2025-002: Errors in Federal Financial Reporting and Cash Management Grant: 16.710 Public Safety Partnership and Community Policing Grants Criteria: In accordance with 2 CFR §200.302 and the Cash Management requirements in the Uniform Guidance Compliance Supplement, recipients are required to maintain effective internal controls over financial reporting to ensure that expenditures reported on Federal Financial Reports (FFRs) are accurate, supported, and based on actual allowable expenditures. Cash requests should be based on accurate expenditure information. Condition: During testing, we noted errors in the expenditures reported on quarterly Federal Financial Reports over multiple reporting periods for the FY2021 and FY2022 COPS grants. The errors in the expenditure calculations were not identified during the City's review process and remained uncorrected through the fiscal year ended April 30, 2025. Because grant reimbursements were based on the quarterly expenditure reports, the City received reimbursement amounts that did not accurately reflect actual grant expenditures during fiscal year 2025. The City performed a comprehensive review of the grant activity. The cumulative expenditures reported on the March 31, 2026 Federal Financial Report were updated, and the supporting detail and summary schedules were updated retroactively to reflect the cumulative balances. Since this report was after year-end, it was not audited. The fiscal year 2025 SEFA was adjusted to reflect the corrected expenditure amounts. Cause: The City did not maintain adequate internal controls over the preparation and review of Federal Financial Reports to ensure expenditure calculations were accurate and reconciled to the underlying accounting records prior to submission. Context: The City submitted quarterly Federal Financial Reports (FFRs) for the FY2021 and FY2022 COPS Hiring Program grants during fiscal year 2025. Errors were identified in the expenditure calculations reported on multiple quarterly FFRs. These errors remained uncorrected through April 30, 2025, and affected the cash reimbursements received during the fiscal year. Questioned Cost: None Effect or potential effect: Inaccurate expenditures were reported to the federal awarding agency over multiple reporting periods, resulting in reimbursement requests that were not based on accurate expenditure information. In addition, the original fiscal year 2025 SEFA did not agree to the corrected grant expenditure records until adjustments were made. Recommendation: We recommend the City strengthen its internal controls over federal reporting by implementing documented review and reconciliation procedures for all Federal Financial Reports prior to submission. Reported expenditures should be reconciled to the general ledger and supporting grant records, and supervisory review should be documented to ensure the accuracy of reported expenditures and related cash draws. View of responsible officials and planned corrective actions: Management concurs with the finding. During fiscal year 2026, the City identified errors in expenditure calculations reported on quarterly Federal Financial Reports (FFRs) for the FY2021 and FY2022 COPS grants. Management performed a comprehensive review of the grant activity, corrected cumulative expenditures reported on the March 31, 2026 FFR, updated supporting detail and summary schedules, and adjusted the FY2025 Schedule of Expenditures of Federal Awards (SEFA) to agree with the corrected grant expenditure records. To prevent similar errors in the future, the City will implement documented review and reconciliation procedures for all Federal Financial Reports before submission. Reported expenditures will be reconciled to the general ledger and supporting grant records, and cash reimbursement requests will be verified against actual allowable expenditures. An independent reviewer will verify the calculations, cumulative balances, supporting documentation, and reimbursement amounts. Evidence of preparation, reconciliation, and supervisory review will be retained in the City's grant files.
2025-003: Lack of Controls in Federal Financial Reporting Grant: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: In accordance with 2 CFR §200.302, recipients are required to maintain effective internal controls over financial reporting to ensure that expenditures reported on Federal Financial Reports (FFRs) are accurate, supported, and based on actual allowable expenditures. Condition: During testing, the City was not able to provide documentation that provided evidence of a separate preparer and reviewer for the Arthur Street grant reporting. Cause: The individuals responsible for reporting during the applicable period were no longer employed by the City and search of available files and email records did not identify the supporting documentation. Context: The Aruthur Street reporting was handled by the Community and Economic Development Department and the associated individuals are no longer employed by the City. Questioned Cost: None Effect or potential effect: Inaccurate reporting could occur without detection. Recommendation: We recommend the City strengthen its internal controls over federal reporting by implementing and maintaining documented review procedures for all Federal Financial Reports prior to submission. View of responsible officials and planned corrective actions: Management concurs with the finding. Management will strengthen its internal controls over federal financial reporting by implementing procedures requiring the preparation and independent review of all Federal Financial Reports (FFRs) prior to submission. The preparer and reviewer will verify reported expenditures against the City's accounting records and supporting grant documentation. The reviewer will document approval through a dated email or written sign-off confirming that the report and supporting documentation have been reviewed. Federal Financial Reports will not be submitted until the review is completed and documented. The City will maintain centralized electronic files for federal grant reporting, including submitted reports, reconciliations, supporting documentation, and evidence of supervisory review. Procedures will also be implemented to ensure that grant reporting records, reporting deadlines, and outstanding responsibilities are transferred to designated personnel when employees leave or change positions.