Audit 402827

Finding Number: 2024-003, Significant Deficiency ALN # 21.027: Federal Program: Coronavirus State and Local Fiscal Recovery Fund Federal Agency: US Department of Treasury Grant # and Year: Y5065, 2024 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Earmarking, Period of Performance, Reporting. Questioned Costs: N/A Criteria: In accordance with 2 CFR § 200.303, non-federal entities are required to establish and maintain effective internal controls to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: The City did not maintain formal documentation surrounding the internal controls over compliance for multiple compliance requirements. Specifically, for 1 of 12 employees tested for pay rate approvals, there was no documentation evidencing approval of the pay rate. In addition, there was no documented review of the payroll registers or of the project and expenditure reports submitted. Cause: Lack of documented controls over compliance primarily attributed to significant operational and personnel changes within the Finance Department. Effect: Potential for noncompliance with federal program requirements. Although there was a lack of internal controls documented, there were no instances of noncompliance noted. Recommendation: The City should evaluate their processes and procedures over internal controls are appropriately documented and maintained. Response: See attached Corrective Action Plan.