CORRECTIVE ACTION PLAN
March 26, 2024
City of Roanoke, Virginia respectfully submits the following corrective action plan for the year ended June 30, 2023.
Name and address of independent public accounting firm:
Brown, Edwards & Company, L.L.P. 3906 Electric Road
Roanoke, VA 24018
Audit period: June 30, 2023
The findings from the June 30, 2023 Schedule of Findings and Questioned Costs (the "Schedule") are discussed below. The findings are numbered consistently with the number assigned in the Schedule.
FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT
2023-001: Workforce Investment Opportunity Cluster - Assistance Listing #17.258117.259 / 17.277 / 17.278, Subrecipient Monitoring
Condition:
During our review of subrecipient monitoring, we noted that the City's monitoring was not being performed according to the formal written policy. While monitoring was performed and documented during the second half of fiscal year 2023, there was a lack of evidence of testing and suggestions to the subrecipient during the first half of fiscal year 2023.
Criteria:
According to 2CFR 200.33l(a) of the 0MB Compliance Supplement, the City should make subrecipients aware of award information. According to the City's Program Participant Monitoring Plan, the City is supposed to conduct subrecipient monitoring on a semi-annual basis which should include desk reviews of payroll, disbursements, and other financial items.
Cause:
Staff turnover, particularly for the role of grant accountant, caused these procedures to be overlooked. Management prioritized core operating activities with staffing vacancies in lieu of monitoring activities. Management asserts staff went onsite to review key documents, as documented by email activities, but did not document specific items subject to review.
Effect:
Noncompliance with federal grant requirements with regard to subrecipient monitoring as well as an increased risk of subrecip1ent misusing funds.
Questioned Cost Amount:
Not applicable.
Perspective Information:
One out of two awards
Recommendation:
We recommend performing subrecipient monitoring in accordance with the City's guidelines and following the procedures laid out in the Program Participant Monitoring Plan.
Corrective Action:
Management concurs with the recommendation and will ensure that follow-up occurs regarding information provided by business owners. Loss of staff in this accountability area resulted in inquiry and reviews conducted by varying personnel the past few fiscal years. The Accounting Supervisor and the Accounts Payable coordinator, in the absence of a Grant Accountant, conducted the first semi-annual visit for fiscal year 2023. A grant accountant was hired in Spring 2023 along with an Accounting Manager, who were able to conduct the second visit in June 2023. Revisions to the policies and procedures were made following the June visit along with developing formalized documentation templates that show what was subject to monito ring. Fiscal year 2024 monitoring in January 2024 has been completed with follow-up to occur in June 2024.
2023-002: Coronavirus State and Local Fiscal Recovery Funds -Assistance Listing #21.027, Disbursements
Condition:
During our review of the locality's disbursements related to the program, it was noted that procurement policies were not being followed. In 3 of 25 instances, credit card purchases were not properly approved.
Criteria:
CSLFRF funds may be used for eligible expenses subject to restrictions set forth in Treasury's Interim Final Rule and Final Rule at 31 CFR Part 35. Also, 2 CFR Part 200 section 303 requires effective control over, and accountability for, all funds. According to the City's procurement policy, department managers and directors are supposed to review and approve credit card purchases on a monthly basis. Review includes ensuring appropriate supporting documentation is included. Documentation should support that transactions are for allowable expenses.
Cause:
Though the City has controls that push compliance, monitoring and enforcement by Finance is lacking. Additionally, the volume of transactions make monitoring challenging. Some transaction support and approval are routed electronically through US Bank for automation, but there are thousands of monthly transactions.
Effect:
Noncompliance with federal grant requirements with regard to disbursements.
Questioned Costs:
Not applicable.
Perspective Information:
Three out twenty-five transactions
Recommendation:
We recommend disbursing funds in accordance with the City's procurement policy including a process that requires approval of all credit card purchases.
Corrective Action:
Management concurs with the recommendation and will ensure that procurement policies including those over credit card purchases will be adhered to. Starting in fiscal year 2023 communication to department directors occurred reinforcing that reviewing and approving financial transactions is necessary under City policy. The City's Department of Finance on a monthly basis is monitoring P-Card compliance and has enhanced communication of internal deadline dates for coding and approving transactions. Follow-up is performed by the Accounts Payable coordinator to address issues with individual users and departments who have unapproved transactions. This practice will continue moving forward with issues of continued non-compliance by users and directors potentially resulting in revoking privileges of using city purchasing cards.
2023-003: Coronavirus State and Local Fiscal Recovery Funds -Assistance Listing #21.027, Disbursements
Condition:
During our review of the locality's revenue loss calculation, it was noted that one revenue figure was not supported by the City's transmittal form causing the lost revenue available for the City to claim to be understated by approximately $4.8 million.
Criteria:
Under the Final Rule, recipients can elect a one-time "standard allowance" of $10 million (not to exceed the recipient's award amount) to spend on the "provision of government services" during the period of performance. Alternatively, recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula provided in the Final Rule to determine the amount of SLFRF funds that can be used for the "provision of government services." According to the 0MB Compliance Supplement section 4-21.027 section III B, recipients can choose whether to use calendar or fiscal year dates but must be consistent through the period of the performance and must provide auditors with evidence supporting their revenue loss calculation.
Cause:
The calculation of revenue loss was performed by staff who was new to their role with the City. All figures agreed with the Auditor of Public Accounts (APA) transmittal except for one section. Supervisory review was performed but did not detect the inconsistency in the calculation with reported figures on the APA transmittal form.
Effect:
Noncompliance with federal grant requirements with regard to lost revenue, understating the available revenue loss the City can utilize.
Questioned Cost Amount:
Not applicable.
Perspective Information:
Three out of twenty-five transactions
Recommendation:
We recommend that a process be put in place that ties out all amounts used on the lost revenue calculation to amounts on the transmittal form.
Corrective Action:
Management concurs with the recommendation and will ensure that the APA transmittal is used for future calculations as necessary. The calculation will be subject to multiple reviews. A final ARPA revenue loss calculation is planned for the spring that will incorporate the updated revenue loss figures from fiscal year 2023 ACFR and update the reporting figures in the fiscal year 2022 ACFR.
The City's plan for ARPA spending currently does not plan to utilize the entire revenue loss funds but instead seeks to spend on specific projects that are ARPA eligible.
If the Federal Audit Clearinghouse has questions regarding this plan, please call Andrea Trent, Financial Management Consultant at 540-853-5224.
Sincerely yours,
Andrea F. Trent
Financial Management Consultant