City of St. PeterLocal Government

MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 2023-003 Reporting Compliance Requirement Criteria – 2 CFR § 200.510 requires that the City prepare financial statements that reflect its financial position, results of operations or changes in net position, and, where appropriate, cash flows for the fiscal year audited, including the Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2023, which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Management is responsible for establishing and maintaining effective internal controls over compliance with requirements applicable to federal programs, including separately tracking federal expenditures within the finance system to provide for accurate preparation of the SEFA. Condition – During our audit, we noted the City did not have sufficient controls in place to ensure completeness of the SEFA and compliance with this requirement. The City’s SEFA was understated by $1,189,917 in federal expenditures related to the Highway Planning and Construction and COVID-19 – Coronavirus State and Local Fiscal Recovery Funds federal programs. Questioned Costs – Not applicable. Context – On the December 31, 2023 SEFA, $1,189,917 of $1,197,438 was initially unreported. Repeat Finding – This is a current year finding. Cause – This was an oversight by the City’s management. Effect – An incomplete SEFA could result in incorrect major program determination and could be seen as a violation of federal award agreements. Recommendation – We recommend that the City review its internal control procedures over reporting and verify completeness of expenditures reported on the SEFA in the future. View of Responsible Official and Planned Corrective Actions – The City agrees with the finding. The City has separately issued a Corrective Action Plan related to this finding.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE ? U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH MINNESOTA DEPARTMENT OF MANAGEMENT AND BUDGET, CORONAVIRUS RELIEF FUND ? CFDA NO. 21.019 2020-002 Internal Control Over Compliance With Federal Allowable Activities and Period of Performance Requirements Criteria ? 42 U.S. Code ? 601(d) requires the City to use the funds provided under this section to cover only those costs that are necessary expenditures incurred due to the public health emergency, with respect to the coronavirus pandemic, and incurring during the period from March 1, 2020 through December 30, 2020. Condition ? During our audit, we noted that the City charged costs to the federal Coronavirus Relief Fund (CRF) program that did not meet the standard for an allowable cost as defined by 86 FR 4182 and 42 U.S. Code ? 601(d) because they were incurred after the period of performance. Questioned Costs ? $39,036. Context ? The City has charged unallowable costs to the program for 1 of 21 transactions tested. This was not a statistically valid sample. Repeat Finding ? This is a current year finding. Cause ? This was an oversight by city personnel. Effect ? This could be viewed as a violation of the award agreement. Recommendation ? We recommend that the City review its internal control procedures relating to allowable activities and the period of performance in regards to federal programs. View of Responsible Official and Planned Corrective Actions ? The City agrees with the finding. The City will review its procedures relating to allowable activities and period of performance in regards to federal programs. The City has separately issued a Corrective Action Plan related to this finding.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE ? U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH MINNESOTA DEPARTMENT OF MANAGEMENT AND BUDGET, CORONAVIRUS RELIEF FUND ? CFDA NO. 21.019 (CONTINUED) 2020-003 Internal Control Over Compliance With Federal Reporting Requirements Criteria ? 42 U.S. Code ? 601(d) requires that each prime recipient of the CRF shall provide Financial Progress Reports that contain COVID-19-related costs incurred during the covered period beginning on March 1, 2020 and ending on December 30, 2020 to the U.S. Department of the Treasury?s Office of Inspector General. Consequently, the Minnesota Department of Management and Budget required each subrecipient of the CRF to submit monthly expenditure reports containing COVID-19-related costs incurred during the same covered period. Condition ? During our audit, we noted that the City did not file all required monthly expenditure reports by the required due date. Questioned Costs ? Not applicable. Context ? Three of five required monthly expenditure reports were not filed by the required due date. Repeat Finding ? This is a current year finding. Cause ? This was an oversight by city personnel. Effect ? This could be viewed as a violation of the award agreement. Recommendation ? We recommend that the City review its internal control procedures relating to the reporting requirements for federal programs. View of Responsible Official and Planned Corrective Actions ? The City agrees with the finding. The City will review its procedures relating to reporting requirements for federal programs. The City has separately issued a Corrective Action Plan related to this finding.

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