Audit 409338

Finding #SA2025-001: Suspension and Debarment Documentation for Contracts and Subcontracts Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Pass Through Entity: County of San Mateo Federal Award Identification Number: SFLRP0201 Criteria: The City’s agreement with the grantor for the Affordable Housing Project (Exhibit C) requires the City to comply with 2 C.F.R. Part 180, subpart C, which requires the City to check SAM exclusions, or collect a certification, or add a clause or condition before entering into a covered transaction. Exhibit C also includes the requirement that the City include “a requirement to comply with these [suspension and debarment] regulations in any lower tier covered transactions it enters into.” Condition: The subgrant agreement under the Affordable Housing project does not include the provisions required by the grant agreement and the City did not have documentation that it had checked for SAM exclusions. We did note that as of July 20, 2026, the subgrantee was not included on the exclusions list on SAM.gov. Effect: The City is not in compliance with the suspension and debarment provisions of the grant award agreement. Cause: We understand City staff checks the SAM.gov for exclusions at the time of contract execution, but documentation is not retained. In addition, we understand the contract did not include the required suspension and debarment provisions due to staff oversight. Identification as a Repeat Finding: Yes, since 2024 (Finding #SA2024-001) Recommendation: The City should develop procedures to retain documentation of the check for SAM exclusions prior to entering into contracts, and the City should ensure that all contracts funded by the grants include the requirement that the vendor/subrecipient comply with the suspension and debarment regulations. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding #SA2024-002: Subrecipient Monitoring Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Pass Through Entity: County of San Mateo Federal Award Identification Number: SFLRP0201 Criteria: 2 C.F.R. Part 200.332 of the Uniform Guidance requires that the City evaluate the risk of noncompliance for its subrecipients and perform monitoring procedures based upon identified risks. Subrecipient monitoring provides reasonable assurance that the subrecipient used the subaward for authorized purposes in compliance with federal statutes, regulations, and the terms and conditions of the subaward. In addition, 2 C.F.R. Part 200.510 (b)(4) of the Uniform Guidance requires that the schedule of expenditures of federal awards include the total amount provided to subrecipients from each Federal program. Condition: The City had one subrecipient under the COVID-19 – Coronavirus State and Local Fiscal Recovery Fund grant, but we understand the City does not have policies and procedures related to the monitoring of subrecipients. In fiscal year 2025, City staff did not obtain a copy of the subrecipient’s most recent single audit report and did not conduct any other monitoring of the subrecipient. Effect: The City is not in compliance with the subrecipient monitoring and reporting requirements of the Uniform Guidance. Cause: We understand that the City’s program manager in charge of this program has left the City and did not perform monitoring procedures. Identification as a Repeat Finding: Yes, since 2024 (Finding #SA2024-002) Recommendation: The City should develop policies and procedures related to subrecipient monitoring in compliance with the provisions of 2 C.F.R. Part 200.332 and reporting in compliance with the provisions of 2 C.F.R. Part 200.510 (b)(4). View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding #SA2025-003: Timely Quarterly Reporting Assistance Listing Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency: Department of the Treasury Pass Through Entity: County of San Mateo Federal Award Identification Number: SFLRP0201 Criteria: Section 6, Reporting Requirements, of the City’s grant award agreement for the Mercy Housing California project requires “written quarterly reports, submitted electronically on Grantee’s official letterhead…within seven (7) days after the end of each quarter.” Condition: We selected the December 2024 and March 2025 quarterly reports for the projects for testing of timely filing and compliance with the content requirements of Section 6 of the grant award agreement. The reports were filed with the grantor on March 5, 2025 and May 12, 2025, respectively, which is outside of the required seven day window. Effect: The City is not in compliance with the timely reporting requirements of the grant award agreements. Cause: We understand the reports were not filed timely due to staff oversight and delayed reporting from the City’s subrecipient. Identification as a Repeat Finding: Yes, since 2024 (Finding #SA2024-004) Recommendation: The City should develop procedures to ensure timely quarterly reporting to the grantor each quarter. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.