of Education Award year: 2023 – 2024 Criteria or specific requirement: Committee of Sponsoring Organizations (COSO) Framework – control activities: Proper review of the schedule of expenditures of federal awards (SEFA) and schedule of expenditure of state awards (SESA) should ensure the accuracy and completeness of the schedules. Condition: We identified errors in the SEFA as originally provided by the City including fiscal year 2023 expenditures being included in the fiscal year 2024 SEFA expenditures reported for the Community Development Block Grants CDBG Entitlement/Special Purpose Grants Cluster (CDBG) ($178,900) and Education Stabilization Fund- Elementary and Secondary School Emergency Relief, American Rescue Plan Elementary and Secondary School Emergency Relief (ESSERS) ($37,382). The City needs improved centralized review of the completed SEFA. Cause: Turnover in the City and DPS finance departments along with grant management and reporting not being centralized within the City, with responsibility left to the individual departments. Effect: This can result in inaccurate amounts reported in the SEFA and the disallowance of expenditures/future awards by the grantor due to lack of proper reporting. Context: For CDBG from a population of 88 nonpayroll expenditure transactions we sampled 9 expenditures totaling $266,738 for testing. For one out of the 9 expenditures tested in the amount of $178,900, we noted the expenditure pertained to fiscal year 2023. For ESSERS out of a population of 302 nonpayroll transactions, we sampled 40 transactions totaling $727,290 for testing. Five out of 40 samples tested, totaling $37,382, pertained to fiscal year 2023. The samples were not statistically valid samples. Questioned Cost: None Repeat Finding: 2023-004 Recommendation: We recommend that City management, in coordination with the departments; improve established policies and procedures , including a more thorough review of the complete schedule, to help to make certain all federal and state expended funds are complete and accurate and included in the correct fiscal year in the SEFA and SESA. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-012: Significant Deficiency and Noncompliance Finding, Reporting – Special Reporting Assistance Listing Program Title and Number: Airport Improvement Program, Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (20.106) Federal Agency: U.S. Department of Transportation Pass-through Entity: N/A Award year: 2023-2024 Criteria or specific requirement: The City is required to submit quarterly Construction Progress and Inspection Reports which cover one calendar quarter and must be submitted to their regional Federal Aviation Administration (FAA) Office by the last day of the month following the end of the period covered. The City is also required to submit various annual reports which are due by December 31 (construction projects) or October 30 (non-construction projects). Condition: During our audit we sampled 4 annual, and 1 quarterly report for testing. One of the five reports tested was not submitted on time. The quarterly report was submitted one day after the required deadline. Cause: Grant management and reporting is not fully centralized within the City and there was turnover in the grant administrator position. The City did not have sufficient internal controls in place to ensure the reports were filed timely. Effect: Late reporting results in non-compliance with the Reporting requirements of the program. This can also result in the Federal government cancelling funding of the program or denying eligible expenditures. Context: There were 14 Reports required to be submitted during the audit period. A sample of five reports were selected for testing. One of the five reports tested was submitted 1 day after the required deadline. The sample was not intended to be, and was not, a statistically valid sample. Questioned Cost: None Repeating Finding: No Recommendation We recommend that the City implement controls to ensure all reports are submitted on time to the requisite agency. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-013: Material Weakness in Internal Control and Material Noncompliance – Equipment and Real Property Management Assistance Listing Program Title and Number: Airport Improvement Program , Infrastructure Investment and Jobs Act Programs, and COVID-19 Airports Programs (20.106), CDBG Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Transportation, U.S. Department of Housing and Urban Development Pass-through Entity: N/A Award year: 2023 – 2024 Criteria or specific requirement: The City must follow equipment and real property management standards as required by 2 CFR section 200.313(c) through (e) which states that a physical inventory of the property must be conducted and the results reconciled with the property records at least once every two years and that adequate maintenance procedures must be developed to keep the property in good condition. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). Condition: The City was not able to provide supporting documentation that an inventory of federally acquired equipment had been completed at minimum once, in the prior two years, nor were they able to produce maintenance records for all inventory items that were selected for testing. Additionally, the assets are not tracked separately from other City assets with property records which note the serial number, date placed in service and specific location of the asset. Cause: The City did not have established policies and procedures in place to ensure an inventory of federally acquired property is completed at minimum once every two years, and that inventory records are sufficiently detailed, nor are there established policies and procedures in place for the upkeep and maintenance requirements of federally acquired equipment. Effect: The City may misplace or misappropriate an asset that was acquired using federal dollars, or an asset acquired using federal monies may fall into disrepair and not be fully utilized. Context: For CDBG, an inventory of federally acquired equipment had not been completed once in the prior two years. We sampled five assets valued at $476,392 out of a total of 28 assets purchased using grant funds since inception valued at approximately $2,300,000 at June 30, 2024. Of that sample there were two additions valued at $192,180 out of a total of three additions for the fiscal year ended June 30, 2024 valued at $210,930. Sufficient property records were not maintained for all selections. The sample was not intended to be, and was not, a statistically valid sample. For AIP, an inventory of federally acquired equipment had not been completed once in the prior two years. We sampled three assets valued at $287,340 out of a total of six assets purchased using grants funds since inception valued at approximately $393,000 at June 30, 2024. The sample included the only addition during the year ended June 30, 2024, valued at $7,166. Sufficient property records were not maintained for all selections. The sample was not intended to be, and was not, a statistically valid sample. Questioned Cost: None Repeat Finding: No Recommendation: We recommend that the City implement controls over their federally funded equipment and real property to ensure they are compliant with Uniform Guidance requirements. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-010: Material Weakness in Internal Control and Noncompliance, Late Issuance of the 2024 Single Audit Reporting Package to the Federal Audit Clearinghouse Assistance Listing Program Title and Number: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds (ALN# 21.027), Airport Improvement Program, Infrastructure Investment and Job Act Programs, and COVID-19 Airports Programs (20.106), Title I Grants to Local Educational Agencies (84.010A), Special Education Cluster (IDEA) (84.027, 84.173), Child Nutrition Cluster (10.553, 10.555, 10.559), COVID-19 – Educational Stabilization Funds (84.425D, 84.425U), CDBG Entitlement/Special Purpose Grants Cluster (14.218) Federal Agency: U.S. Department of Treasury, U.S. Department of Transportation, U.S. Department of Education, U.S. Department of Agriculture, U.S. Department of Housing and Urban Development Pass-through Entity: State of Connecticut Department of Education (COVID-19 – Coronavirus State and Local Fiscal Recovery Funds, Child Nutrition Cluster, Title I Grants to Local Educational Agencies, Special Education Cluster (IDEA), and Education Stabilization Funds) Award year: 2022-2023 and 2023-2024 Criteria or specific requirement: Uniform Guidance 2 CFR 200.512(a) requires that each organization’s audit must be completed and the data collection form and reporting package should be submitted within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the audit period. Condition: The Single Audit packages for the City’s fiscal years ended June 30, 2024, June 30, 2023 and June 30, 2022 should have been submitted to the Federal Audit Clearinghouse by March 31, 2025, March 31, 2024 and March 31, 2023, respectively. The City missed the filing deadlines, making the filings for 2024, 2023 and 2022, late. Cause: The cause is the lack of effective controls over financial reporting resulting in delays in both the Financial Statement Audit and Single Audit. Effect: This can result in disallowance of expenditures / future awards by the grantor due to lack of proper reporting. In addition, late filings result in noncompliance with the requirements of the Uniform Guidance and makes the City ineligible for consideration as a low risk auditee under Uniform Guidance, expanding the scope and cost of the single audit. Context: The June 30, 2024, 2023 and 2022 Single Audit packages. Questioned Costs: None Repeat Finding: 2023-002 Recommendation: We recommend the City evaluate the process and design of internal controls over financial reporting, including the SEFA and SESA, in order to ensure readiness for the audit and to avoid late filing of the data collection form. Views of Responsible Officials: Management agrees with the finding.