Criteria: Under 2 CFR §200.303, non-Federal entities are required to establish and maintain effective internal controls over Federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. In addition, 2 CFR §200.318–200.320 require entities to maintain records sufficient to detail the history of procurement transactions, including the rationale for contractor selection and the basis for contract price, and to ensure vendors are not suspended or debarred. Further, 2 CFR §200.302 requires recipients to maintain accurate and complete financial records that properly support and record federal expenditures. Condition: During our testing of expenditures charged to the Coronavirus State and Local Fiscal Recovery Fund under the American Rescue Plan Act (ARPA), we identified several instances where the City did not maintain adequate documentation and supporting records for program expenditures. Specifically: a. The City did not consistently maintain documentation supporting procurement decisions. Documentation for competitive bidding, vendor selection rationale, and price reasonableness was not consistently available. The City also did not provide evidence that vendors were verified against SAM.gov for suspension and debarment. Management indicated certain procurements were made under COVID-19 emergency conditions; however, written justification and required approvals were not consistently maintained. b. Expenditures totaling $1,070,694.56, out of $6,305,879.54 tested, were recorded in fiscal year 2022 instead of 2023. c. One disbursement had an invoice dated October 1, 2021, but was not paid until April 26, 2022, resulting in a delay of approximately seven months. d. For certain expenditures, purchase orders totaling $1,018,000 did not agree with related invoices totaling $1,410,483.81, indicating discrepancies between approved purchase amounts and billed amounts. Cause: These issues appear to be due to inadequate internal controls over procurement documentation, expenditure processing, and financial recordkeeping. The City did not consistently maintain documentation supporting procurement decisions, review supporting documentation for completeness, or ensure that expenditures were recorded in the appropriate accounting period. In addition, review procedures were not consistently performed to verify that supporting documents, purchase orders, and invoices were complete and consistent prior to processing payments. Effect: These deficiencies indicate significant weaknesses in the City’s internal controls over procurement documentation, expenditure review, and financial recordkeeping. As a result, the City cannot ensure that expenditures were properly authorized, supported by adequate documentation, recorded in the appropriate accounting period, or consistent with approved purchase amounts. These conditions increase the risk of unsupported or improperly recorded expenditures and limit the City’s ability to demonstrate compliance with federal requirements. Recommendation: The City should strengthen internal controls over procurement and expenditure processing by maintaining complete procurement documentation, including evidence of competitive bidding, vendor selection rationale, price reasonableness, and suspension and debarment verification. Management should also implement procedures to ensure expenditures are recorded in the correct fiscal period and that purchase orders, invoices, and supporting documentation are reviewed for completeness and consistency prior to payment. Questioned Cost: -0- View of Responsible Official: The City agrees with this finding. ARPA rules again were still developing during this time frame and some items were not a requirement during reporting. However, the City did require vendors to start registering with Sams.gov as well perform checking vendors for suspension and debarment after the rules changed.