City of BayonneLocal Government

Criteria or Specific Requirement: United States Code of Federal Regulation 2 CFR 200.328 requires the City to submit financial reports in a timely manner. Timeliness defined under 2 CFR 300.28 as the submission of a SF-425 Federal Financial Report no later than 30 days after a quarterly report and no later than 90 days after an annual report. Condition: The City is not in compliance with Federal requirements regarding the submission of Federal Financial Reports. Context: Audit procedures included a request for proof of SF-425 Federal Financial Report Submission. Cause: The cause for failure to submit the required Federal Financial Reports was not definitively determined, but may relate to the absence and departure of personnel previously responsible for such filings. Effect or Potential Effect: Noncompliance with this reporting requirement can lead to a reduction in future awards, if determined appropriate subsequent to a review by HUD. Questioned Costs: None. Recommendation: The City should assign responsibility for the filing of Federal Financial Reports and that submissions be verified by a second party. Federal Financial Reports not filed should be submitted. Views of Responsible Officials of the Auditee: The City will assign responsibility for the filing of the Federal Financial Reports and will verify that the reports have been submitted.

Criteria or Specific Requirement: United States Code of Federal Regulation 2 CFR 200.339 requires the grantee to monitor the activities of the subrecipient to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies (3) Issuing a management decision for applicable audit findings (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. Condition: The City did not monitor subrecipients during the grant enforcement period as required and as stated to be normal practice by the City in the CAPER (Consolidated Annual Performance and Evaluation Report). Context: No proof of subrecipient monitoring was provided by the City upon requests by the auditor. Cause: The City does not have active subrecipient monitoring procedures. Effect or Potential Effect: The City is noncompliant with the subrecipient monitoring requirements of 2 CFR 200.339. The lack of monitoring increases the risk of the misuse of funds by the subrecipient. Questioned Costs: None. Recommendation: The City must create and adhere to formal subrecipient monitoring processes in accordance with the guidelines set forth in 2 CFR 200.339. Views of Responsible Officials of the Auditee: The City will devise subrecipient monitoring procedures.

Criteria or Specific Requirement: United States Executive Order 12432 requires Federal agencies, including HUD, to develop Minority Business Development Plans which establish minority enterprise (MBE) development objectives. In order to comply with the Executive Order, HUD requires grantees to submit an MBE report annually within 10 days of the end of the City’s applicable reporting period. Condition: The City did not file the Annual MBE Report during the year ended December 31, 2023. Context: No proof of submission of the Annual MBE Report was provided by the City upon request by the auditor. Cause: The cause was a combination of staff changes and an error in not scheduling the completion of the required report. Effect or Potential Effect: The City is noncompliant with HUD requirements to submit an annual MBE Report. Questioned Costs: None. Recommendation: The City should submit the annual MBE Report to the local HUD Office within ten (10) days after the end of the annual reporting period. Views of Responsible Officials of the Auditee: The City will ensure that the Annual MBE Report is filed.

Finding 2021-003: Noncompliance of Major Program ? (L) Reporting - U.S. Department of Treasury Coronavirus State and Local Fiscal Recovery Funds (SLFRF) ? Assistance Listing No 21.027 Criteria: Pursuant to Subpart L of the Uniform Guidance, the City is required to include in its Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Compliance Report all grant activity of the reporting period within the Project and Expenditure section. Condition: The City reported $2,153,286 of SLFRF Program expenditures on its 2021 SLFRF Compliance Report. However, the City?s records identified $3,681,649 of SLFRF Program expenditures. Context: Audit observation and comparison of the City?s SLFRF budget line(s) to the 2021 SLFRF Compliance Report identified the discrepancy. Cause: The City did not reconcile internal expenditure records with amounts reported in the 2021 SLFRF Compliance Report. Effect: The City?s 2021 SLFRF Compliance Report was understated by $1,528,363. Questioned Costs: None. Recommendation: The City should reconcile internal expenditure records with grant program expenditure reports prior to submission in order to provide reasonable assurance that all activity within the reporting period is properly reflected on reports sent to State or Federal agencies. The City should revise its 2021 SLFRF Compliance Report in the SLFRF Portal. Views of Responsible Officials of the City (unaudited): The City was aware of this error. However, the SLFRF portal was closed and we were unable to correct. When the portal opens up for the next quarterly report, this will be reconciled.

Finding 2019-003: Noncompliance of Major Program - Subrecipient Monitoring - U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) ? CFDA No. 14.218 Condition: The City does not have a formal procedure in place to track whether subrecipients are receiving Single Audits in accordance with Subpart F of the Uniform Guidance. The City did not complete subrecipient monitoring and was unable to provide documentation on two subrecipients. This finding is modified from the prior year. Criteria: Pursuant to Subpart F of the Uniform Guidance, the City is required to track whether subrecipients are obtaining required Single Audits. The City is also required to monitor subrecipients in accordance with 2 CFR ? 200.331, and to document the results of such monitoring. Context: The City did not correct the subrecipient monitoring issue until 2020. Effect: The City cannot determine if subrecipients were required to have a Single Audit performed in accordance with subpart F of the Uniform Guidance audit or provide assurance that subrecipients expended funds in accordance with their agreements. Cause: The City did not complete monitoring on two of its subrecipients. Questioned Costs: None. Recommendation: The City should maintain a tracking system of all its subrecipients in order to ensure that it obtains copies of their financial reports and audits, where applicable, to verify whether subrecipients are conducting Single Audits when required by Subpart F of the Uniform Guidance. The City should establish formal procedures for monitoring CDBG subrecipients for compliance with the terms of the grant agreement. Views of Responsible Officials of the City (unaudited): The City has performed monitoring of subrecipients of the Community Development Block Grants in 2020. Going forward, the City will perform an audit at least annually to ensure compliance with Subpart F of the Uniform Guidance.

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