City of JohnstownLocal Government

INTERNAL CONTROL - MATERIAL WEAKNESS AND NONCOMPLIANCE COMMUNITY DEVELOPMENT BLOCK GRANTS/ENTITLEMENT GRANTS 14.218 2024-003 - REPORTING Criteria: HUD Quarterly reports are due no later than thirty days after the end of each quarter. Condition: During our testing we noted that three quarterly reports were submitted late as follows: Reporting Period: April 1, 2024 - June 30, 2024/ Due Date: July 30, 2024/ Submission Date: August 23, 2024 Reporting Period: July 1, 2024 - September 30, 2024/ Due Date: October 30, 2024/ Submission Date: January 31, 2025 Reporting Period: October 1, 2024 - December 31, 2024/ Due Date: January 30, 2025/ Submission Date: February 19, 2025 Cause: Reports were not prepared and submitted timely. Effect: The City did not submit the quarterly reports timely. Context: There was turnover during 2024 and there was not adequate cross training in place among the staff to ensure that program reporting deadlines were met. Questioned Costs: None noted. Recommendation: We recommend that the City prepares a listing of required reports and related due dates and designates a manager level employee to monitor the report submission and ensure that reports are submitted in a timely manner.

INTERNAL CONTROL - MATERIAL WEAKNESS AND NONCOMPLIANCE COVID-19 - Coronavirus State and Local Fiscal Relief Funds - 21.027 2024-004 - Procurement Criteria: The City is responsible for establishing and maintaining a procurement policy which is compliant with the Uniform Guidance in 2 CFR 200.320. In addition, the City is responsible for maintaining adequate records relating to procurements. Condition: The City's procurement policy lacks the specific methods of procurement to be followed and the respective thresholds for procurements using federal funds. Furthermore, there is not adequate pre-award documentation maintained relating to each of the City's procurements. Cause: The City's procurement policy was not adequately updated with necessary Uniform Guidance requirements. In addition, the City's procurement process is not centralized and there is inadequate or missing pre-award documentation pertaining to the City's various procurements. Effect: The condition above could result in material program and internal control issues relating to procurements whereby: appropriate methods of procurement may not be followed, debarred or suspended vendors or contractors could be awarded purchase orders or contracts, open and fair competition may not be achieved, etc. Context: Audit procedures noted that the procurement policy is inadequate and not in line with Uniform Guidance. Furthermore, audit procedures noted that there is not centralized process in place for tracking the City's various procurements along with the necessary pre-award documentation. There was a total of $1,194,777 of expenditures incurred during the year ended December 31, 2024 for which procurements would have been made in the current year or prior years. Questioned Costs: We questioned $1,194,777 of costs because this was the total that was expended during the year ended December 31, 2024, for goods or services for which procurement policies should have been followed. Our testing surrounding procurement in the current year noted that there was not a proper procurement policy in place that would permit the testing of procurements made during the year. Recommendation: We recommend that the City adopt a proper procurement policy that is in line with Uniform Guidance. We further recommend that the City develops a centralized procurement process whereby appropriate procurement type is documented along with the maintenance of proper pre-award documentation.

INTERNAL CONTROL – MATERIAL WEAKNESS AND NONCOMPLIANCE COVID-19 – Coronavirus State and Local Fiscal Relief Funds – 21.027 2023-004 – Procurement Criteria: The City is responsible for establishing and maintaining a procurement policy which is compliant with the Uniform Guidance in 2 CFR 200.320. In addition, the City is responsible for maintaining adequate records relating to procurements. Condition: The City’s procurement policy lacks the specific methods of procurement to be followed and the respective thresholds for procurements using federal funds. Furthermore, there is not adequate pre-award documentation maintained relating to each of the City’s procurements. Cause: The City’s procurement policy was not adequately updated with necessary Uniform Guidance requirements. In addition, the City’s procurement process is not centralized and there is inadequate or missing pre-award documentation pertaining to the City’s various procurements. Effect: The condition above could result in material program and internal control issues relating to procurements whereby: appropriate methods of procurement may not be followed, debarred or suspended vendors or contractors could be awarded purchase orders or contracts, open and fair competition may not be achieved, etc. Context: Audit procedures noted that the procurement policy is inadequate and not in line with Uniform Guidance. Furthermore, audit procedures noted that there is no centralized process in place for tracking the City’s various procurements along with inadequate pre-award documentation. There was a total of $1,609,137 of expenditures relating to procurements during the year ended December 31, 2023; however, documentation was not deemed adequate to substantiate the procurements and whether they complied with Uniform Guidance. Questioned Costs: We questioned $1,609,137 of costs because this was the total that was expended during the year ended December 31, 2023, for items or services for which procurement policies should have been followed. Our testing surrounding procurement in the current year noted that there is not appropriate pre-award documentation and an improper procurement policy that would permit the testing of procurements. Recommendation: We recommend that the City adopt a proper procurement policy that is in line with Uniform Guidance. We further recommend that the City develops a centralized procurement process whereby appropriate procurement type is documented along with the maintenance of proper pre-award documentation.

INTERNAL CONTROL – MATERIAL WEAKNESS AND NONCOMPLIANCE COVID-19 – Coronavirus State and Local Fiscal Relief Funds – 21.027 2023-005 – Subrecipient Monitoring Criteria: The City is responsible for identifying the applicable requirements and relevant terms and conditions to the subaward entity at the time of award, or by means subsequent modification to the subawards. Condition: The City’s agreement with Johnstown Redevelopment Authority relating to the Weatherization program, funded by means of State and Local Fiscal Relief Funds, was not appropriately amended to reflect the intentions of both entities subsequent to the initial award. Cause: The intentions of each party with respect to the nature of the subaward with Johnstown Redevelopment Authority changed after the initial award and there were no subsequent modifications to the subaward agreement. Effect: The condition above could have resulted in programmatic issues related to spending as well as reporting over the subaward period. Context: The City is responsible for clearly outlining the terms and conditions of subawards. Questioned Costs: We questioned $336,467 of costs because that was the total amount passed to the subrecipient during the year ended December 31, 2023. Recommendation: We recommend that the City appropriately amend its subaward agreement with Johnstown Redevelopment Authority to clearly specify the terms and conditions of the agreement.

2022-003 ? Procurement Criteria: The City is responsible for establishing and maintaining a procurement policy which is compliant with the Uniform Guidance in 2 CFR 200.320. In addition, the City is responsible for maintaining adequate records relating to procurements. Condition: The City?s procurement policy lacks the specific methods of procurement to be followed and the respective thresholds for procurements using federal funds. Furthermore, there is not adequate pre-award documentation maintained relating to each of the City?s procurements. Cause: The City?s procurement policy was not adequately updated with necessary Uniform Guidance requirements. In addition, the City?s procurement process is not centralized and there is inadequate or missing pre-award documentation pertaining to the City?s various procurements. Effect: The condition above could result in material program and internal control issues relating to procurements whereby: appropriate methods of procurement may not be followed, debarred or suspended vendors or contractors could be awarded purchase orders or contracts, open and fair competition may not be achieved, etc. Context: Audit procedures noted that the procurement policy is inadequate and not in line with Uniform Guidance. Furthermore, audit procedures noted that there is no centralized process in place for tracking the City?s various procurements along with inadequate pre-award documentation. There was a total of $3,969,370 of expenditures relating to procurements during the year ended December 31, 2022; however, documentation was not deemed adequate to substantiate the procurements and whether they complied with Uniform Guidance. Questioned Costs: We questioned $3,969,370 of costs because this equaled the expenditures related to procurements during the year ended December 31, 2022. We reviewed the expenditures for the eight (8) projects with procurements during the year ended December 31, 2022 and determined that there was not appropriate pre-award documentation and an improper procurement policy that would permit the testing of procurements. Recommendation: We recommend that the City adopt a proper procurement policy that is in line with Uniform Guidance. We further recommend that the City develops a centralized procurement process whereby appropriate procurement type is documented along with the maintenance of proper pre-award documentation.

2022-004 ? Subrecipient Monitoring Criteria: The City is responsible for identifying the applicable requirements and relevant terms and conditions to the subaward entity at the time of award, or by means subsequent modification to the subawards. Condition: The City?s agreement with Johnstown Redevelopment Authority relating to the Weatherization program, funded by means of State and Local Fiscal Relief Funds, was not appropriately amended to reflect the intentions of both entities subsequent to the initial award. Cause: The intentions of each party with respect to the nature of the subaward with Johnstown Redevelopment Authority changed after the initial award and there were no subsequent modifications to the subaward agreement. Effect: The condition above could have resulted in programmatic issues related to spending as well as reporting over the subaward period. Context: The City is responsible for clearly outlining the terms and conditions of subawards. Questioned Costs: None Recommendation: We recommend that the City appropriately amend its subaward agreement with Johnstown Redevelopment Authority to clearly specify the terms and conditions of the agreement.

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