Corrective Action Plans

The City has established policies and procedures related to grant administration and accounting guidelines for allowable costs. The City is aware of the deadline for the submission of the Single Audit. The City is taking steps to ensure that personnel have received guidance and training regarding grant accounting, including deadlines for the audit. Responsible Party and Anticipated Completion Date: Commissioner of Finance Minita Sanghvi 12/31/2026

U.S. Department of Housing and Urban Development – CFDA 14.228 Condition: The County charged payroll costs using an internal allocation method that included salaries, benefits, and supplies, rather than actual expenditures. This method was not supported by an approved cost allocation plan. Additionally, the hours charged were based on total grant administration time, not specific to the CDBG program. Recommendation: The County should ensure that all costs charged to federal programs are based on actual expenditures or an approved cost allocation plan. Documentation should be maintained to support all reported costs, and internal controls should be strengthened to prevent reliance on unsupported methodologies. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action planned in response to finding: The County will not be applying for any CDBG grants in the future unless there is adequate administrative cost allocation in the grant. The County will continue to make every effort to adequately close out CDBG grants and provide reports to the granting organization as staff and priorities allow. Name(s) of the contact person(s) responsible for corrective action: Under direction of the County Administrative Officer, the Senior Financial Analyst Suzie Hawkins Planned completion date for corrective action plan: Completed and on-going

• CFO will examine feasibility of adding flags to journal entries to ensure unallowable costs are flagged at the point of entry Will conduct training on allowable vs. unallowable costs Grants Accountant will conduct quarterly review of costs to ensure no unallowable costs included – will review first three months of FY26 by 12/31/25

Per the auditor's reportable finding via the Section II- Findings Related to the Financials Statements Audited in Accordance with Government Auditing Standrds and Section III- Findings and Questioned Costs For Federal Awards: 2024-001 Indirect Costs Alloction Process Needs Improvements, the following represents management's explanation of tits corrective action plan: Effectively immediately, Urban League of Greater Chattanooga (ULGC) implementing a monthly process to record and allocate indirect costs to programs where an indirect rate is allowed for all federal and state programs. Kyree Brown, Accountant will calculate and record the journal entry and Pierre Pinkerton, CFO will perform the review. Also Kyree Brown will eprform a monthly reconciliation of indirect costs charged to programs with the amount recorded to the general ledger. Any differences will be investigated and immediately resolved.

2023-006 Management Response: Management respectfully disagrees with this Finding. • Under Condition, the finding states, “Time and effort is being tracked and maintained by employees, including hours charged to the specific efforts for the programs.…” This is not accurate. Employees report their time worked each day, including the amount of time they worked on different projects if applicable. Employees report this in our commercial HRIS/Payroll system, where it is maintained and where it is reviewed and approved by the employee’s manager. The employees report the time they worked and which project(s) they worked on, their managers review and approve the time and the distribution, and the data is tracked and maintained in our HRIS/Payroll system (ExponentHR). • Also under Condition, the finding states, “The specific amount of employee salaries and wages that are allocated to specific federal programs for reimbursement, and which are less than the amounts reflected in time and effort records, are determined by members of the finance staff.” It is correct that we would have to invoice sponsors for less than the total cost of an employee’s allocated time and effort if a sponsor’s budget is not sufficient to cover that full amount. This is the correct procedure to follow. Employees correctly continue documenting their hours worked on a specific project even if the budget is expended and the accounting staff can no longer bill the sponsor. If a particular grant does not have sufficient sponsor funds, then the Grants Accounting staff reduce the bill accordingly. • Also under Condition, the finding states, “The rationale for the amount actually allocated for reimbursement, if less than the amount reflected in time and effort records, is not documented”. This is incorrect. Our monthly invoices to each sponsor accumulate, with each invoice clearly showing not only that month’s expense but also the year-to-date expense and remaining balance, which forces the sponsor invoice to stop at an amount less than the total cost of employees’ time and effort when the budget is exhausted. • Also under Condition, the finding states, “Review and approval of the allocation of employee compensation to specific federal programs reimbursement requests is not maintained.” Each employee records their hours worked, and the project(s) on which they worked those hours, in our HRIS/Payroll system. The employee’s manager reviews and approves both the hours worked and the projects on which the hours were worked. This review and approval is maintained in our HRIS/Payroll system. Financial staff calculate the amount to allocate to specific federal programs based on these HRIS/Payroll system records (or other records such as clinical units produced, based on the terms of each grant). Separate accounting staff review the sponsor invoice and post the Receivable once they deem the invoice correct. • Under Cause, the finding states, “…..the Organization has not implemented a structured process for documenting the extent to which allowable [emphasis added] compensation costs will be allocated for reimbursement to specific federal programs in instances where the allowable compensation cost exceeds the amount allocated for reimbursement.” This means that we do not have a process for documenting how much of a payroll expense already deemed allowable on a particular grant will actually be invoiced there. We disagree and believe that the presence and documentation of a limited sponsor budget, along with cumulative tracking and documentation of compensation expenses against that budget, proves and documents why sometimes full compensation costs are not charged to a grant. • Under Possible Effect, the finding addresses possible effects of “the absence of documented allocation methodologies.” We don’t agree that our process could lead to improper allocation between federal programs (as the finding states) nor to misstating federal expenditures (as the finding states). When a sponsor’s budget is insufficient to cover its appropriately allocated compensation costs, those costs are paid from unrestricted, non-federal funds. As also noted in the finding, no questioned costs were identified.

2023-006 Single Audit Report Submission Although management acknowledges that the City’s annual financial statement and single audits have not been completed timely, we also note that it was the only issue identified in the federal single audit. The City has invested significant time and resources to bring its accounting and reporting current. The City’s timeliness has improved each year since 2020 and the 2023 single audit will be submitted 3 months earlier than the prior year. Management anticipates this issue being fully corrected by September 2025 with the timely filing of the 2024 audit. Dr. Brian Martinez, Commissioner of Finance, is responsible for ensuring that this corrective action is completed.

The City has established policies and procedures related to grant administration and accounting guidelines for allowable costs. The City is aware of the deadline for the submission of the Single Audit. A personnel vacancy for the position that performs the tasks of supplying the amount of federal expenditures resulted in a delay in ensuring the deadline and the policies and procedures were adhered to. The positions have been filled and the City has taken steps to ensure the personnel have received guidance and training regarding grant accounting, including deadlines for the audit.

We agree with the recommendations offered and will establish and implement a comprehensive indirect cost allocation policy that aligns with Uniform Guidance requirements.

Finding 2022-010 U.S Department of Agriculture Special Supplemental Nutrition Program for Women, Infants, and Childre – 10.557 Award number 202222W100643 Management’s Response: Management agrees it is imperative to foster collaboration for successful award management. Finance leads the annual effort working with an outside consultant to calculate the indirect rate using information supplied by Unified Government of Wyandotte County & Kansas City KS. The annual indirect rate will be calculated annually for use by all departments in the spring and available by July 1 each fiscal year. This will be used consistently across all departments unless the State of Kansas rate is permitted by the grant. Finance will work to find the best way to make the information easily accessible to grant program managers embedded in departments. After the audit, management received an authorization letter from the Kansas Department of Health and Environment (KDHE) that supported the indirect rate we used for Jul2022-Dec2022, however because the letter was dated in 2024, we are still subject to this finding. Views of Responsible Officials and Corrective Action: Management will work internally to complete the annual calculation of the indirect rate and develop a solution, a shared document solution to provide indirect rate information to departments in a consistent and timely manner. Management will ensure this is addressed by December 31, 2024. Responsible Official: Dr. Shelley Kneuvean Chief Financial Officer Unified Government of Wyandotte County & Kansas City KS

Although management acknowledges that the City’s annual financial statement and single audits have not been completed timely, we also note that it was the only issue identified in the federal single audit. The City has invested significant time and resources to bring its accounting and reporting current. Management anticipates this issue being fully corrected by September 2024 with the timely filing of the 2023 audit. Dr. Brian Martinez, Commissioner of Finance, is responsible for ensuring that this corrective action is completed.

If an award is identified as originating from federal funds the Seaway Valley Prevention Council has put measures in place that trigger a system of trainings for involved personnel that require, they thoroughly review the Uniform Guidance 2 C.F.R. Part 200. Involved personnel are also provided a "Allowable Costs and Activities" desk reference. SVPC has also reviewed our internal control's structure and is implementing changes to comply with the Uniform Guidance. SVPC has also performed a thorough review of agency cost allocation methodologies to identify and correct inconsistencies with expense accounts reviewed and reclassified as necessary. Indirect/admin expense accounts have been grouped accordingly in our chart of accounts streamlining our expense review process.

CONDITION: For the calendar year 2021, the City of McKeesport submitted a listing to the Department of Treasury, of eligible expenses for the Coronavirus State and Local Fiscal Recovery Federal Funding. This listing contained the ShotSpotter as referenced in Finding 2021-004 which was already reimbursed to the City as part of the Community Development Block Grant (CDBG) Program by the Department of Housing and Urban Development. CRITERIA: In accordance with Section 2 CFR 200.412 of the Uniform Guidance, federal expenses are prohibited from being charged to more than one federal program. MANAGEMENT’S CORRECTIVE ACTION PLAN: Management of the City will review this eligible expense charged to the Coronavirus State and Local Fiscal Recovery Federal Funding Program, confirm that this is an expense that was already reimbursed by the Department of Housing and Urban Development for the benefit of the City’s CDBG Grant Program, and if so, consult with a representative from the Department of Treasury as to the procedure required to amend the quarterly report filings required to be filed with the Department of Treasury to ensure compliance with Section 2 CFR 200.214 of the Uniform Guidance. The timeframe for completion of this process is effective immediately.