City of Ortonville, Minnesota

Federal Agency: Environmental Protection Agency Federal Program Name: Capitalization Grant for Clean Water State Revolving Fund Assistance Listing Number: 66.458 Federal Award Identification Number and Year: Unknown and 2023 Pass-Through Agency: Minnesota Public Facilities Authority Pass-Through Number: MPFA_CWRF-L-046-FY23 Award Period: January 1, 2023 to December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Context: Four of the five draw requests were not in compliance due to requesting reimbursement for an invoice that had not been approved by the City. Condition: During Cash Management testing, it was noted that there were four draw requests that were not approved by City Council as of the date of the draw request. Questioned Costs: None Criteria: Federal guidelines requires that all invoices be paid before requesting reimbursement for the expense. However, with this type of grant funding, the City is allowed to request reimbursement before the payment if the City Council has approved the payment and the payment is made within three to five days after receiving the federal funds. Cause: Lack of oversight of management. Effect: The City is not meeting federal regulations pertaining to cash management and could be reimbursed for unallowable expenses.

Federal Agency: Environmental Protection Agency Federal Program Name: Capitalization Grant for Clean Water State Revolving Fund Assistance Listing Number: 66.458 Federal Award Identification Number and Year: Unknown and 2023 Pass-Through Agency: Minnesota Public Facilities Authority Pass-Through Number: MPFA_CWRF-L-046-FY23 Award Period: January 1, 2023 to December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Context: One out of two vendors selected were not verified against the suspended/debarred vendor report. Condition: During suspension and debarment testing, it was noted that the City did not verify that one of two vendors/contractors were not suspended or debarred. Questioned Costs: None Criteria: Per 2 CRF section 180.995, the City is to review vendors showing they are not excluded or debarred for participating in procurement transactions that use federal funds prior to awarding the contract. Cause: Lack of oversight of management. Effect: Lack of proper documentation of controls over compliance with suspension and debarment requirements could result in paying suspended or debarred vendors. This could ultimately result in questioned costs.

Federal Agency: Environmental Protection Agency Federal Program Title: Capitalization Grant for Clean Water State Revolving Fund and Capitalization Grant for Drinking Water State Revolving Fund CFDA Number: 66.458 Award Period: January 1, 2020 to December 31, 2020 Type of Finding: Significant Deficiency in Internal Control over Compliance Context: Federal guidelines requires that all invoices be paid before requesting reimbursement for the expense. However, with this type of grant funding, the City is allowed to request reimbursement before payment if the City Council has approved the payment and the payment is made within three days after receiving the federal funds. Condition: During Cash Management testing, it was noted that there were six invoices that were not approved by City Council as of the date of the draw request. Questioned Costs: None Criteria: Five of the five draw requests were not in compliance due to requesting reimbursement for an invoice that had not been approved by the City Council. Cause: Lack of oversight of management. Effect: The City is not meeting federal regulations pertaining to cash management and could be reimbursed for unallowable expenses. Repeat Finding: Yes Recommendation: We recommend that management ensures invoices are approved by the City Council before submitting the draw request. View of Responsible Official: There is no disagreement with the finding. Planned Corrective Action: Contact Person: Char Grossman, City Clerk/Administrator/Treasurer Corrective Action Planned: A corrective action is in place. Anticipated Completion Date: December 31, 2020

2019-004 Federal Agency: Environmental Protection Agency Federal Program Title: Capitalization Grant for Clean Water State Revolving Fund and Capitalization Grant for Drinking Water State Revolving Fund CFDA Number: 66.458 and 66.468 Award Period: 2019 Type of Finding: Significant Deficiency in Internal Control over Compliance Unpaid Expenses on Draw Request Condition: During Cash Management testing, it was noted that there was one invoice that was not paid as of the date of the draw request. Criteria/Context: Federal guidelines requires that all invoices be paid before requesting reimbursement for the expense. Cause: Lack of oversight of management. Possible Effect: The City is not meeting federal regulations pertaining to cash management and could be reimbursed for unallowable expenses. Repeat Finding: No. Recommendation: We recommend that management ensures invoices are paid before submitting the draw request. View of Responsible Official: There is no disagreement with the finding. Planned Corrective Action: Contact Person: Char Grossman, City Clerk/Administrator/Treasurer Corrective Action Planned: A corrective action is in place. Anticipated Completion Date: December 31, 2020.