City of Long PrairieLocal Government

Finding 2020-005 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 11.300 Investments for Public Works and Economic Development Facilities Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget?s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regards to determining allowable costs, procurement procedures, conflicts of interest, and cash management. This finding was also reported in the prior year audit as finding number 2019-002. Criteria: 2 CFR ? 200.302(b) requires the City to have written procedures related to managing cash from federal award, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E ? Cost Principles. Additionally, 2 CFR ? 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City?s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City?s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

Finding 2020-007 Internal Controls Over Compliance for the Determination of Eligible Program Costs Federal Program: 21.019 Coronavirus Relief Fund Condition: Clear documentation was not available for certain costs applied to the federal program to verify that such costs met the eligibility requirements of the program identified below. Criteria: The federal program requires that all costs applied to the program be necessary expenditures incurred due to the public health emergency with respect to COVID-19. Additionally, such costs must not be accounted for in the City?s most recently approved budget as of March 27, 2020. Cause: The City does not have sufficient controls in place to ensure the expenditures that have been applied to the federal program meet the eligibility requirements as defined by the federal program. Additionally, costs applied to the program were not clearly identified with the City?s accounting records. Effect: The eligibility of certain costs applied to the program could not be ascertained. However, additional eligible costs not applied to the federal program were identified, as discussed further below. Context: A sample of twenty-seven invoices and other cost items with a combined dollar value of $248,239 were selected for audit, from the total population of $254,273. The tests identified four cost items for which eligibility with federal program requirements was questioned. Questioned Costs: $42,603. However, other eligible costs, consisting largely of public safety wages, were also identified. These costs could have been applied to the program in lieu of the costs being questioned. Recommendation: We recommend the City review the federal program compliance requirements, to obtain a better understanding of the related requirements under Uniform Guidance. Additionally, we recommend the establish additional internal controls pertaining to evaluation and documentation of costs applied to the federal program. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

Finding 2020-008 Internal Controls Over Compliance for State Monthly Federal Program Reporting Federal Program: 21.019 Coronavirus Relief Fund Condition: The City failed to submit all monthly reports prior to the State imposed reporting deadlines. Criteria: The State of Minnesota required Cities who received Coronavirus Relief Fund monetary distributions to submit monthly expenditure reports according to certain deadlines imposed by the State. Cause: The City failed to establish sufficient procedures to ensure that all State of Minnesota reporting requirements for the federal program expenditures were met prior to the prescribed deadlines. Effect: Monthly submissions to the State of Minnesota were delinquent. This was indicative of a breakdown of internal control over compliance by the City that could lead to further errors. Context: Of the four Local Government Expenditure Reports reviewed, three were dated beyond the submission deadlines. Questioned Costs: None identified. Recommendation: We recommend the City review any future federal program reporting requirements and related deadlines, and establish procedures to ensure future programs are operated in accordance with the reporting requirements imposed by the State or other grantor. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.

Finding 2019-002 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: This finding pertains to all Federal Programs Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget?s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regards to determining allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR ? 200.302(b) requires the City to have written procedures related to managing cash from federal award, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E ? Cost Principles. Additionally, 2 CFR ? 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City?s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City?s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to all federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.