Finding 1147310 (2024-001)

Finding 2024-001 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City did not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal awards, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures were not formally drafted and updated in written form. Effect: The failure to have written policies and procedures during the grant period resulted in the City’s temporary noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Since the discovery of this issue, the City has adopted written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation, and this matter has already been resolved subsequent to year-end. See corresponding Corrective Action Plan.