City of St Joseph, Missouri

Federal Agency: U.S. Department of Transportation Federal Program Title: Highway Planning and Construction Cluster CFDA Number: 20.205 Grant Year: 2020 Award Number: STP-5301(117), TAP 5303 (101), STP-5301 (119) Pass-Through Agency: Missouri Highway and Transportation Commission Compliance Requirement Affected: Procurement, Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance and Compliance Criteria: The City is required to review and sign the debarment report and review SAM website. Condition: It was noted the City did not review and approve 2 vendors before they entered into a contract with them. Context: The debarment report should be signed by the project engineer attesting review of SAM Website is included in the DCP checklist sent to the state and approved by the council and self-attestestation from contractor should be included in the contract files. Questioned Costs: None Cause: The City did not include a debarment report in 2 of the 3 project files. Possible Effect: The City is not in compliance with the suspension and debarment compliance requirement. Repeat Finding: N/A Recommendation: The City should develop a process to ensure that all required vendors are being reviewed for this compliance requirement and the review be documented. Management Response: The City will review the policies and procedures in place for all requirements and will implement changes to ensure applicable federal compliance requirements will be met going forward.

2019-001: Material Audit Adjustments Type of Finding: Material Weakness in Internal Control over Financial Reporting Criteria: An effective internal control system over financial reporting provides reasonable assurance that assets are safeguarded against loss and theft, and that reliable financial statements are prepared in accordance with the appropriate accounting standards and in compliance with applicable laws and regulations. Condition/Context: The City?s current yearend closing procedures and processes resulted in account balances being materially misstated on the City?s financial statements and Schedule of Expenditures of Federal Awards. As a result, material audit adjustments were necessary. A similar finding was reported in 2018 as finding 2018-001. Effect: Material adjustments were proposed throughout the audit and subsequently recorded by management. Cause: The City?s current procedures and processes were not sufficient to ensure all accounts are adjusted to their appropriate year-end balances in accordance with GAAP. Recommendation: In order to strengthen internal controls, we recommend management enhance its internal controls over financial reporting, procedures, and processes to ensure complete and accurate financial reporting. Year-end closing procedures should be expanded to ensure all transactions have been accounted for, and are recorded in the proper period. Prior to the audit, the City should reconcile all accounts to the general ledger. Management should perform a detail review of the financial statements and supporting schedules to ensure they are fairly stated. Management Response: Due to recent turnover and cross-training in the department, not all accounts were reviewed as in the past. A monthly reconciliation and closing process continues to be implemented that will reconcile all balance sheet accounts and allow for revenue and expense analysis and to ensure all transactions have been accounted for, are recorded in the proper period, and the financial statements and supporting schedules are fairly stated.

Federal Agency: Housing and Urban Development Federal Program Title: Community Development Block Grant CFDA Number: 14.218 Grant Year: 2014, 2015, 2016, 2017, 2018 Award Number: Various Pass-Through Agency: None Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The City is to charge payroll as a direct cost of the program and not as an indirect cost. Condition: The City is charging 35% of an individual?s salary and benefits as an indirect cost. Context: Salary and benefits are being charged to the program as an indirect cost and is not being tracked for time or effort to the program. Questioned Costs: $35,808 Cause: The City is not charging the salary and benefits based on the actual time spent on the CDBG program. Effect: The program could be over/under charging salary and benefits due to a lack of proper documentation of time and effort. Recommendation: The City should report actual time spent working on the program instead of estimated time on the program. Management Response: This finding was noted during the already commenced 2019 fiscal year and changes have been implemented in the 2020 fiscal year.

Federal Agency: Housing and Urban Development Federal Program Title: Community Development Block Grant CFDA Number: 14.218 Grant Year: 2014, 2015, 2016, 2017, 2018 Award Number: Various Pass-Through Agency: None Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The City is to file the Form 425 (SF-425) to the HUD Field Office by the end of the first month after each quarter. Condition: It was noted during the audit that the City did not file the required reports during the fiscal year. Context: The Office of Management and Budget (OMB) requires the submission of the Federal Financial Report Standard Form 425 (SF-425) to the HUD Field Office. OMB requires the quarterly submission of the SF 425 report in order to obtain financial information from recipients of Federal funding assistance. Questioned Costs: N/A Cause: The City failed to file the required reports during the fiscal year. Effect: The City is not in compliance with this reporting requirement Recommendation: The City develop a process to complete and file the required reports within the allotted timeframe. Management Response: The City will review the policies and procedures in place for the CDBG reporting requirements and will implement changes to ensure applicable federal compliance requirements will be met.

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