City of South Portland

2025-005 U.S. Department of Education, Assistance Listing #84.010, Title 1A Disadvantage for the period of July 1, 2024, through June 30, 2025 Criteria: In accordance with grant agreement terms and applicable federal and state regulations (e.g., Uniform Guidance 2 CFR Part 200), grant reimbursement requests must accurately reflect allowable costs incurred. Condition: The School incorrectly calculated allowable costs when preparing Title 1 grant reimbursement requests. The majority of the error was attributed to the 1/1/2023-3/31/2023 reimbursement request. The request was overstated, and the Maine Department of Education (MDOE) paid the full amount requested. The noncompliance was reported in the 2024 Single Audit, but was not rectified. A payable to MDOE for $123,810 has been recorded on the financial statements as of June 30, 2025. Cause: The above mentioned requests improperly excluded accounting credits when reporting grant expenditures. Most notably, an accounting credit for a MainePERS reimbursement of $95,077 was not netted against grant expenditures. Effect: Grant expenditures totaling $123,810 were over-reported and represent questioned costs that should be reimbursed to MDOE. Failure to comply with grant requirements may result in financial penalties, reputational risk, and potential restrictions on future funding. Questioned Costs: $123,810 Recommendation: Management should: • Reimburse MDOE for the questioned costs of $123,810. • Implement procedures to ensure all credits and adjustments are considered when preparing reimbursement requests. • Strengthen review controls over grant accounting to prevent similar errors in the future. • Provide staff training on proper grant accounting and compliance requirements.

2025-006 U.S. Department of Treasury, Assistance Listing #21.027, Coronavirus State and Local Fiscal Recovery Funds (SLRF) Program for the period of July 1, 2024, through June 30, 2025 Criteria: In accordance with 2 CFR part 180 and 2 CFR §200.214, non-federal entities are prohibited from entering into contracts or making subawards to parties that are suspended or debarred from participation in federal programs. Entities must verify vendor eligibility through the System of Awards Management (SAM.gov), obtain a vendor certification documenting compliance, or add a clause or condition in the contract for that vendor. Condition: Of the five vendors tested, three did not have documented evidence the City performed the required suspension and debarment verification. Cause: The City uses SLRF funds to fill budget gaps caused by the pandemic’s economic fallout. The City did not procure all contracts with the expectation they would be paid for with federal funds. Therefore, suspension and debarment procedures were not verified in all cases. Effect: Without proper verification, there is an increased risk that federal funds could be expended on vendors who are suspended or debarred, which may result in noncompliance with federal regulations and potential repayment of funds. Recommendation: We recommend the City review their existing contracts to ensure documentation of suspension and debarment compliance has been obtained for all vendors paid with SLRF grants. Questioned Costs: None.

2024-005 U.S. Department of Education, Assistance Listing #84.010, Title 1A Disadvantage for the period July 1, 2023 through June 30, 2024 Criteria: Per 2 CFR 200.402, reimbursable costs for a Federal award are the sum of the allowable direct and allocable indirect costs minus any applicable credits. Condition: The School Department requests grant reimbursements on a periodic basis utilizing expense detail recorded in the accounting system’s general ledger. Throughout the year, adjustments may be made to the general ledger to correct errors and misclassifications or to reverse prior period accruals. During 2024, the School Department requested reimbursement for fiscal year 2023 expenses utilizing the expenses recorded on the general ledger. However, several adjustments had been made to reduce grant expenditures that were not captured in the requests. Cause: The School Department misinterpreted the expense detail for the grant by not taking into account negative adjustments to expenses. Effect: Reimbursement requests exceeded net expenditures by $113,884, resulting in questioned costs for the program that should be refunded to the grantor agency. Recommendation: We recommend grant requests be based on net expenditures that take into account all debit and credit activity during the period. Questioned Costs: $113,884

2024-006 U.S. Department of Education for the period July 1, 2023 through June 30, 2024 Assistance Listing: #84.425D and #84.425U, Elementary and Secondary School Emergency Relief Funds Criteria: Per 2 CFR 200.430(g) Standards for Documentation of Personnel Expenses, charges to Federal awards for salaries and wages should support the distribution of employee’s salary or wages among more than one Federal award, or a Federal and non-Federal award. Budgeted estimates alone do not qualify as support for charges to Federal awards. Condition: Time and effort documentation for School Department employees who are allocated amongst multiple Federal grants is based on budgeted estimates. These estimates are not adequate to ensure actual time spent on each grant is charged to the grants. Budgeted estimates are not trued up to reflect actual time worked at year end. Cause: The School Department does not have policies and procedures requiring employees charged to multiple grants, or to Federal and non-Federal activities, to track actual time spent on each grant. There are no policies and procedures to adjust budgeted estimates to actual time incurred for each grant on a periodic basis. Effect: It could not be determined if payroll costs reflected actual time worked on the grant. This could result in grants being allocated a disproportionate share of payroll costs. Recommendation: Personnel activity reports should be prepared at least monthly to document actual time worked on grants. Budgeted payroll allocations should be adjusted periodically to reflect actual time worked. Questioned Costs: None

2024-007 U.S. Department of Transportation, Assistance Listing #20.507 and #20.526, Federal Transit Cluster Formula Grants for the period July 1, 2023 through June 30, 2024 Criteria: Administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Out of forty payroll disbursements tested for the Federal Transit Cluster, thirteen timecards were missing documentation of supervisory approval and five timecards did not match the hours paid. Cause: Lack of administrative personnel at the Bus Station resulted in a breakdown of established internal control procedures over payroll. Effect: The errors caused improper payments for five of the forty paychecks tested. Actual overpayments of $436 were identified in our sample with an extrapolated overpayment of $11,533 across the population. Recommendation: We recommend evaluating staffing workloads to ensure adequate supervision of the payroll function at the Bus Station. Questioned Costs: None

2024-008 U.S. Department of Transportation, Assistance Listing #20.507 and #20.526, Federal Transit Cluster Formula Grants for the period July 1, 2023 through June 30, 2024 Criteria: Administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Sixteen of sixty disbursements tested (27%) for the Federal Transit Cluster Formula Grant did not have documented review and approval by a knowledgeable program staff person. In addition, two of sixty disbursements totaling $68.73 tested for the program had no supporting documentation. All exceptions noted were related to credit card purchases. Cause: Control policies are not consistent across the organization and do not require a knowledgeable program person to document their review of credit card expenditures coded to Federal grants prior to entry into the accounting system. Effect: Unallowable costs may be charged to grants which may lead to repayment of grant funds. Recommendation: We recommend reviewing policies and procedures regarding monthly credit card reconciliations to ensure that a knowledgeable program person is approving the coding of credit card purchases to grant funds prior to their entry into the accounting system. Questioned Costs: None

Criteria: Administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Twenty-three of forty-two disbursements tested (55%) for the Equitable Sharing Program did not have documented review and approval by a knowledgeable program staff person. All exceptions noted were related to credit card purchases. Cause: Control policies are not consistent across the organization and do not require a knowledgeable program person to document their review of credit card expenditures coded to Federal grants prior to entry into the accounting system. Effect: Unallowable costs may be charged to grants which may lead to repayment of grant funds. Recommendation: We recommend reviewing policies and procedures regarding monthly credit card reconciliations to ensure that a knowledgeable program person is approving the coding of credit card purchases to grant funds prior to their entry into the accounting system. Questioned Costs: None Management’s Response/Corrective Action Plan: This program received significantly more distributions in 2024 than the City had received in the past. The funds initially were not considered to be federal since the source was private companies, but staff has since taken required grant agency training. The City is implementing workflow for purchasing and credit card transactions which will provide electronic approvals and the ability to attach receipts.

2023-003 U.S. Department of Education, Assistance Listing #84.425D and #84.425U, Elementary and Secondary School Emergency Relief Funds for the period July 1, 2022 through June 30, 2023 Criteria: Allowable costs under the Elementary and Secondary School Emergency Relief Funds (ESSER) must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Time and effort documentation for certain School Department employees allocated to the ESSER grants was not maintained. Cause: There was staff turnover in the School Department during the administration of the ESSER grants. Time and effort documentation could not be located for certain School Department employees. Effect: It could not be determined if payroll costs were allowable and appropriate according to grant requirements. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements in 2 CFR §200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained and accessible based on the School Department’s document retention policies. Questioned Costs: None

2023-003 U.S. Department of Education, Assistance Listing #84.425D and #84.425U, Elementary and Secondary School Emergency Relief Funds for the period July 1, 2022 through June 30, 2023 Criteria: Allowable costs under the Elementary and Secondary School Emergency Relief Funds (ESSER) must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Time and effort documentation for certain School Department employees allocated to the ESSER grants was not maintained. Cause: There was staff turnover in the School Department during the administration of the ESSER grants. Time and effort documentation could not be located for certain School Department employees. Effect: It could not be determined if payroll costs were allowable and appropriate according to grant requirements. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements in 2 CFR §200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained and accessible based on the School Department’s document retention policies. Questioned Costs: None

2023-004 U.S. Department of Education, Assistance Listing #84.010 Title IA, Disadvantaged for the period July 1, 2022 through June 30, 2023 Criteria: Allowable costs under the Title IA, Disadvantaged grant must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Time and effort documentation for certain School Department employees allocated to the Title IA grant was not maintained. Cause: There was staff turnover in the School Department during the administration of the Title IA grant. Time and effort documentation could not be located for certain School Department employees. Effect: It could not be determined if payroll costs were allowable and appropriate according to grant requirements. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements in 2 CFR §200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained and accessible based on the School Department’s document retention policies. Questioned Costs: None

2023-004 U.S. Department of Education, Assistance Listing #84.010 Title IA, Disadvantaged for the period July 1, 2022 through June 30, 2023 Criteria: Allowable costs under the Title IA, Disadvantaged grant must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: Time and effort documentation for certain School Department employees allocated to the Title IA grant was not maintained. Cause: There was staff turnover in the School Department during the administration of the Title IA grant. Time and effort documentation could not be located for certain School Department employees. Effect: It could not be determined if payroll costs were allowable and appropriate according to grant requirements. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements in 2 CFR §200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained and accessible based on the School Department’s document retention policies. Questioned Costs: None

2023-005 U.S. Department of the Treasury, Assistance Listing #21.027 Coronavirus State and Local Fiscal Recovery Funds for the period July 1, 2022 through June 30, 2023 Criteria: The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant agreement requires the City to file a quarterly Project and Expenditure Report in the Treasury’s reporting portal that details budgeted programs, obligated expenditures, and actual expenditures to date for each grant project. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: In our testing of the September and December quarterly reports, we found errors in the reporting of cumulative and quarterly expenditures for the TRUCK, LFVNT, CPLAN, and SWRKR projects. Net cumulative and quarterly reporting errors for the September report were $31,255 and $9,570, respectively. Net cumulative errors for the December report were $6,857. There were no quarterly expenditure errors. Cause: There is no control in place to ensure the quarterly report is reviewed by an independent person prior to submitting to the reporting portal. Effect: Inaccurate expenditures were reported to the Treasury’s SLFRF portal. Recommendation: Controls should be established to allow for an independent review of the report data prior to submission. Questioned Costs: None

2023-005 U.S. Department of the Treasury, Assistance Listing #21.027 Coronavirus State and Local Fiscal Recovery Funds for the period July 1, 2022 through June 30, 2023 Criteria: The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant agreement requires the City to file a quarterly Project and Expenditure Report in the Treasury’s reporting portal that details budgeted programs, obligated expenditures, and actual expenditures to date for each grant project. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Condition: In our testing of the September and December quarterly reports, we found errors in the reporting of cumulative and quarterly expenditures for the TRUCK, LFVNT, CPLAN, and SWRKR projects. Net cumulative and quarterly reporting errors for the September report were $31,255 and $9,570, respectively. Net cumulative errors for the December report were $6,857. There were no quarterly expenditure errors. Cause: There is no control in place to ensure the quarterly report is reviewed by an independent person prior to submitting to the reporting portal. Effect: Inaccurate expenditures were reported to the Treasury’s SLFRF portal. Recommendation: Controls should be established to allow for an independent review of the report data prior to submission. Questioned Costs: None

2022-001 U.S. Department of Education, Assistance Listing #84.425D, #84.425U, and #84.425W Elementary and Secondary School Emergency Relief Funds for the period July 1, 2021 through June 30, 2022 Criteria: Allowable costs under the Elementary and Secondary School Emergency Relief Funds (ESSER) must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. Condition: Time and effort documentation for certain School Department employees allocated to the ESSER grants was not maintained. Cause: There was staff turnover in the School Department during the administration of the ESSER grants. Time and effort documentation could not be located for certain School Department employees. Effect: It could not be determined if payroll costs were allowable and appropriate according to grant requirements. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements in 2 CFR ?200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained and accessible based on the School Department?s document retention policies. Questioned Costs: None

2022-002 U.S. Department of Education, Assistance Listing #84.010 Title IA, Disadvantaged for the period July 1, 2021 through June 30, 2022 Criteria: Allowable costs under Title IA Disadvantaged must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. Condition: Time and effort documentation for certain School Department employees allocated to the Title IA grant was not maintained. Cause: There was staff turnover in the School Department during the administration of the Title IA grant. Time and effort documentation could not be located for certain School Department employees. Effect: It could not be determined if payroll costs were allowable and appropriate according to grant requirements. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements in 2 CFR ?200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained and accessible based on the School Department?s document retention policies. Questioned Costs: None

2021-001 U.S. Department of the Treasury, CFDA #21.019 Coronavirus Relief Fund and U.S. Department of Education, CFDA #84.425D Elementary and Secondary School Emergency Relief Funds for the period July 1, 2020 through June 30, 2021 Criteria: Allowable costs under the Coronavirus Relief Fund (CRF) and Elementary and Secondary School Emergency Relief Funds (ESSERF) must be substantiated with proper documentation detailing the activity and nature of the costs incurred that are allocated to the grant to ensure that such costs are reasonable and appropriate under the grant terms. Condition: Time and effort documentation for certain School Department employees allocated to the CRF and ESSERF grants were not maintained. Cause: There was turnover in the School Department Business Manager position during the administration of the CRF and ESSERF grants. Time and effort documentation could not be located for certain School Department employees. Effect: Nine payroll transactions out of a sample size of forty payroll transactions did not have proper time and effort documentation. Recommendation: All School Department employees allocating time to grant activities should properly complete time and effort documentation based on the requirements 2 CFR ?200 to ensure amounts are reasonable and allowable. All documentation should be properly maintained. Questioned Costs: None

2019-001 ? U.S. Department of Agriculture, For the Period July 1, 2018 through June 30, 2019, CFDA #10.553-10.559 Child Nutrition Cluster Statement of Condition: The School Department under reported meal count figures on the direct claim form in two of the three months tested. Criteria: Each month the School Department is required to submit a direct claim form that reports meals served and calculates the amount of reimbursement the School Department will receive. This form reports meals for each location that serves breakfast, lunch, and after school snacks. Additionally, the School Department is required to segregate the meals based on the categories of free, reduced, or paid as each category has a different reimbursement amount. Effect: The reimbursement that the School Department received was less then what the School Department actually earned for the two months with reporting errors. Cause: The School Lunch Director did not detect and correct the errors on the direct claim form. Recommendation: Management needs to assign a second individual to review the monthly direct claim forms with the internally generated meal count sheets prior to the School Lunch Director filing the claim for reimbursement. Additionally, this second individual should sign off on the meal count sheets at the end of the month to signify that the review has been completed.

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