Audit 410733

Failure to Obtain a Required Single Audit in a Timely Manner Criteria – Title 2, U.S. Code of Federal Regulations §200.501 requires a non-Federal entity that expends $750,000 or more in Federal awards during its fiscal year to obtain a Single Audit conducted in accordance with Uniform Guidance. Federal reporting requirements require the audit reporting package to be submitted to the Federal Audit Clearinghouse within the required timeframe. Condition – The City expended more than $750,000 in Federal awards during the fiscal year ended June 30, 2024. The City did not obtain a Single Audit within the required timeframe because management was unaware that the expenditure of Federal awards triggered the Single Audit requirement. Cause – The City’s management did not have procedures in place to monitor Federal expenditures and evaluate whether additional Federal audit requirements were applicable. As a result, management was not aware that a Single Audit was required. Effect – The City was not in compliance with Federal Single Audit requirements. In addition, Federal agencies and pass-through entities did not receive timely assurance regarding the City's compliance with applicable Federal program requirements. Recommendation – The City should establish procedures to monitor Federal expenditures throughout the year and assess whether expenditures exceed the Single Audit threshold. Management should communicate Federal funding activity to the auditors timely to ensure all applicable audit requirements are identified and completed within the required deadlines. Response and Corrective Action Planned – The City will implement procedures to track Federal expenditures and evaluate Single Audit requirements on an ongoing basis. Management will communicate Federal funding information to its auditors before the audit begins to ensure any required Single Audit is performed and submitted timely. Conclusion – Response accepted.

Single Audit Process Criteria – Title 2, U.S. Code of Federal Regulations §200.501 states an entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards, must have a single audit or program-specific audit conducted for that year in accordance with the provision in §200.501. Condition – The City expended in excess of $750,000 of federal awards for the year ended June 30, 2024. The City was not aware of the single audit requirement and did not contract to have a single audit for fiscal year 2024. Cause – The City’s management was aware of the federal awards being expended; however they were not aware of the requirements to have a single audit completed. Effect – The City’s internal control over compliance with federal audit requirements was inadequate. Recommendation – The City should establish a process to track the dollar amount of federal expenditures that were spent during the year and whether those expenditures give rise to additional audit requirements. This should be done and communicated with the auditors before audit work begins. Response and Corrective Action Planned – The City will develop a formal process for tracking all federal expenditures and take steps to learn when those expenditures trigger additional audit requirements. Conclusion – Response accepted.

Project and Expenditure Report (Quarterly Report) Criteria – The Uniform Guidance, Part 200.303, requires the auditee establish and maintain effective internal control over the federal award which provides reasonable assurance the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms of the federal award. The City is required to submit an annual project and expenditures report. Condition – The required report was submitted with the total funds expended to date being understated by $390,253. Cause – City procedures have not been established to ensure the report is submitted with the correct information. Effect – The lack of established policies and procedures resulted in the incorrect information being submitted of the required report. Recommendation – The City should establish policies and procedures to ensure reports are submitted with the correct information in accordance with the Compliance and Reporting Guidance. Response and Corrective Action Planned – A policy and procedure will be established to ensure the annual Project and Expenditure Report is reviewed and reconciled prior to submission. Conclusion – Response accepted.

Procurement, Suspension & Debarment Criteria – Title 2, U.S. Code of Federal Regulations Part 180.300 When a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. Condition – The City’s management did not verify that the vendor was not suspended or disbarred. Cause – The City’s management were not aware that they needed to verify that the entity was not suspended or debarred. Effect – The City did not have a process to indicate that the vendor was not suspended or disbarred from doing business with federal funds. The City is not in compliance with Federal regulations pertaining to procurement suspension & debarment as required by the Uniform Guidance. Recommendation – The City should verify that each vendor or contracts paid with federal awards, are not suspended by checking the System for Awards Management (SAM) Exclusion available at SAM.gov. Response and Corrective Action Planned – The City was unable to check to make sure the contractor was not disbarred from federal grants. The City is working through a process to ensure all contractors are not on the disbarred list. The City will check SAMS numbers and do more work on the front end for each contractor. Conclusion – Response accepted.