Audit 403242

Programs Various Criteria Control activities: Proper review of the schedule of expenditures of federal awards (SEFA) should ensure the accuracy and completeness of the schedule. Condition We identified the following errors in the SEFA provided by the City: - Omitted programs - Programs on the wrong schedule - Incorrect amounts - Errors in grant numbers and grant names The SEFA balances are required to be reconciled to the basic financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). The City’s internal controls over compliance did not include a reconciliation. Questioned costs None noted. Context Not applicable. Effect This can result in inaccurate amounts reported in the SEFA or the disallowance of expenditures / future awards by the grantor due to lack of proper reporting. Additionally, misstatements in the SEFA can lead to the inaccurate identification of major federal programs and audit inefficiencies. Cause Unknown. The change in general ledger software was a contributing factor. Recommendation We recommend the City implement procedures to prepare / reconcile the SEFA based upon the City’s general ledger. The procedures should include specific steps to ensure that the schedule is complete. Views of responsible official and planned corrective actions Management agrees with the finding and recommendation.

Programs All Federal Programs Criteria 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 package for the City’s fiscal year ended June 30, 2024 was not submitted to the Federal Audit Clearinghouse by March 31, 2025. Questioned costs None Context The Single Audit Reporting Package and the data collection form were not submitted by the deadlines stated in the criteria above. Effect 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. Cause The cause is the lack of effective controls over financial reporting which resulted in delays in issuing both the Financial Statement Audit and Single Audit. Recommendation We recommend the City evaluate the process and design of internal controls over financial reporting, including the SEFA, in order to ensure readiness for the audit and to avoid late filing of the single audit reporting package and data collection form. Views of Responsible Officials Management agrees with the finding and recommendation.

Program Federal Agency - U.S. Department of the Treasury Federal Program - Coronavirus State and Local Fiscal Recovery Funds AL Number - 21.027 Criteria The City is required to complete the project and expenditure report quarterly for obligations and expenditures. The report is required to include current period obligations, cumulative obligations, current period expenditures and cumulative expenditures. Condition We noted that the current period expenditures amount reported by the City did not agree to the general ledger activity by approximately $1,611,000. The expenditures reported were lower than the general ledger. Questioned costs None noted. Context Not applicable. Effect The City was not in compliance with the reporting requirements. Cause Unknown. Recommendation We recommend the City implement procedures to review the project and expenditure report prior to submission to ensure reporting is properly reconciled to the general ledger expenditures in accordance with the grant requirements. Views of responsible official and planned corrective actions Management agrees with this finding. The City will implement procedures to ensure reports are based upon the City’s general ledger and properly reconciled and in compliance with U.S. Treasury guidelines.