City of Warwick, Rhode Island

Federal Agency: U.S. Environmental Protection Agency Federal Programs: Congressionally Mandated Projects Assistance Listing Number: 66.202 Federal Award Identification Number and Year: 00A01315, 2024 Award Period: December 8, 2023 – December 1, 2025 Compliance Requirement: Reporting Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: Per the terms and conditions of the federal award, the semi-annual performance report must be submitted no later than April 30th and October 30th of each year. Condition: The City did not submit the required semi-annual performance report required during fiscal year 2024 within the time frame specified by the federal awarding agency. Questioned Costs: None. Context: The one semi-annual performance report required to be submitted during the period under audit was not submitted. Cause: The City’s procedures were not sufficient to ensure that reports were submitted timely. Effect: Failure to submit timely performance reports may hinder the federal awarding agency’s ability to monitor project progress and compliance and may impact the City’s eligibility for continued funding or future awards. Recommendation: We recommend the City strengthen its internal controls over federal reporting requirements to ensure timely compliance with all federal reporting deadlines. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: Unknown Pass-Through Agency: State of Rhode Island Department of Administration Pass-Through Number(s): Unknown Award Period: March 3, 2021 – December 31, 2026 Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria or specific requirement: In accordance with 2 CFR 200.328 and 31 CFR section 35.4(c), the City is required to submit quarterly “Project and Expenditure Reports” which are due 30 days after the end of each quarterly period. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure the quarterly reports were completed accurately. Questioned costs: None Context: During our testing, it was noted that the City did not accurately report the current period expenses and cumulative expenditures, or the revenue loss calculations for each of they quarterly reports. Cause: Lack of controls surrounding the preparation of quarterly reports. Effect: Failure to comply with Uniform Guidance and Treasury reporting requirements may result in questioned costs, audit findings, and potential recoupment of federal funds. Recommendation: We recommend the City implement procedures to ensure the accuracy of quarterly reporting and maintain supporting documentation for each of the amounts reported. Views of responsible officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Programs: Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U, 84.425W Federal Award Identification Number and Year: S425D210046, 2021 S425U210046, 2021 S425W210041-21A, 2021 Pass-Through Agency: Rhode Island Department of Elementary and Secondary Education Pass-Through Number: 4672-60602-101, 4872-505020-201 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Per the Rhode Island Department of Elementary and Secondary Education Grant Award Notification, specifically related to ESSER Fund II, Special Grant Award Conditions, "Interim financial status reports are due quarterly for the periods ending 9/30/2021 through 9/30/2023. Final financial status reports are due 15 days after the liquidation of all obligations, but no later than 11/15/2023. Per the Rhode Island Department of Elementary and Secondary Education Grant Award Notification, specifically related to ESSER Fund III, Special Grant Award Conditions, "Interim financial status reports are due quarterly for the periods ending 3/31/2022 through 9/30/2024. Final financial status reports are due 15 days after the liquidation of all obligations, but no later than 11/15/2024. 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: Expenditures reported in the quarterly financial status reports did not agree to supporting documentation. Questioned Costs: None. Context: For the ESSER II quarterly financial status reports for the quarters ending 3/31/2023 and 6/30/2023, expenditures reported did not agree to supporting schedules. For the ESSER III quarterly financial status reports for the quarters ending 9/30/2022 and 12/31/2022, expenditures reported did not agree to supporting schedules. Cause: The City's procedures were not sufficient to ensure that reports were submitted accurately, and proper documentation maintained. Effect: Reported expenditures were not properly supported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-003. Recommendation: We recommend the City review and enhance internal controls and procedures to ensure that all reports are prepared and reviewed for accuracy and supporting documentation maintained. Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Education Federal Programs: Special Education - Preschool Grants (IDEA Preschool) Assistance Listing Number: 84.173 Federal Award Identification Number and Year: H173A220057, 2021 Pass-Through Agency: Rhode Island Department of Elementary and Secondary Education Pass-Through Number: 2725135.02.02 Award Period: July 1, 2022 – June 30, 2023 Compliance Requirement: Allowable Activities/Allowable Costs Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: 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 have supporting documentation available for the approval of the split in federal and local payroll allocations. Questioned Costs: Unknown. Context: For 4 of 40 payroll transactions selected for testing, the City was unable to provide support for the approval of the split of funds between federal and local sources. Cause: The Department was unable to provide documentation of the internal controls implemented to ensure it correctly reported compliance with allowable activities and costs. Effect: Insufficient controls over the allowable activities and costs requirements can result in undetected errors and noncompliance with allowable activities and cost requirements. Repeat Finding: No. Recommendation: We recommend the Department develop and document internal controls to provide proper support and approval over the allocation of salaries. Views of Responsible Officials: There is no disagreement with the audit finding.

2022-003 Federal Agency: U.S. Department of Education Federal Programs: Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Pass-Through Agency: Rhode Island Department of Elementary and Secondary Education Pass-Through Number: 4672-10502-101, 4872-505020-201 Award Period: July 1, 2021 – June 30, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per the Rhode Island Department of Elementary and Secondary Education Grant Award Notification, specifically related to ESSER Fund I, Special Grant Award Conditions, "Interim financial status reports are due quarterly for the periods ending 9/30/2020 through 9/30/2022. Final financial status reports are due 15 days after the liquidation of all obligations, but no later than 11/15/2022. Per the Rhode Island Department of Elementary and Secondary Education Grant Award Notification, specifically related to ESSER Fund III, Special Grant Award Conditions, "Interim financial status reports are due quarterly for the periods ending 3/31/2022 through 9/30/2024. Final financial status reports are due 15 days after the liquidation of all obligations, but no later than 11/15/2024. 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: Expenditures reported in the quarterly financial status reports did not agree to supporting documentation. Questioned Costs: None. Context: For the ESSER I quarterly financial status report for the quarter ending 9/30/2021, expenditures reported did not agree to supporting schedules. For the ESSER III quarterly financial status report for the quarter ending 6/30/2022, expenditures reported did not agree to supporting schedules. Cause: The City's procedures were not sufficient to ensure that reports were submitted accurately and proper documentation maintained. Effect: Reported expenditures were not properly supported. Recommendation: We recommend the City review and enhance internal controls and procedures to ensure that all reports are prepared and reviewed for accuracy and supporting documentation maintained. Views of Responsible Officials: There is no disagreement with the audit finding.

2022-004 Federal Agency: U.S. Department of Education Federal Programs: Education Stabilization Fund Assistance Listing Number: 84.425U Pass-Through Agency: Rhode Island Department of Elementary and Secondary Education Pass-Through Number: 4872-505020-201 Award Period: July 1, 2021 – June 30, 2022 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR § 200.430 (a), costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non- Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. Per 2 CFR § 200.430 (i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:  Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated,  Be incorporated into the official records of the non-Federal entity,  Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities,  Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity's written policy,  Comply with the established accounting policies and practices of the non-Federal entity,  Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non- Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. 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: Payroll costs charged to the grant showed no evidence of approval. Questioned Costs: Below the reportable limit. Context: For 16 out of 60 payroll costs charged to the grant, time sheets or other documentation was not available to support evidence of approval for time worked. Cause: The City's procedures were not sufficient to ensure that payroll charges were appropriately approved and documented. Effect: Payroll costs charged to the grant may not be allowable. Recommendation: We recommend the City review and enhance internal controls and procedures to ensure that approval for payroll charges is documented and maintained. Views of Responsible Officials: There is no disagreement with the audit finding.

2021-001 Federal Agency: U.S. Department of Education Federal Programs: Education Stabilization Fund Assistance Listing Number: 84.425D Pass-Through Agency: Rhode Island Department of Elementary and Secondary Education Pass-Through Number: 4672-60602-101 Award Period: July 1, 2020 ? June 30, 2021 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: "2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of Allowable Costs/Cost Principles. The City of Warwick should have internal controls designed to ensure compliance with those provisions. Payroll expenditures must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated." Condition: We identified that the City did not have adequate internal controls designed to ensure timely documentation and support of payroll expenditures. Questioned Costs: Below the reportable limit Context: For one of sixty samples tested, no time-sheet was provided. For two of sixty samples tested, timesheet did not include evidence of approval. The sample was statistically valid. Cause: Procedures are not in place to ensure that the required supporting documentation is received and maintained. Effect: The salaries charged could be subject to disallowance and considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that salaries charged to the grant are appropriately supported by signed time sheets. Views of Responsible Officials: There is no disagreement with the audit finding.

Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of Allowable Costs/Cost Principles. The City of Warwick should have internal controls designed to ensure compliance with those provisions. Payroll expenditures must be based on records that accurately reflect the work performed and supported by a system of internal controls that provides reasonable assurances that charges are accurate; allowable and reasonable; and properly allocated. Condition: We identified that the City did not have adequate internal controls designed to ensure timely documentation and support of time and effort. Questioned Costs: None. Context: 6 of 40 samples tested, the required time and effort certifications were not completed in a timely manner. The sample was a statistically valid sample. Cause: Procedures are not in place to ensure that the required supporting documentation is obtained timely. Effect: Noted no instances of noncompliance with the provisions as the compliance requirement as the time and effort certifications were obtained at a later date; however, the lack of internal control over these compliance requirements provides an opportunity for noncompliance. Recommendation: We recommend procedures be implemented to ensure that salaries charged to the grant are appropriate and are supported by timely preparation of the time and effort reports. Views of responsible officials: There is no disagreement with the audit finding.

Criteria or specific requirement: 2 CFR, Part 200, 200.303 requires an auditee to establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations and the terms and conditions of the federal award. 2 CFR Part 200.403 (g) states that costs must be adequately documented to be allowable under federal awards. Condition: We identified that the City?s internal controls were not designed to ensure accurate payroll expenditures are charged to the grant. Questioned Costs: Under the reportable limit. Context: Salaries related to the program were charged twice for the fourth quarter of the fiscal year, which resulted in overstatement of expenditures of $16,928. Cause: Procedures are not in place to ensure the appropriate salary expenditures are charged to the grant. Effect: The salaries charged are subject to disallowance and are considered questioned costs. Recommendation: We recommend management review their policies and procedures in place to ensure salaries charged to the grant are appropriate. Views of responsible officials: There is no disagreement with the audit finding.

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