Finding 44120 (2022-004)

Significant Deficiency
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2023-06-20
Audit: 44284
Organization: City of Laguna Beach (CA)
Auditor: Eide Bailly LLP

AI Summary

  • Core Issue: The City did not have documented evidence of review or approval for the Project and Expenditure Report before submission.
  • Impacted Requirements: This finding relates to the need for effective internal controls as outlined in 2 CFR Section 200.303(a).
  • Recommended Follow-Up: Enhance internal controls to ensure that evidence of review and approval is retained for future reports.

Finding Text

Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021/22 Grant Number: N/A Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Criteria: 2 CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The City must submit an annual Project and Expenditure Report for this program. Condition: While the City prepared and had adequate supporting documentation for the Project and Expenditure Report, there was no documented evidence of review or approval prior to submission. Cause: The City prepared the Project and Expenditure Report and submitted without retaining evidence that the report was reviewed and approved by a separate individual prior to submission. Effect: Documentation was not available to support the review of the report prior to submission. Questioned Costs: None Context/Sampling: The entire population of one Project and Expenditure Report submitted during the year was selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend the City enhance internal controls to ensure supporting documentation, including evidence of review, is retained for the Project and Expenditure Report. Views of Responsible Official: Management agrees. See separately issued Corrective Action Plan.

Corrective Action Plan

Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021/22 Grant Number: N/A Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Cause: The City prepared the Project and Expenditure Report and submitted without retaining evidence that the report was reviewed and approved by a separate individual prior to submission. Recommendation: We recommend the City enhance internal controls to ensure supporting documentation, including evidence of review, is retained for the Project and Expenditure Report. Management Response and Corrective Action: The City's Finance Manager was responsible for submitting the Project and Expenditure Report for the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds award. Prior to submission, the report underwent a comprehensive review by the Assistant City Manager/CFO, which was documented through a calendar invitation between the Finance Manager and Assistant City Manager/CFO. Furthermore, to ensure transparency and accountability, the appropriation of COVID-19 - Coronavirus State and Local Fiscal Recovery Funds was presented to the City Council, and the funding was included in the FY 2021-22 City Adopted Budget. Additionally, multiple presentations were made during City Council meetings regarding the appropriation and expenditure of these funds, which are public meetings. For future submission, management will formally document the review of the submission process with a signed memo from the Assistant City Manager/CFO and City Manager. Name of Responsible Official: Julie Nemes Director of Finance and Technology Services Implementation Date: June 2023

Categories

Reporting Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 44121 2022-005
    Significant Deficiency
  • 620562 2022-004
    Significant Deficiency
  • 620563 2022-005
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Covid-19 Coronavirus State and Local Fiscal Recovery Funds $2.12M
14.218 Community Development Block Grants/entitlement Grants $140,326
97.067 Homeland Security Grant Program $47,021