CITY OF PATERSONLocal Government

Information on the federal program: American Rescue Plan, Assistance Listing #21.027 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available for review. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the American Rescue Plan requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management's response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

Information on the federal program: Community Program to Improve Minority Health, Assistance Listing #93.137 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available for review. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the Community Program to Improve Minority Health requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management's response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

FINDING 2023-008 Information on the federal program: Community Program to Improve Minority Health, Assistance Listing #93.137 Criteria or specific requirement: The City is required to ensure that financial records, such as quarterly financial reports, are accurate, consistent, and supported by appropriate documentation in accordance with the grant agreement. Condition: Supporting documentation provided did not agree with the quarterly reports submitted. Questioned costs: Unable to be determined. Context: The inconsistencies between supporting documentation and the submitted reports raise concern regarding the reliability of the City’s records. Effect: Failure to ensure that supporting documentation aligns with the reported amounts submitted increases the risk of error, misstatement, and potential noncompliance with financial reporting requirements. Cause: The City does not have adequate review procedures in place to verify that quarterly reports are fully supported by underlying documentation before submission. Recommendation: The City should implement a review process to ensure that all financial reports are reconciled with supporting documentation before submission. Management’s response: Procedures will be implemented to ensure all supporting documentation is reconciled with quarterly reports prior to submission.

Community Program to Improve Minority Health, Assistance Listing #93 .13 7 Information on the federal program: Expenditures made by the City must be authorized by the CFO prior to purchase, ensuring that purchases are eligible under the grant award. Condition: The City's current procedures for authorizing purchases under the Community Program to Improve Minority Health Program are not functioning as intended. Questioned Costs: Unable to be detennined. Context: The City has authorized a purchase that does not meet the eligibility criteria outlined in the grant agreement. Effect: Failure to perform adequate fiscal control procedures resulted in non-compliance with the specific program requirements in accordance with the grant agreement. Cause: The City lacks a system in place to ensure that purchases and authorizations comply with the Community Program to Improve Minority Health Program requirements. Recommendation: A process will be developed and implemented to ensure proper authorization is obtained prior to the expenditure of grant funds. Management's response: Procedures are to be implemented to ensure proper authorization is obtained prior to expenditure of grant funds.

Information on the federal program: Maternal & Child Health Services Block Grant- Childhood Lead Poisoning Control Program, Assistance Listing #93 .994 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available to verify payroll costs. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the Childhood Lead Poisoning Control Program requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management's response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

Information on the federal program: Maternal & Child Health Services Block Grant- Childhood Lead Poisoning Control Program, Assistance Listing #93.994 Criteria or specific requirement: The City must submit quarterly financial reports and maintain sufficient supporting documentation required for approval of reimbursement. Condition: Quarterly reports provided did not agree to supporting documentation. Questioned costs: Unable to be determined. Context: Quarterly reports provided did not contain approving signatures. Supporting documentation did not agree to the quarterly reports provided. Effect: Without authorizing signatures, unallowable costs can be reported on the SAGE Reports submitted to the State. Cause: Lack of supporting documentation and supervising duties can lead to improper maintenance of records. Recommendation: The City must adhere to all reporting requirements, including providing sufficient expenditure support and proper approval of reports. Management's response: Procedures are to be implemented to ensure reports are properly handled and approved.

FINDING 2023-012 Information on the federal program: HIV Care Formula Grants (Ryan White HIV/AIDS Program Part B), Assistance Listing #93.917 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available at the time of audit. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the Ryan White HIV/AIDS Program Part B requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management’s response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

FINDING 2023-013 Information on the federal program: Housing Opportunities for Persons with AIDS, Assistance Listing #14.241 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several purchase orders related to this grant were not made available for review at the time of audit. Questioned costs: Unable to be determined. Context: The City authorized expenditures under this grant program; however, supporting documentation was not provided to verify compliance with grant requirements. Effect: The absence of supporting documentation may result in noncompliance with the allowable cost requirements under the grant agreement. Cause: Controls were not in place to ensure all required eligibility determinations and supporting documents are properly maintained and available for audit review. Recommendation: The City should develop and implement procedures to ensure records are properly maintained and in compliance with the federal grant guidance. Management’s response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years

Information on the federal program: American Rescue Plan, Assistance Listing #21.027 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available for review. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the American Rescue Plan requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management's response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

Finding 2022-008 Information on the federal program: Community Program to Improve Minority Health, Assistance Listing #93.137 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available for review. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the Community Program to Improve Minority Health requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management's response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

Finding 2022-009 Community Program to Improve Minority Health, Assistance Listing #93 .13 7 Information on the federal program: Expenditures made by the City must be authorized by the CFO prior to purchase, ensuring that purchases are eligible under the grant award. Condition: The City's current procedures for authorizing purchases under the Community Program to Improve Minority Health Program are not functioning as intended. Questioned Costs: Unable to be detennined. Context: The City has authorized a purchase that does not meet the eligibility criteria outlined in the grant agreement. Effect: Failure to perform adequate fiscal control procedures resulted in non-compliance with the specific program requirements in accordance with the grant agreement. Cause: The City lacks a system in place to ensure that purchases and authorizations comply with the Community Program to Improve Minority Health Program requirements. Recommendation: A process will be developed and implemented to ensure proper authorization is obtained prior to the expenditure of grant funds. Management's response: Procedures are to be implemented to ensure proper authorization is obtained prior to expenditure of grant funds.

Finding 2022-010 Information on the federal program: Maternal & Child Health Services Block Grant- Childhood Lead Poisoning Control Program, Assistance Listing #93 .994 Criteria or specific requirement: The City must retain all expenditure records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available to verify payroll costs. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the Childhood Lead Poisoning Control Program requirements. Recommendation: A process should be developed and implemented to ensure records are properly maintained. Management's response: Procedures are to be implemented to ensure records are properly retained for a minimum period of three years.

Finding 2022-011 Information on the federal program: Maternal & Child Health Services Block Grant- Childhood Lead Poisoning Control Program, Assistance Listing #93.994 Criteria or specific requirement: The City must submit quarterly financial reports and maintain sufficient supporting documentation required for approval of reimbursement. Condition: Quarterly reports provided did not agree to supporting documentation. Questioned costs: Unable to be determined. Context: Quarterly reports provided did not contain approving signatures. Supporting documentation did not agree to the quarterly reports provided. Effect: Without authorizing signatures, unallowable costs can be reported on the SAGE Reports submitted to the State. Cause: Lack of supporting documentation and supervising duties can lead to improper maintenance of records. Recommendation: The City must adhere to all reporting requirements, including providing sufficient expenditure support and proper approval of reports. Management's response: Procedures are to be implemented to ensure reports are properly handled and approved.

Finding 2022-012 Information on the federal program: Emergency Solutions Grant, Assistance Listing #14.231 Criteria or specific requirement: The City must retain all payroll records for a minimum of three years, as maintained by the Department Head and/or Grant Supervisor. Condition: Several payroll files selected for audit were not available to verify payroll costs. Questioned costs: Unable to be determined. Context: The City issued reimbursement of payroll expenses in which backup documentation was not available to support the claims. Effect: Without proper documentation, there is a risk that grant funds could be used for ineligible employees or activities. Cause: The City lacks a system to ensure that records related to purchases and authorizations are maintained in accordance with the Emergency Solutions grant requirements. Recommendation: A process to be developed and implemented to ensure records are properly maintained and in compliance with the federal grant guidance.

Finding 2020-002 Information on the federal program: School-Based Youth Services (Temporary Assistance for Needy Families), CFDA #93.558 Criteria or Specific Requirement: According to the OMB Uniform Guidance Compliance Supplement, a financially-needy family may be offered TANF ?assistance? through alternative education or training programs for a minor parent if determined eligible subsequent the application process. Condition: There were multiple instances where eligibility files selected for review were either incomplete, or unable to be presented for audit review. Questioned Costs: Unable to be determined. Context: Per the Federal OMB Uniform Guidance Circular Compliance Supplement, each individual who receives benefits under the TANF program should have a completed eligibility determination on file which is available for audit review. Effect: By failing to provide documentation that each individual receiving TANF benefits was eligible for the program, there could be instances where ineligible program participants are receiving assistance. Cause: Controls were not in place to ensure that all required eligibility determinations and supporting documents were on file and available for audit review. Recommendation: A process be developed and implemented to ensure all files are maintained in accordance with federal grant guidance. Management?s response: Procedures are to be implemented to ensure all files are maintained and in compliance with federal grant guidance.

Finding 2020-003 Information on the federal program: Federal Equitable Sharing, CFDA #16.922 Criteria or Specific Requirement: According to the OMB Uniform Guidance Compliance Supplement, any expenditures towards tangible property must be approved by the governing body and include the asset identification number, intended use, and funding sources. Condition: There were multiple instances in which purchases of tangible property did not include an asset identification number, nor inclusion in the fixed asset report. Questioned Costs: None. Context: Per the Federal OMB Uniform Guidance Circular Compliance Supplement, tangle and real property must be included in the fixed asset report and include an asset identification number. Effect: By failing to include equipment on the fixed asset report, there is potential for properties to be misclassified under the grant award. Cause: Controls were not in place to ensure that all tangible property has been included in the fixed asset report. Recommendation: A process be developed and implemented to ensure all expenditures made for tangible property, equipment, and real property include asset identification numbers. Management?s response: Procedures are to be implemented to report all acquisitions on the fixed asset report.

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