Finding Text
Condition: We noted that the entity experienced significant turnover in key management positions responsible for overseeing compliance with federal awards during FY 2024. As a result, there was insufficient oversight of federal programs and internal controls. Critical duties related to compliance monitoring, reporting, and financial management were not performed adequately during the transition period, and there was a lack of continuity in management practices. Cause: The entity did not have adequate processes in place to ensure continuity of oversight and management responsibilities during periods of turnover. There were no succession plans or interim measures to ensure that compliance duties were properly transitioned and maintained. Effect or Potential Effect: The lack of oversight during the management turnover period increases the risk of non-compliance with federal award requirements. It can lead to gaps in monitoring, failure to meet reporting deadlines, inaccurate financial management, and the potential for disallowed costs or other negative consequences. Questioned Cost: None. Context: The deficiency was found during our testing of reporting and special tests and provisions. Statistical Sampling Validity: Not applicable. No sampling was performed. Repeat of a Prior-Year Finding: 2022-007, 2023-006. Recommendation: The entity should establish policies and procedures to ensure continuity of oversight and compliance monitoring during management transitions. This should include: 1. Developing a formal succession plan for key management positions responsible for overseeing federal programs. 2. Implementing interim oversight measures, such as assigning temporary leadership or redistributing compliance responsibilities during periods of transition. 3. Ensuring that new management receives timely training on compliance responsibilities and internal controls related to federal awards. Management Response and Corrective Action Plan City's Response: The City concurs with the recommendation. Corrective Action Plan: The recommendations are included in the new Grants policy. The City Manager shall review and submit to City Council for approval and adoption. Expected implementation by June 2026. Planned Implementation Date: June 2026 Responsible Person(s): City Manager