City of OwatonnaLocal Government

Lack of Procurement Policy – Procurement, Suspension and Debarment Federal Agency: U.S. Department of Treasury Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: December 31, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The City is required to have controls in place to ensure vendors are not federally suspended or debarred prior to payment. Condition: There is a lack of an official procurement, suspension and debarment policy as required by Uniform Grant Guidance. Questioned Costs: None Context: During testing, it was noted that the City does not have a Uniform Grant Guidance Procurement Policy designating controls of procurement, suspension & debarment procedures. Cause: Oversight Effect: There is potential for vendors to be paid with federal dollars without receiving proper approval or while being federally suspended. Repeat Finding: Yes, See Finding 2023-002. Recommendation: We recommend the City adopt a Procurement Policy in line with Uniform Grant Guidance. Views of Responsible Officials: There is no disagreement with the audit finding.

Finding: 2023-002 Lack of Procurement Policy – Procurement, Suspension and Debarment Federal Agency: U.S. Department of Treasury Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: December 31, 2023 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The City is required to have controls in place to ensure vendors are not federally suspended or debarred prior to payment. Condition: There is a lack of an official procurement, suspension and debarment policy as required by Uniform Grant Guidance. Questioned Costs: None Context: During testing, it was noted that the City does not have a Uniform Grant Guidance Procurement Policy designating controls of procurement, suspension & debarment procedures. Cause: Oversight Effect: There is potential for vendors to be paid with federal dollars without receiving proper approval or while being federally suspended. Repeat Finding: No. Recommendation: We recommend the City adopt a Procurement Policy in line with Uniform Grant Guidance. Views of Responsible Officials: There is no disagreement with the audit finding.

2020 ? 001 Federal agency: U.S. Department of Treasury Federal program title: Coronavirus Relief Fund CFDA Number: 21.019 Pass-Through Agency: State of Minnesota Pass-Through Number(s): SLT0016 Award Period: March 1, 2020 ? November 15, 2020 Type of Finding: ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Standard internal control procedures suggest that reports should have a review documented by someone other than the preparer. Condition: The required monthly reports submitted to the state were not reviewed by someone other than the preparer. Questioned costs: None Context: The City was required to submit monthly reports to the state. The City submitted a total of four reports. None of the four reports were properly reviewed before they were submitted to the state. Cause: City management had someone reviewing the actual expenditures, but did not review the final report submissions to the state. Effect: The amounts reported on the monthly reports could be incorrect and there is an increased change that the City would not catch the error internally. Repeat Finding: No Recommendation: We recommend City management has a secondary person reviewing these reports before they are submitted to the state. Views of responsible officials: There is no disagreement with the audit finding.