City of Manchester, NHLocal Government

Reference Number: Prior Year Finding: 2025-007 N/A Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing Number: 14.218 Award Number and Year: B-24-MC-33-0001 (7/1/2024-6/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR Part 170, Appendix A, prime recipients must report each first-tier subaward obligating action of $30,000 or more to SAM.gov (formerly FSRS) no later than the end of the month following the month in which the obligation was made. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Manchester, New Hampshire (City) did not report subaward information in accordance with FFATA requirements. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (19) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Context: One of one subaward selected for testing was not reported timely. The subaward was reported 26 days late. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $576,845 $0 $576,845 $0 $0 Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported no later than the end of the month following the month of issuance. Effect: Subawards were not submitted timely in accordance with FFATA reporting requirements. Questioned costs: None. Recommendation: We recommend the City strengthen procedures and internal controls to ensure that all required subawards are reported timely and accurately no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: There is no disagreement with the finding.

Reference Number: Prior Year Finding: 2025-008 N/A Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing Number: 14.218 Award Number and Year: B-24-MC-33-0001 (7/1/2024-6/30/2025) Compliance Requirement: Special Tests and Provisions – Environmental Reviews Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: The environmental review process consists of all the actions that a responsible entity must take to determine compliance with this part. The environmental review process includes all the compliance actions needed for other activities and projects that are not assisted by HUD but are aggregated by the responsible entity in accordance with § 58.32. (24 CFR 58.30) The responsible entity must maintain a written record of the environmental review undertaken under this part for each project. This document will be designated the “Environmental Review Record” (ERR) and shall be available for public review. The ERR must contain all environmental review documents, public notices, written determinations or environmental findings required by this part as evidence of review, decision-making, and actions pertaining to the project. The ERR must describe the project and related activities, evaluate the effects of the project or activities on the human environment, document compliance with applicable statutes and authorities, including those cited in §§ 58.5 and 58.6, and record the written determinations and other review findings required by this part. The ERR must also contain verifiable source documents and relevant base data used or cited in environmental assessments, environmental impact statements, or other project review documents. (24 CFR 58.38) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Manchester, New Hampshire (City) did not maintain documentation evidencing that environmental reviews were conducted for all applicable projects. Context: For one of eight projects selected for testing, the environmental review worksheet documenting that an environmental review had been conducted was not available. As such, the auditor was unable to determine if the environmental review had been performed by the City. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (21) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Cause: The City’s procedures and controls were not sufficient to ensure that environmental review certifications were prepared and retained as part of the environmental review process. Effect: The City was unable to ensure that the required review was performed, documented and approved prior to the expenditure of federal funds. Questioned costs: Unable to determine. Recommendation: We recommend the City strengthen procedures and internal controls to ensure that environmental review certifications are prepared and retained, evidencing that the environmental reviews were completed. Views of Responsible Officials: There is no disagreement with the finding.

Reference Number: Prior Year Finding: 2025-009 N/A Federal Agency: U.S. Department of Transportation Federal Program: Airport Improvement Program, Infrastructure Investments and Jobs Act Programs, and COVID-19 Airports Programs Assistance Listing Number: 20.106 Award Number and Year: 3-33-0011-124-2021, 2021 3-33-0011-137-2022, 2022 3-33-0011-138-2022, 2022 3-33-0011-139-2022, 2022 3-33-0011-140-2023, 2023 3-33-0011-142-2023, 2023 3-33-0011-143-2024, 2024 3-33-0011-134-2025, 2025 3-33-0011-144-2025, 2025 3-33-0011-146-2025, 2025 3-33-0011-147-2025, 2025 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (2 CFR 200.313(d)(2)). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City performed an annual physical inventory of equipment acquired under the Federal program; however, the annual physical inventory was incomplete. Context: During testing, we selected a sample of five assets from the federal financial records which document equipment acquired under the Federal program. One of five assets selected for testing from the federal financial records was not included in the annual inventory list. Cause: The City's procedures and controls were not sufficient to ensure that all equipment acquired under the Federal program was accurately recorded and included in the annual inventory list and reconciled to the results of the physical inventory. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (23) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Effect: The equipment records may not be complete or accurately reflect the existence, location, or condition of all assets acquired under the Federal program, and the City may not timely identify missing, obsolete, or improperly recorded equipment. Questioned costs: None. Recommendation: We recommend the City strengthen procedures and internal controls to ensure that all equipment acquired under the Federal program is accurately recorded and included in the annual inventory list, and that the annual physical inventory is reconciled to the equipment records. Views of Responsible Officials: There is no disagreement with the finding.

Reference Number: Prior Year Finding: 2025-010 2024-005 Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 - 12/31/2026) Compliance Requirement: Procurement Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Audit documentation must be made available upon request to the cognizant or oversight agency for audit or its designee, cognizant agency for indirect cost, a Federal agency, or GAO at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities consistent with the purposes of this part. Access to audit documentation includes the right of Federal agencies to obtain copies of audit documentation as is reasonable and necessary. (2 CFR 200.517(b)) Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City could not provide complete procurement and contract documentation timely for audit review. Context: For two of eight contracts selected for testing, the City did not provide contract files or related procurement documentation, including the executed contract, procurement method, vendor selection support, or other documentation evidencing compliance with applicable procurement requirements. Cause: The City’s policies and procedures were not sufficient to ensure procurement and contract documentation related to Federal awards was centrally retained, complete, and readily available for audit. In addition, the City’s document retention and monitoring controls did not ensure that contract files contained all required supporting documentation prior to or during the audit period. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (25) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Effect: Since the City was unable to provide complete procurement and contract documentation, auditors could not verify whether the selected procurements complied with applicable Federal procurement requirements or whether the City maintained sufficient documentation to support the allowability and compliance of the related expenditures. The lack of available documentation increases the risk that procurement transactions may not be properly supported, reviewed, or conducted in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Questioned costs: Unable to determine. Recommendation: We recommend that the City strengthen its internal controls over procurement and contract documentation for Federal awards. Such procedures should require that complete contract files, including executed agreements, procurement method documentation, vendor selection support, approvals, and other required supporting documentation, be retained in a centralized location and reviewed for completeness. The City should also establish monitoring procedures to ensure documentation is maintained in accordance with Federal requirements and is available timely for audit or other oversight review. Views of Responsible Officials: There is no disagreement with the finding.

Reference Number: Prior Year Finding: 2025-011 N/A Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1 (5/23/2021 - 12/31/2026) Compliance Requirement: Suspension and Debarment Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Audit documentation must be made available upon request to the cognizant or oversight agency for audit or its designee, cognizant agency for indirect cost, a Federal agency, or GAO at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities consistent with the purposes of this part. Access to audit documentation includes the right of Federal agencies to obtain copies of audit documentation as is reasonable and necessary. (2 CFR 200.517(b)) Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards (2 CFR 200.214). Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City could not provide complete documentation to evidence the City ensured contractors were not suspended or debarred prior to entering into the contract. Context: Two of eight contracts selected for testing were not available for review. No contract information was provided for these agreements and therefore no support related to ensuring that a contractor was not suspended or debarred was available. In addition, for an additional three of eight contracts selected for testing, documentation did not contain the necessary suspension and debarment certifications or review checks. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (27) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Cause: The City’s policies, procedures, and internal controls were not sufficient to ensure that contract files included or retained documentation supporting suspension and debarment verification checks. Effect: Without complete contract files and documented suspension and debarment verification, the City could not demonstrate compliance with Federal requirements. This increases the risk that Federal funds could be used in transactions with contractors that are suspended, debarred, or otherwise excluded from participation in Federal awards. Questioned costs: None. Recommendation: We recommend that the City strengthen its written policies, procedures, and internal controls to require suspension and debarment verifications before entering into Federally funded contracts and that verification be readily available for audit. Views of Responsible Officials: There is no disagreement with the finding.

Reference Number: Prior Year Finding: 2025-012 N/A Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1(5/23/2021 - 12/31/2026) Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are required to submit Financial and Performance Measure Reports in accordance with the terms and conditions of the Federal award. Recipients of Coronavirus State and Local Fiscal Recovery Funds are required to submit complete and accurate Project and Expenditure Reports in accordance with the terms and conditions of the Federal award and applicable U.S. Department of the Treasury reporting guidance. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City did not retain sufficient point-in-time documentation to support amounts reported in the quarterly Project and Expenditure Reports. As a result, certain cumulative expenditure amounts reported to the U.S. Department of the Treasury could not be reconciled to the underlying Expenditure and Obligation data maintained by the City at the time the reports were prepared and submitted. Context: Two of four quarterly reports were selected for testing. For two of the two quarterly reports selected, seven project line items could not be tied to underlying Expenditure and Obligation data supporting the cumulative expenditure amounts reported. Because the City did not maintain a point-in-time reporting support package or other documentation showing how the reported amounts were derived, management was unable to provide sufficient audit evidence to support the accuracy and completeness of those reported line items. Cause: The City’s policies and procedures were not designed or operating effectively to ensure that quarterly reporting amounts were supported by retained documentation that agreed to the City’s underlying accounting records. In addition, the City did not maintain a formal review and reconciliation process requiring personnel to preserve the source reports, reconciliations, and approvals used to support cumulative expenditure line items prior to report submission. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (29) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Effect: The City was unable to demonstrate compliance with the Reporting requirement for the selected quarterly reports. Without retained support that ties reported cumulative expenditures to the underlying records, there is an increased risk that amounts reported to the U.S. Department of the Treasury may be inaccurate, incomplete, or not supported by sufficient audit evidence. Questioned costs: None. Recommendation: We recommend that the City strengthen its internal controls over Federal Financial reporting by developing and implementing written procedures requiring all cumulative expenditure line items reported in the Project and Expenditure Reports to be reconciled to underlying accounting records prior to submission. The procedures should also require retention of a point-in-time support package for each report, including the source reports, reconciliations, explanations for adjustments, evidence of supervisory review, and documentation of report certification. Views of Responsible Officials: There is no disagreement with the finding.

Reference Number: Prior Year Finding: 2025-013 N/A Federal Agency: U.S. Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Number and Year: ARP17SL1(5/23/2021 - 12/31/2026) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Pass-through entities should verify that subrecipients expected to be audited as required by 2CFR Part 200, Subpart F, met this requirement (2CFR section 200.322(f). The pass-through entity should also ensure that the subrecipient takes timely and appropriate correction action on deficiencies detected through audits. These reviews should be documented. Control: Per 2 CFR section 200.303(a), a 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. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City did not retain evidence that subrecipient single audit reports were reviewed as required. Context: Two of five subrecipients selected for testing were required to submit Single Audit Reports to the Federal Audit Clearinghouse. The City could not provide evidence that these reports were obtained and reviewed as part of the subrecipient monitoring process. Cause: The City’s policies and procedures were not sufficient to ensure that subrecipient single audit report reviews were documented and retained. The City did not have a formalized process to track which subrecipients were subject to single audit requirements, document the review of submitted reports, and maintain evidence that any required follow-up on subrecipient single audit finding or matters impacting the federal awards were made. CITY OF MANCHESTER, NEW HAMPSHIRE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2025 (31) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Effect: The City was not in compliance with Subrecipient Monitoring related requirements and did not have sufficient documentation to demonstrate that it evaluated relevant subrecipient audit results when assessing subrecipient risk and determining the appropriate level of monitoring. Without evidence of the reviews, there is an increased risk that subrecipient audit findings, questioned costs, or other matters affecting the Federal program may not be identified, evaluated, or addressed timely. Questioned costs: None. Recommendation: We recommend that the City strengthen internal controls and procedures to ensure that all subrecipient monitoring checks are performed and documented. Such procedures should include identifying subrecipients subject to Single Audit requirements, obtaining and reviewing applicable Single Audit Reports, documenting the results of the review, retaining evidence of the review, and tracking any required follow-up or corrective action related to findings impacting the Federal award. Views of Responsible Officials: There is no disagreement with the finding

2024-004 Improve Internal Controls Over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Federal Agency: Environmental Protection Agency Award Name: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Award Year: 2024 Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Assistance Listing Number: 14.905 Award Year: 2024 Type of Finding Compliance Internal Control Over Compliance – Material Weakness SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Criteria or Specific Requirement Per 2 CFR 200.510(b), auditees must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must accurately and completely report federal awards expended during the period, regardless of when reimbursements are received. The SEFA should reflect federal expenditures as incurred in accordance with program requirements and generally accepted accounting principles. Condition and Context While preparing its draft SEFA, the City did not include $1,183,881 in federal expenditures under the National Infrastructure Investment grant. In addition, expenditures reported under the Clean Water State Revolving Fund grant were understated by $30,921 and expenditures reported under the Lead Hazard Reduction Demonstration Grant Program were overstated by $391,414. As a result, an adjustment was required in order for the SEFA to be complete and accurate. Cause The City did not have adequate controls in place in order to ensure the complete and accurate preparation of the SEFA, including reconciling federal expenditures reported in the general ledger with the information included on the SEFA. Certain programs within the City reported expenditures on the SEFA based on when federal reimbursements were received, rather than when expenditures were incurred. Expenditures under the Lead Hazard Reduction Demonstration Grant initially included CDBG funds and the match that was not to be reported under the program on the SEFA. The misapplication of the reporting basis led to misstatement and omission of federal expenditures. Effect or Potential Effect Incomplete and inaccurate SEFA reporting increases the risk that federal agencies and oversight bodies receive misleading financial information. It may also result in improper determination of major programs for audit testing and affect audit risk assessments. Reporting federal expenditures by reimbursement rather than when incurred is not compliant with federal requirements and generally accepted accounting principles. No questioned costs are reported as the finding relates to completeness and accuracy of reporting, not the allowability of costs. Recommendation The City should strengthen its procedures and controls for preparing the SEFA to ensure all federal awards expended during the period are included and accurately reported based on expenditures incurred, not reimbursements received. The City should ensure that adequate procedures and controls are in place to ensure that the SEFA is complete and accurate. These controls should include controls requiring the reconciliation of federal expenditures to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.). SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

2024-005 Improve Internal Controls Over Procurement Federal Program(s) Information Federal Agency: Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Procurement Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.318–200.327 requires the City to follow documented procurement procedures consistent with applicable Federal statutes, regulations, and the terms and conditions of their Federal award. The City must maintain records sufficient to detail the history of procurement, including, but not limited to, the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition and Context During our testing of six procurement transactions under the SLFRF program, the City was unable to provide documentation supporting procurement policies and procedures were followed for one transaction. Specifically, the City did not provide evidence of procurement history, competitive selection, or justification for the selected vendor related to this expenditure. Invoices were provided to support the expenditure. Cause The City’s internal controls did not ensure that procurement documentation was adequately maintained and available to support all federally funded transactions as required by Uniform Guidance. Effect or Potential Effect Lack of supporting procurement documentation increases the risk of noncompliance with Federal procurement requirements. No questioned costs are reported, as the expenditure was below the questioned cost threshold. Recommendation We recommend that the City strengthen its controls to ensure all required procurement documentation is maintained and readily available for all federally funded transactions. The City should provide training to procurement and program staff on Federal documentation requirements and regularly review procurement files for completeness. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

2024-006 Improve Internal Controls and Compliance Over Reporting Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Compliance Requirement: Reporting Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Program Assistance Listing Number: 14.905 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards to provide reasonable assurance that the City is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Further, per 2 CFR 200.328 and program instructions, recipients must submit accurate, complete, and timely financial reports (such as the SF-425 Federal Financial Report) that reconcile to supporting accounting records, including the general ledger and Schedule of Expenditures of Federal Awards (SEFA). Condition and Context During our testing of two quarterly SF-425 Federal Financial Reports for both the National Infrastructure Investments program and the Lead Hazard Reduction Demonstration Grant program, we noted that the amounts reported on the reports did not agree to the amounts per the general ledger and ultimately the SEFA. The discrepancies were the result of inaccurate recording of expenditures in the general ledger based on timing as discussed in finding 2024-001, which led to inconsistent reporting on the SF-425 reports. Cause The City’s internal controls over financial reporting were not sufficient to ensure that expenditures were recorded accurately and consistently in the general ledger and SEFA and that reported amounts on the SF-425 matched the underlying accounting records. Effect or Potential Effect Inaccurate reporting of expenditures increases the risk of noncompliance with Federal reporting requirements and impairs the reliability of financial information reported to Federal agencies. No questioned costs are reported as the requirement is procedural in nature and costs reported were ultimately deemed allowable. Recommendation The City should strengthen its controls over financial reporting for Federal awards to ensure all expenditures are recorded accurately in the general ledger and SEFA and reconciled to amounts reported on the SF-425. Management should implement procedures for timely and thorough review and reconciliation of accounting records prior to the submission of required Federal reports. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

2024-007 Improve Internal Controls Over Reporting Federal Program(s) Information Federal Agency: Department of Justice Award Name: Public Safety Partnership and Community Policing Grants Assistance Listing Number: 16.710 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal controls over Federal awards to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. Effective internal control includes appropriate segregation of duties to prevent and detect errors and irregularities in financial reporting, including the preparation and review of Federal Financial Reports (such as the SF-425). Condition and Context During our testing of two quarterly SF-425 Federal Financial Reports submitted under the Public Safety Partnership and Community Policing Grants program, we noted that although the amounts reported agreed to the general ledger, there was no segregation of duties between the individual who prepared the reports and the individual responsible for review and approval prior to submission. The same individual performed both preparation and submission duties without a documented independent review. Cause The City did not establish adequate internal control procedures to ensure that reports under the program are subject to independent review and approval prior to submission. Effect or Potential Effect The lack of segregation of duties increases the risk that errors or misstatements in the reports could go undetected. No questioned costs are reported as the requirement is procedural in nature. Recommendation The City should implement procedures to ensure appropriate segregation of duties in the preparation and review of all Federal reports. The process should include a documented, independent review and approval of reports prior to their submission to ensure accuracy and compliance with grant requirements. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

The Fire department has not formalized written policies and procedures related to Federal awards as required under Uniform Guidance.

GSA_MIGRATION