CITY OF NEW HAVENLocal Government

FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Internal Controls Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Pass-Through Entity: Allen County Compliance Requirement: Reporting Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF NEW HAVEN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. The City was unable to provide documentation that more than one individual was involved in the preparation and submission of the monthly project spending reports for the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds administered by Allen County (County). Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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 be in compliance 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). . . ." Cause A proper system of internal controls was not designed or implemented by management of the City to ensure that the monthly project spending reports were prepared by one individual and reviewed by another before submission to the County. Effect Without proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2025 Compliance Requirement: Reporting Audit Findings: Significant Deficiency, Other Matters Condition and Context The City included expenditures on the 2025 Annual Project and Expenditure Report (P&E) that did not occur within the reporting period. As a result, the current period expenditures and cumulative expenditures were both overstated by $35,974 due to including expenditures from April 2025. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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 be in compliance 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). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary . . . periodic reports providing detailed accounting of the uses of funds, . . ." Cause The internal controls designed and implemented were not operating effectively and did not detect errors in the P&E report. The City inadvertently included an additional month of expenditures in its April 1, 2024 to March 31, 2025 P&E report submission. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF NEW HAVEN SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. As such, the City could not ensure that the reports submitted were accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the City provides the U.S. Department of the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2021-002 Subject: COVID-19 - Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii - Reporting Federal Agency: Department of Housing and Urban Development Federal Program: COVID-19 - Community Development Block Grants/State's program and Non-Entitlement Grants in Hawaii Assistance Listings Number: 14.228 Federal Award Number and Year (or Other Identifying Number): CV-CV1-232 Pass-Through Entity: Indiana Office of Community and Rural Affairs Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. The City had not established a system of internal control to ensure that proper documentation was retained for audit. The Grant Administrator prepared and submitted the required CDBG-CV Reports on Jobs Retained report; however, the City could not provide documentation to support the information disclosed in the report. Due to the lack of supporting documentation, we could not verify and determine the accuracy of the Low to Moderate Income key line for those that were employed by the businesses that received Small Business Economic Recovery Loans. The lack of internal controls and the failure to maintain adequate supporting documentation was isolated to the CDBG-CV Reports on Jobs Retained report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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 be in compliance 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). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause Management had not established a system of internal control that would have ensured compliance and that adequate supporting documentation would have been maintained and made available for audit related the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could have resulted in the loss of federal funds to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a system of internal control as well as maintain documentation to ensure compliance and comply with the grant agreement and the Reporting compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.