FAC Explorer

Audit 43117

FY End
2022-06-30
Total Expended
$4.17M
Findings
2
Programs
3
Organization: City of Cupertino (CA)
Year: 2022 Accepted: 2023-04-09
Auditor: Crowe LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
48885 2022-001 Material Weakness - L
625327 2022-001 Material Weakness - L

Programs

ALN Program Spent Major Findings
21.027 Coronavirus State and Local Fiscal Recovery Funds $3.59M Yes 1
14.218 Community Development Block Grants/entitlement Grants $113,716 - 0
20.205 Highway Planning and Construction $9,290 - 0

Contacts

Name Title Type
DQ4CLU1A74G9 Kristina Alfaro Auditee
4087773220 Kathy Lai Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The City has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Cupertino, California (the City) for the year ended June 30, 2022. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the Citys operations, it does not present the financial position, changes in net position, or cash flows of the City.
Title: Major Programs Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The City has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. In accordance with the Uniform Guidance, major programs for the City are individual programs or a cluster of programs determined by using a risk-based analysis. The threshold for distinguishing Type A and Type B programs was $750,000 and $187,500, respectively. Awards from the CDBG-Entitlement Grants Cluster and Highway Planning and Construction Cluster are designated as clusters of programs.
Title: Non-Cash Assistance Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The City has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The City had no non-cash assistance during the year.
Title: Federal Insurance Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the principles contained in the Uniform Guidance wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The City has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The City had no Federal Insurance in force during the year.

Finding Details

Finding 2022-001
Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 303(a) states, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). These would include segregation of duties over report preparation and submission to ensure compliance with deadline requirements. Additionally, per the ?Compliance and Reporting Guidance ? State of Local Fiscal Recovery Funds? published by the U.S. Department of Treasury, the Interim Report is required to be submitted by August 31, 2021, while the Project and Expenditure Report is required to be submitted by April 30, 2022 and then annually thereafter. Condition During our assessment of the control activities for the American Rescue Plan Act of 2021 (ARPA), we observed that the City did not have a control in place to ensure proper segregation of duties between report preparation, approval and submission to the US. Department of Treasury, as well a control to ensure timely submission of ARPA reports. As such, the required Project and Expenditure report was not submitted on a timely basis. Questioned Costs None Context The City is required to submit an Interim Report and also a Project and Expenditure Report. For the Interim Report, there was no control in place to ensure segregation of duties between the report preparer and the report reviewer, although we did not note any exceptions in the data submitted by the City and the report was submitted timely. For the Project and Expenditure Report, there also was no control in place to ensure segregation of duties between the report preparer and the report reviewer, with the City not submitting the report (which had a due date of April 2022) until January 2023. However, we did not note any exceptions in the data submitted by the City in the Project and Expenditure Report. Effect Failure to implement sufficient internal controls to ensure the timely filing of reports in accordance with federal regulations could result in the program being noncompliant with federal statutes, regulations and the terms and conditions of the federal awards. Cause The City did not implement an effective control to ensure reports had proper segregation of duties and that reports were submitted timely. In addition, the City wasn?t aware that a Project and Expenditure was required to be submitted. Identification as a Repeat Finding, if Applicable N/A Recommendation We recommend the City revisit its control design and revise its procedures to ensure proper controls over preparation, review and submission of ARPA reports and also ensure the timely submission of all reports. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.
Finding 2022-001
Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 303(a) states, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). These would include segregation of duties over report preparation and submission to ensure compliance with deadline requirements. Additionally, per the ?Compliance and Reporting Guidance ? State of Local Fiscal Recovery Funds? published by the U.S. Department of Treasury, the Interim Report is required to be submitted by August 31, 2021, while the Project and Expenditure Report is required to be submitted by April 30, 2022 and then annually thereafter. Condition During our assessment of the control activities for the American Rescue Plan Act of 2021 (ARPA), we observed that the City did not have a control in place to ensure proper segregation of duties between report preparation, approval and submission to the US. Department of Treasury, as well a control to ensure timely submission of ARPA reports. As such, the required Project and Expenditure report was not submitted on a timely basis. Questioned Costs None Context The City is required to submit an Interim Report and also a Project and Expenditure Report. For the Interim Report, there was no control in place to ensure segregation of duties between the report preparer and the report reviewer, although we did not note any exceptions in the data submitted by the City and the report was submitted timely. For the Project and Expenditure Report, there also was no control in place to ensure segregation of duties between the report preparer and the report reviewer, with the City not submitting the report (which had a due date of April 2022) until January 2023. However, we did not note any exceptions in the data submitted by the City in the Project and Expenditure Report. Effect Failure to implement sufficient internal controls to ensure the timely filing of reports in accordance with federal regulations could result in the program being noncompliant with federal statutes, regulations and the terms and conditions of the federal awards. Cause The City did not implement an effective control to ensure reports had proper segregation of duties and that reports were submitted timely. In addition, the City wasn?t aware that a Project and Expenditure was required to be submitted. Identification as a Repeat Finding, if Applicable N/A Recommendation We recommend the City revisit its control design and revise its procedures to ensure proper controls over preparation, review and submission of ARPA reports and also ensure the timely submission of all reports. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.