Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires prime recipients of federal grants or contracts ($30,000 or more) to report first-tier subawards and executive compensation via SAM.gov by the end of the month following the month of the award. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. The City did not report the first-tier subawards in compliance with the Uniform Guidance. Context/Cause: The City did not have adequate internal controls to ensure compliance with FFATA reporting requirements. It was determined that there were twenty (20), fourteen (14), and eight (8) first-tier subawards subject to FFATA reporting for the CDBG, HOPWA, and EFSP programs, respectively. The City did not monitor any of the first-tier subawards subject to FFATA reporting to ensure FFATA reporting was completed timely for each subaward. Effects: Noncompliance for reporting the first-tier subawards subject to FFATA reporting occurred and was not detected by the City. Questioned Costs: None Recommendation: We recommend the City enhance internal controls to ensure compliance with FFATA reporting requirements. Auditee’s Response: Management will implement a process to ensure compliance with FFATA reporting requirements.
Criteria: Section 15011 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act requires recipients of federal CDBG-CV grants ($150,000 or more) to submit a report containing information regarding the amount of funds received; the amount of funds obligated or expended for each project or activity; a detailed list of all such projects or activities, including a description of the project or activity; and detailed information on any subcontracts or subgrants awarded by the recipient within 10 days of the end of each calendar quarter. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. The City did not submit this report during the fiscal year. Context/Cause: The City did not have adequate internal controls to ensure compliance with Section 15011 of the CARES Act reporting requirements for the CDBG-CV funding. The City was awarded $7,913,409 of CDBG-CV funding and would be required to complete the Section 15011 of the CARES act reporting. It was determined that none of the quarterly required reports were filed for the CDBG-CV grant funding. Effects: Noncompliance for quarterly reporting for Section 15011 of the CARES Act occurred and was not detected by the City. Questioned Costs: None Recommendation: We recommend the City enhance internal controls to ensure compliance with Section 15011 of the CARES Act reporting requirements. Auditee’s Response: Management will implement a process to ensure that reporting of CDBG-CV funds are being completed timely.
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires recipients of federal funding grants who charge indirect costs to a grant to either use the de minimis cost rate of 10% or have a negotiated indirect cost rate approved by a cognizant agency. Furthermore, recipients of federal funding in excess of $35 million in direct federal funding are required to develop an indirect cost rate proposal and submit that proposal to its cognizant agency for indirect costs when they elect to use a rate that exceeds the 10% de minimis rate. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. The City did not submit their indirect cost rate proposal to their cognizant agency. Context/Cause: The City did not have adequate internal controls to ensure compliance with indirect cost rate requirements. The City received more than $35 million in direct federal funding and did not submit their required indirect cost rate proposal for approval to a cognizant agency after electing not to use the 10% de minimis rate. The rate charged to the CSLFRF program for the current fiscal year was greater than the 10 percent de minimis rate, but the total indirect costs charged under that rate during the current fiscal year did not exceed 10% of the total federal award. Effects: Controls were not in place over the process of allowable indirect costs. Questioned Costs: None Recommendation: We recommend the City enhance internal controls to ensure compliance with indirect cost rate requirements. Auditee’s Response: Management will establish a process to apply the de minimis rate to all relevant federal awards going forward.
Criteria: Under 2 CFR 200.403, costs charged to a federal award must be necessary, reasonable, and allocable to the award. They must also follow the limits and exclusions in the award terms and be adequately documented. Under 2 CFR 200.303, the non-federal entity must keep effective internal control over the award so that it can reasonably ensure compliance with federal statutes, regulations, and the award terms. The Emergency Food and Shelter Program (EFSP) award terms and Responsibilities and Requirements Manual define which costs are eligible, including eligible populations, cost categories, and documentation. Under 2 CFR 200.332, a pass-through entity must monitor its subrecipients to ensure that subawards are used for authorized purposes. Condition: The EFSP National Board reviewed the City's EFSP expenditures and found that costs of $1,074,061 charged to the program did not meet program requirements. It therefore determined these costs to be unallowable. Questioned Costs: $1,074,061 (Known) Context/Cause: The City's total EFSP expenditures for the year were $5,259,831. The National Board found unallowable costs of $1,074,061, or 20.4% of total program expenditures. The City did not have adequate controls to ensure that costs charged to the program, including those incurred by subrecipients, were reviewed against EFSP eligibility and documentation requirements before reimbursement was requested. Effects: Controls were not in place over the process of allowable costs. The City must repay the $1,074,061 in unallowable expenditures. Recommendation: We recommend the City enhance internal controls to ensure compliance with allowable cost requirements. Auditee’s Response: The City acknowledges the finding and recognizes the importance of ensuring that all expenditures charged to grant funded programs comply with applicable allowability and documentation requirements. During the period under review, the City engaged a consulting firm to provide compliance support for the program, including guidance related to allowable costs. The City relied on this professional guidance in administering the program. The finding highlights the need for additional City-level oversight of compliance and management will work to enhance controls to ensure compliance going forward.
Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires pass-through entities to clearly identify to each subrecipient federal subaward information, assess risk of noncompliance for each subrecipient, monitor subrecipient activities, confirm every subrecipient has an audit under Subpart F of the Uniform Guidance (if applicable) and respond to the results of the subrecipients’ audits. Condition: Internal controls should be in place to ensure the City is in compliance with all requirements of the federal award program. The City did not properly monitor six (6) subrecipients (four (4) under Highway Planning and Construction and two (2) under the Federal Transit Formula Grants) in compliance with the Uniform Guidance. Context/Cause: The City did not have adequate internal controls to ensure compliance with subrecipient monitoring requirements. Testing was performed over each requirement for the City. Out of a total population of six (6) subrecipients across the Highway Planning and Construction program and the Federal Transit Formula Grants, all six (6) were selected for testing. For all six (6) subrecipients, the City did not perform subrecipient monitoring on any of the subrecipients for either program. Effects: Noncompliance at the subrecipient level may occur and not be detected by the City. Questioned Costs: None Recommendation: We recommend the City enhance internal controls to ensure compliance with subrecipient monitoring requirements. Auditee’s Response: Management will implement a process to ensure entities receiving grant funds from the City are properly evaluated to determine whether they are classified as contractors or subrecipients. Subrecipients will be assessed for risk and ongoing monitoring will be conducted for all subrecipients based on the results of the City’s risk assessment.