Finding 1074686 (2023-006)

Criteria – The Uniform Guidance, Part 200.303, requires the City establish and maintain effective internal control over the federal award which provides reasonable assurance the City is managing the federal award in compliance with federal statutes, regulations and the terms of the federal award. The SF-425 report, “Federal Financial Report”, is the annual summary of financial activity for the federal award. Airport Improvement Program policy requires that the recipients of airport improvement program grants must submit an SF-425 report at least annually for each grant no later than 90 days after the end of the federal fiscal year (i.e., September 30). Condition – The City did not submit two reports for federal fiscal year ending September 30, 2023 until May 6, 2024. Also, both reports understated total expenditures for the projects in the federal fiscal year ended September 30, 2023. In addition, there is no documentation that the City is reviewing these reports prior to submission. Cause – The City contracts with an outside vendor to ensure that the reports are prepared and submitted. However, due to an oversight by the vendor the reports were not submitted timely and expenditure amounts were misstated. In addition, the City does not have policies and procedures in place to ensure that these reports are reviewed prior to submission. Effect – The lack of policies and procedures in place by the City could result in late submission of reports and inaccurate reports. Recommendation – Procedures should be established to ensure that all federal reporting is done timely and accurately. These policies should include an independent review of reports prior to submission. If the City chooses to use an outside vendor, the City should develop policies and procedures to ensure that the vendor is submitting reports timely and accurately, as well as procedures to review these reports before they are submitted. Response - The City will develop policies and procedures to ensure that all federal reporting is done timely and accurately. Also, those policies and procedures should ensure that these reports are independently reviewed before submission. Conclusion - Response accepted.