FAC Explorer

Audit 4666

FY End
2022-06-30
Total Expended
$5.15M
Findings
4
Programs
4
Organization: City of Weed (CA)
Year: 2022 Accepted: 2023-11-29
Auditor: Charles W Pillon CPA

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
2723 2022-005 Material Weakness Yes BL
2724 2022-006 Material Weakness Yes B
579165 2022-005 Material Weakness Yes BL
579166 2022-006 Material Weakness Yes B

Programs

ALN Program Spent Major Findings
11.300 Investments for Public Works and Economic Development Facilities $4.53M Yes 2
21.027 Coronavirus State and Local Fiscal Recovery Funds $325,939 - 0
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $134,395 - 0
21.019 Coronavirus Relief Fund $5,324 - 0

Contacts

Name Title Type
SCKFJ5NN6FZ5 Jill Porterfield Auditee
5309385020 Charles Pillon Auditor
No contacts on file

Notes to SEFA

Title: Note A - Basis of Presentation Accounting Policies: Accrual basis of accounting; pass through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: No explanations are necessary. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal grant activity of the City of Weed (the City) under programs of the federal government for the fiscal year ended June 30, 2022. The information in this Schedule is presented in accordance with the audit 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 operations of the City, it is not intended to and does not present the financial net position or changes in net position of the City.
Title: Note B - Summary of Significant Accounting Policies Accounting Policies: Accrual basis of accounting; pass through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: No explanations are necessary. 1. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, when applicable, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Also, when applicable, recognition is following the Uniform Guidance for federal awards granted after December 26, 2014. 2. Pass-through entity identifying numbers are presented where available.
Title: Note C - Subrecipients Accounting Policies: Accrual basis of accounting; pass through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: No explanations are necessary. Of the federal expenditures presented in the schedule, the City provided $17,314 of the federal awards to subrecipients.
Title: Note D - Indirect Cost Rate Accounting Policies: Accrual basis of accounting; pass through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: No explanations are necessary. The City did not elect to use the 10% de Minimis indirect cost rate on the federal awards presented in this schedule.
Title: Note E - Federal Assistance Accounting Policies: Accrual basis of accounting; pass through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: No explanations are necessary. The City expended no federal non-cash assistance during the year, had no federal insurance in effect during the year, and had no outstanding federal loans or loan guarantees during the year.

Finding Details

Finding 2022-005
2021-005 Material Weakness and Material Noncompliance: Grant and Reporting Compliance Department of Commerce - Investments for Public Works and Economic Development Facilities – CFDA No. 11.300 - Year ended June 30, 2022 Condition: The City failed to adequately review and reconcile the last pay request from the contractor and overpaid the contractor. As a result, the City also requested this overpayment amount from the Federal grant and it was funded to the City. Requests for reimbursement and semi-annual reporting is being reviewed by financial management, but there was no evidence that a reconciliation to the accounting system (i.e. general ledger) was performed, which resulted in material misstatements in the requests and reporting. Criteria: As a requirement of Federal cost principles found in 2 CFR 200.302, as well as the grant agreement with the U.S. Department of Commerce Economic Development Administration (EDA), the City’s accounting system should reconcile directly, and easily, to the grant reports/funds requests submitted to the grantors, the grant reporting should be free of material misstatements, and the grant files should be appropriately organized. Additionally, costs paid on this project with Federal funds cannot consist of improper payments, including overpayments, which are considered unallowable costs under the Federal cost principles. Cause: There was no reconciliation of grant reporting (including funds requests) to the general ledger in the accounting system, which resulted in the overpayment and overfunding. Effect: Grant project costs reporting (SF-425) were submitted to EDA with material misstatements and funds requests (SF-271) were misstated resulting in the overfunding of project costs. Material weakness in internal controls over compliance and material noncompliance with reporting occurred due to these misstatements and the lack of reconciliation to the accounting system. The same questioned costs as stated in Finding 2022-001, $52,446, also relates to this major award program. Context: The audit examined 100% of the fund’s requests (SF-271 #3 through #10) covering the entire fiscal year accrual period. The total Federal share requested exceeded total allowable project costs by $52,446, the amount of the questioned costs. The overpayment of the contractor and overfunding appear to be isolated and not pervasive. This is a repeat finding. Recommendation: I recommend the City ensure the accounting system reconciles to the funds requests without exception, to ensure invoices from contractors are correct before paying and to document the reconciliation to the accounting system. Views of Responsible Officials: The City agrees with the finding.
Finding 2022-006
2022-006 Material Weakness and Material Noncompliance: Cost Principles Department of Commerce - Investments for Public Works and Economic Development Facilities – CFDA No. 11.300 - Year ended June 30, 2022 Condition: The City’s written policies and procedures for compliance over Federal award programs is not complete. The City only has written policies related to procurement, suspension and debarment. Criteria: Under Uniform Guidance cost principles, all grantees who receive Federal funds must have “specific” written policies and procedures for compliance over Federal award programs for all 12 compliance requirements found in the Uniform Guidance. Cause: The City only has internal policies and procedures that comply with State laws and regulation. Effect: Without effectively written and communicated policies and procedures the City will be in noncompliance in the operation of Federal programs and employees might not have the direction necessary to stay in compliance with all Federal compliance requirements when working on or managing Federal award programs. Context: This is a repeat finding and has been elevated to material. There are no questioned costs related to this finding. Recommendation: The City should develop a complete set of “specific” written policies and procedures for compliance over Federal award programs and communicate them to the appropriate City personnel. Views of responsible officials: The City agrees with the finding.
Finding 2022-005
2021-005 Material Weakness and Material Noncompliance: Grant and Reporting Compliance Department of Commerce - Investments for Public Works and Economic Development Facilities – CFDA No. 11.300 - Year ended June 30, 2022 Condition: The City failed to adequately review and reconcile the last pay request from the contractor and overpaid the contractor. As a result, the City also requested this overpayment amount from the Federal grant and it was funded to the City. Requests for reimbursement and semi-annual reporting is being reviewed by financial management, but there was no evidence that a reconciliation to the accounting system (i.e. general ledger) was performed, which resulted in material misstatements in the requests and reporting. Criteria: As a requirement of Federal cost principles found in 2 CFR 200.302, as well as the grant agreement with the U.S. Department of Commerce Economic Development Administration (EDA), the City’s accounting system should reconcile directly, and easily, to the grant reports/funds requests submitted to the grantors, the grant reporting should be free of material misstatements, and the grant files should be appropriately organized. Additionally, costs paid on this project with Federal funds cannot consist of improper payments, including overpayments, which are considered unallowable costs under the Federal cost principles. Cause: There was no reconciliation of grant reporting (including funds requests) to the general ledger in the accounting system, which resulted in the overpayment and overfunding. Effect: Grant project costs reporting (SF-425) were submitted to EDA with material misstatements and funds requests (SF-271) were misstated resulting in the overfunding of project costs. Material weakness in internal controls over compliance and material noncompliance with reporting occurred due to these misstatements and the lack of reconciliation to the accounting system. The same questioned costs as stated in Finding 2022-001, $52,446, also relates to this major award program. Context: The audit examined 100% of the fund’s requests (SF-271 #3 through #10) covering the entire fiscal year accrual period. The total Federal share requested exceeded total allowable project costs by $52,446, the amount of the questioned costs. The overpayment of the contractor and overfunding appear to be isolated and not pervasive. This is a repeat finding. Recommendation: I recommend the City ensure the accounting system reconciles to the funds requests without exception, to ensure invoices from contractors are correct before paying and to document the reconciliation to the accounting system. Views of Responsible Officials: The City agrees with the finding.
Finding 2022-006
2022-006 Material Weakness and Material Noncompliance: Cost Principles Department of Commerce - Investments for Public Works and Economic Development Facilities – CFDA No. 11.300 - Year ended June 30, 2022 Condition: The City’s written policies and procedures for compliance over Federal award programs is not complete. The City only has written policies related to procurement, suspension and debarment. Criteria: Under Uniform Guidance cost principles, all grantees who receive Federal funds must have “specific” written policies and procedures for compliance over Federal award programs for all 12 compliance requirements found in the Uniform Guidance. Cause: The City only has internal policies and procedures that comply with State laws and regulation. Effect: Without effectively written and communicated policies and procedures the City will be in noncompliance in the operation of Federal programs and employees might not have the direction necessary to stay in compliance with all Federal compliance requirements when working on or managing Federal award programs. Context: This is a repeat finding and has been elevated to material. There are no questioned costs related to this finding. Recommendation: The City should develop a complete set of “specific” written policies and procedures for compliance over Federal award programs and communicate them to the appropriate City personnel. Views of responsible officials: The City agrees with the finding.