City of Portsmouth, VirginiaLocal Government

Prior Year Finding: 2023-004 Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: 2018,2019,2020,2023 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) B-23-MC-51-0018 (7/1/23-9/1/30) Compliance Requirement: Reporting - Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance - Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control - Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2024. Context: None of the ten subawards selected for testing were reported to FSRS during FY 2024. Total subawards selected were $50,000.00, and $-0- was reported as required by FFATA requirements. Transactions Subaward Report not Subaward Subaward Tested not reported timely amount missing key incorrect elements 1 1 0 0 0 Dollar Amount Subaward Report not Subaward Subaward of Tested not reported timely amount missing key Transactions incorrect elements $50,000.00 $50,000.00 $0 $0 $0 Cause: The City's procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2024. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Prior Year Finding: No Federal Agency: U.S Treasury Entity: City of Portsmouth (the City) Federal Program: Coronavirus State and Local Recovery Funds (CSLRF) Assistance Listing: 21.027 Federal Award Identification Number and Year: None Pass-Through Entity: N/A Award Number and Period: None, March 3, 2021 - December 31, 2024 Compliance Requirement: Allowable Activities Type of Finding:Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Internal Control - Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not have adequate internal controls in place to manage and monitor the distribution and usage of gift cards. Specifically, there were no formal procedures for tracking the issuance, distribution, and reconciliation of gift cards. This lack of controls resulted in an inability to ensure that gift cards were used for their intended purposes and increased the risk of misappropriation or misuse. Context None, the finding relates to the maintenance of records. Questioned costs: None noted Cause: The City's initial response was to provide immediate financial assistance to the City's residents. As a result, the time to establish adequate internal controls that prevent and/or detect errors and irregularities was decreased. Effect: The City may be unable to support the allowability of activity supported by the gift cards. Recommendation: We recommend that the City review and evaluate procedures to ensure that the procedures over safeguarding assets, maintenance of records, and reconciliation of activity are consistently performed. Views of responsible officials: Management agrees with the finding.

Prior Year Finding: No Federal Agency: U.S Treasury Entity: City of Portsmouth (the City) Federal Program: Coronavirus State and Local Recovery Funds (CSLRF) Assistance Listing: 21.027 Federal Award Identification Number and Year: None Pass-Through Entity: N/A Award Number and Period: None, March 3, 2021 - December 31, 2024 Compliance Requirement: Allowable Activities Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or specific requirement: Compliance - Recipients may use CSLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (codified as 42 USC 802 and 42 USC 803 respectively). Control - Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City developed policies to determine the allowable uses of gift cards under the program+ including supporting documentation to be obtained prior to distribution of the gift cards. The City was not in compliance with its internal policy for obtaining required supporting documentation. Context: CLA noted that 2 out of 60 samples did not have support for the current year school contract and 2 out of 60 samples did not have support for proof of school or VA State ID. Questioned costs: $2,100 Cause: The City initially responded by offering immediate financial assistance to its residents. Consequently, this led to the bypassing of internal controls related to supporting documentation. Effect: The City may be unable to support the allowability of activity supported by the gift cards. Recommendation: We recommend that the City develop and distribute clear guidelines on the documentation requirements for the assistance program and provide training for staff on the importance of obtaining and maintaining proper documentation and adhering to internal controls. Views of responsible officials: Management agrees with the finding.

Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2023 Pass-Through Entity: N/A Award Number and Period: B-23-MC-51-0018 (7/1/23-9/1/30) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge to the Federal award allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award, only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. Further, the Uniform Guidance in 2 CFR 200.344(b), states that unless the Federal awarding agency or pass-through entity authorized an extension, a non-Federal entity must liquidate all financial obligation incurred under the Federal award no later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award. Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth charged costs to the program that were incurred outside of the grant. award's period of performance. Context: One of Five expenditure transactions selected for testing, totaling $ 1,000, were incurred before the award start date of July 1, 2023. Cause: Accounting staff identified and charged program costs to the incorrect grant. The Program's review process did not detect the errors nor take timely corrective action. Effect: The City of Portsmouth was not compliant with the grant's period of performance which could result in the grantor's disallowance of the costs. Questioned costs: $1,000. Recommendation: We recommend that the City of Portsmouth review its procedures to ensure that expenditures charged to the program are incurred within the grant's period of performance. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2023-001 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Department: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting Type of Finding Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance – Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) – Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee’s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90-day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction’s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following system-generated reports: PR29 – CDBG Cash on Hand Quarterly Report Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The City of Portsmouth did not document their review of the PR29 Cash on Hand Quarterly Report. Auditors are required to tests specific information extracted from HUD’s IDIS system, the PR29 is one of the identified reports. The City was not aware of that review of the report was a requirement. Context: Evidence of review for one report was not provided. Questioned costs: None noted. Cause: The City was not aware that review of the report was a requirement. Effect: The City was unable to support compliance with the requirements. Recommendation: We recommend that the City review its policies and procedures to ensure that compliance with federal reporting requirements is evident. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-002 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021, 2022, 2023 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) H027A210107 (7/1/21-9/30/23) H027X210107 (7/1/21-9/30/23) H027A220107 (4/17/23-9/30/23) H173A200107 (7/1/20-9/30/22) H173A210107 (7/1/21-9/30/23) H173X210107 (7/1/21-9/30/23) Compliance Requirement: Allowable Costs/Cost Principles (Time and Effort Certifications) Type of Finding: Material Weakness in Internal Control over Compliance, Maternal Non-Compliance Criteria or specific requirement: Compliance – Per 2 CFR section 403, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also § 200.306(b). (f) Be adequately documented. See also § 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: PPS was unable to provide documentation supporting time and effort for employee’s salary charged to the grant. We were unable to support the allowable salary reported on the grant due to lack of time and effort certification. Context For 13 out of 40 employee’s salary selected for testing were not supported by time and effort certification. Questioned costs: $30,763, represents the employee’s salary charged to the federal program and not supported by time and effort certification. Cause: PPS did not maintain documentation supporting time and effort for employee pay charged to the grant. Effect: Failure to adhere to allowable cost requirements may result in PPS charging expenditures to the program that are not allowable. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that it retains documentation supporting time and effort on federal grants and that this documentation is available for audit purposes. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Education Department: Portsmouth Public Schools (PPS) Federal Program: Special Education Cluster (IDEA) Assistance Listing: 84.027, 84.173 Federal Award Identification Number and Year: None, 2021 Pass-Through Entity: Commonwealth of Virginia Department of Education Pass-Through Award Number and Period: H027A200107 (7/1/20-9/30/22) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Control – Per 2 CFR section 200.303(a), a non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should comply with the guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control-Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition PPS charged program costs to the grant after the period of performance period ended. We noted that an invoice for $176.05, for goods/services received in October 2022, wase charged to the federal grant ending September 2022. PPS did not obtain prior approval or an extension from the awarding agency before charging the grant. Context: One out of twenty-one samples selected for testing was charged to the grant after period of performance. Questioned costs: $176.05, represents the costs charged to the program after the period of performance. Cause: PPS did not consistently monitor the period of performance for a federal award to ensure that costs were only charged during the allowed period. Effect: PPS expensing of funds out of the period of performance may result in noncompliance and questioned costs from the grantor. Recommendation: We recommend that PPS enhance its procedures and internal controls to ensure that expenditures are not charged to federal awards during the period of performance. Views of responsible officials: Management agrees with the finding.

Reference Number: 2023-004 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development (HUD) Entity: City of Portsmouth (the City) Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listing: 14.218 Federal Award Identification Number and Year: None, 2018, 2019, 2020 Pass-Through Entity: N/A Award Number and Period: B-18-MC-51-0018 (7/1/18-9/1/26) B-19-MC-51-0018 (7/1/19-9/1/27) B-20-MC-51-0018 (7/1/20-9/1/28) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City of Portsmouth did not report subaward information to FSRS during FY 2023. Context: Subawards were not reported to FSRS during FY 2023. Total subawards selected were $153,000, and $0 was reported as required by FFATA requirements. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The City’s procedures and controls were not sufficient to ensure that subawards were reported to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the City establish procedures and internal controls to ensure that all required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Views of Responsible Officials: Management agrees with the finding.

Reference Number: 2022-001Prior Year Finding: NoFederal Agency: U.S. TreasuryFederal Program: Coronavirus State and Local Recovery Funds (CSLRF)Assistance Listing Number: 21.027Federal IdentificationAward Number and Year:None, March 3, 2021- December 31, 2024Compliance Requirement:Allowable Costs and ActivitiesAward YearJuly 1, 2021-June 30, 2022Type of FindingSignificant Deficiency in Internal Control Over Compliance, Other MattersCriteria or specific requirement:Compliance: Recipients may use CSLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (codified as 42 USC 802 and 42 USC 803 respectively).21 U.S.C. ? 812 - U.S. Code - Unannotated Title 21. Food and Drugs ? 812. Schedules of controlled substances. There are established five schedules of controlled substances, to be known as schedules I, II, III, IV, and V. CSA identifies cannabis as schedule 1, despite studies finding it to have medical uses.(1) Schedule I:(A) The drug or other substance has a high potential for abuse.(B) The drug or other substance has no currently accepted medical use in treatment in the United States.(C) There is a lack of accepted safety for use of the drug or other substance under medicalsupervision.Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Condition:The City used CSLRF funds to support the marketing and production of a Cannabis Summit which supported the use of cannabis. Although the use of cannabis is legal in the Commonwealth of Virginia and the summit was approved by the Commonwealth, cannabis is a schedule I controlled substance under the federal Controlled Substance Act (CSA).Federal funds are not allowed to support activities that are illegal federal activity.Context:CLA noted two of five disbursements selected for testing were used to support the Cannabis Summit. CLA reviewed all CSLRF disbursements and noted that only two were made to support the Cannabis Summit.Questioned costs:$130,000, relates to the total CSLRF used to support the Cannabis Summit.Cause:City obtained approval from the State to use the funds in support of the Cannabis Summit.Effect:Federal funds were used to support an illegal federal activity.Recommendation:We recommend that the City ensure that federal funds are used to support allowable costs and activities, and to determine when federal requirements may be more restrictive than the State or grantor? requirements.Views of responsible officials:The City agrees with the finding, see corrective action plan.

Reference Number: 2022-002Prior Year Finding: NAFederal Agency: U.S. TreasuryFederal Program: Coronavirus State and Local Recovery Funds (CSLRF)Assistance Listing Number: 21.027Federal IdentificationAward Number and Year:None, March 3, 2021- December 31, 2024Compliance Requirement:Allowable ActivitiesAward YearJuly 1, 2021-June 30, 2022Type of FindingSignificant Deficiency in Internal Control Over ComplianceCriteria or specific requirement:Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and theterms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Condition:The City purchased 4,429 $100 gift cards for the Senior and ALICE programs. The gift card distribution records did contain all the required eligibility information but was not reconciled to the total gift card population as of June 30, 2022. The distribution record was completed and reconciled as of March 1, 2023; however, this was not timely for the fiscal year 2022 federal program audit.Context:None, the finding relates to the maintenance of records.Questioned costs:None noted.Cause:The City?s initial response was to provide immediate financial assistance to the City?s residents. As a result, the time to establish adequate internal controls that prevent and/or detect errors and irregularities was decreased.Effect:The City may be unable to support the allowability of activity supported by the gift cards.Recommendation:We recommend that the City review and evaluate procedures to ensure that the procedures over safeguarding assets, maintenance of records, and reconciliation of activity are consistently performed.Views of responsible officials:The City agrees with the finding, see corrective action plan.

Finding: 2019-004 Program name: Child Care and Development Fund (CCDF) (CFDA # 93.596) Federal Awarding Agency: Department of Health and Human Services (HHS) State Awarding Agency: Virginia Department of Social Services (VDSS) Department: Portsmouth Department of Social Services (DSS) Compliance Requirement: Eligibility Type of Finding: Significant Deficiency; Nonmaterial Noncompliance Criteria: Per Title 2 Subpart ?200.303, ?The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per PDSS internal control policies and procedures, payments made on behalf of participants should only be made if there is a ?Purchase of Service Order? (POSO) signed by both the local department representative and vendor to cover the time period of that payment. Per Title 42 of the U.S. Code (USC) section 9858, the local DSS must re-determine eligibility based on established eligibility period of at least 12 months. Condition: Of the twenty-five (25) beneficiaries that we tested, we noted: ? Two (2) instances where eligibility was not re-determined within the established 12-month period, and ? Two (2) instances where CCDF payments were made on behalf of participants, even though a ?Purchase of Service Order? (POSO) signed by both the local department representative and vendor was not maintained to cover the time period of the payment. Cause: The performance of the re-determinations was delayed due to lack of resources to complete all required re-determinations in a timely manner. POSO?s were not retained in the file to support that a participant was eligible to receive CCDF payments on their behalf. Effect: The DSS operated CCDF program was not in compliance with the eligibility compliance requirement as of June 30, 2019. Additionally, failure to re-determine eligibility on a timely basis or ensure that services are authorized by appropriate personnel before making payments could result in CCDF benefits rendered to ineligible individuals. Auditor?s Recommendation: We recommend DSS implement a process to monitor the status of upcoming re-determination deadlines in order to prioritize its heavy workload efficiently and that DSS continue to assess current staffing levels and implement a plan to address staff shortages. We also recommend DSS implement a process to ensure that all relevant information for case records be properly scanned and stored in the electronic system for the proper length of time. Finally, we recommend that eligibility workers ensure there is an approved POSO before making payments on behalf of a participant. Questioned Costs: None noted Management?s Response: DSS Management currently monitor?s re-determination due dates. Management has been counseled regarding adherence to the importance of adherence to re-determination deadlines. DSS has been working with City Human Resources and has developed a process to address filling vacant positions expeditiously. DSS has scanned all POSO?s received prior to July 1, 2019 into VaCMS. As of July 1, 2019 vendor are no longer required to sign and return POSO?s for payment Once staff (Family Service Specialist) approves the case for eligibility in VaCMS, It is the responsibility of the vendor to submit a copy of their client attendance record to the state for payment.

Finding: 2019-005 Program name: Title I (CFDA # 84.010) Federal Awarding Agency: Department of Education (DOE) State Awarding Agency: Virginia Department of Education (VDOE) Department: Portsmouth School Board (PSB) Compliance Requirement: Special Tests and Provisions ? Annual Report Card, High School Graduation Rate Type of Finding: Significant Deficiency; Nonmaterial Noncompliance Criteria: Per section 1111(c)(2) of the Elementary and Secondary Education Act of 1965 (ESEA) an SEA and its LEAs must report graduation rate data for all public high schools at the school, LEA, and State levels using the 4-year adjusted cohort rate. To remove a student from the cohort, a school or LEA must confirm, in writing, that the student transferred out, emigrated to another country, transferred to a prison or juvenile facility, or is deceased. To confirm that a student transferred out, the school or LEA must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. A student who is retained in grade, enrolls in a GED program, or leaves school for any other reason may not be counted as having transferred out for the purpose of calculating graduation rate and must remain in the adjusted cohort. Condition: Of the fourteen (14) students removed from the cohort tested, we noted two (2) instances where there was not adequate written documentation to support the removal of the student from the cohort. Cause: The guidance counselors did not receive and maintain the appropriate documentation to support the removal of the student or relied on verbal information without support. Effect: PSB is not in compliance with the Annual Report Card, High School Graduation Rate in ESEA sections 1111(c)(2), 1111(h)(1)(C)(iii)(II) and 8101(25),(23). Auditor?s Recommendation: We recommend that PSB implement a process to educate staff on when they are allowed to remove a student as well as procedures to obtain and retain documentation to support the proper removal of students from the cohort. Questioned Costs: None noted Management?s Response: We have hired a School Counseling Coordinator who will oversee all aspects of School Counseling to include enrollment/withdrawal processes. She has had individual conversations with the enrolling clerks and department directors at all high schools to discuss these three specific instances as well as best practices moving forward. She is also closely monitoring graduation cohorts and requiring these records requests to be filed as they are received.

Finding: 2019-006 (Prior Year Audit Finding Number: 2018-004) Program name: Temporary Assistance for Needy Families (TANF) Cluster (CFDA # 93.558) Federal Awarding Agency: Department of Health and Human Services (HSS) State Awarding Agency: Virginia Department of Social Services (VDSS) Department: Portsmouth Department of Social Services (DSS) Compliance Requirement: Special Tests and Provisions ? Penalty for Refusal to Work Type of Finding: Significant Deficiency; Nonmaterial Noncompliance Criteria: Per Title 45 of the Code of the Federal Regulation (CFR) section 261.14, if an individual refuses to engage in work required under section 407 of the Social Security Act, the agency must reduce or terminate the amount of assistance payable to the family, subject to any good cause or other exceptions the State may establish. Condition: Of the sixty (60) beneficiaries that we tested, we noted two (2) instances where benefits were not reduced for a beneficiary who did not work or participate in a job readiness program. Cause: The TANF Manual allows an exemption to the requirement to maintain employment or participate in a job readiness program if the caretaker is totally disabled and such a disability prevents the individual from being self-supporting. Management notes in these instances, the caretaker had previously been medically evaluated and determined to be disabled, but the caretaker?s disability status was denied and terminated at a point before or during the current year. After the caretaker?s disability status had been terminated, the caretaker did not maintain employment or participate in a job readiness program for the remainder of the year and TANF benefits were never reduced, suspended, or otherwise terminated. Effect: DSS was not in compliance with the penalty for refusal to work requirement as of June 30, 2019. Failure by DSS to reduce or terminate a participant?s eligibility for benefits ultimately results in excess payments to the participant by the State. Auditor?s Recommendation: We recommend DSS implement a process to monitor disabled status of participants to ensure that each participant meets the requirement to work or participate in a job readiness program. Questioned Costs: None noted Management?s Response: DSS staff will enter into VaCMS the onsite and end date of the disability. At the end date of the disability VaCMS will send out task reminder for further staff follow up. It will also send out a task reminder to the staff?s supervisor if the task has not been addressed.

Finding: 2019-007 Program name: Temporary Assistance for Needy Families (TANF) Cluster (CFDA # 93.558) Federal Awarding Agency: Department of Health and Human Services (HHS) State Awarding Agency: Virginia Department of Social Services (VDSS) Department: Portsmouth Department of Social Services (DSS) Compliance Requirement: Eligibility Type of Finding: Nonmaterial Noncompliance Criteria: Per Title 42 of the US. Code (USC) section 608, a state may not provide assistance for a minor child who has been or is expected to be absent from the home for a period of 45 consecutive days or, at the option of the State, such period of not less than 30 and not more than 180 consecutive days unless the state grants a good cause exception, as provided in its State Plan. Condition: Of the sixty (60) beneficiaries that we tested, we noted one (1) beneficiary whose participant file did not contain sufficient information regarding the length of time a child was absent from the home. Cause: The beneficiary notated on their annual renewal application that one of the related children would be temporarily absent from the home. The DSS eligibility worker did not document the follow-up used to determine the length of time the child would be absent from the home in either the case notes or elsewhere in the file. Effect: The DSS operated TANF program was not in compliance with the eligibility compliance requirement as of June 30, 2019. Additionally, failure to follow up on the length of time the child was absent from the home could result in temporary assistance for needy families rendered to ineligible individuals. Auditor?s Recommendation: We recommend DSS follow-up immediately when the caretaker informs DSS that the child is expected to be absent from the home for any length of time. We also recommend that DSS employees clearly document the follow-up actions taken and how long the child is expected to be absent from the home. Questioned Costs: None noted Management?s Response: DSS management will provide a training for eligibility workers who process TANF cases on appropriate documentation related to a child?s absence from home. DSS staff will set an alert in VaCMS to ensure that the child?s absence from the home does not exceed 60 days. This will result in a task reminder for staff for further follow up to ensure that the child is removed from the case. The system will also generate a task reminder for management if the task has not been addressed by the staff.

Finding: 2019-008 Program name: Adoption Assistance ? Title IV-E (CFDA # 93.659) Federal Awarding Agency: Department of Health and Human Services (HHS) State Awarding Agency: Virginia Department of Social Services (VDSS) Department: Portsmouth Department of Social Services (DSS) Compliance Requirement: Eligibility Type of Finding: Nonmaterial Noncompliance Criteria: Per Title 45 of the Code of the Federal Regulation (CFR) section 1356.30 and Title 42 of the US. Code (USC) section 671, the prospective adoptive parent(s) must satisfactorily have met a criminal records check, including a fingerprint-based check. This involves a determination that such individual(s) have not committed any prohibited felonies. The prospective parent(s) and any other adult living in the home who has resided in the provider home in the preceding five years must also satisfactorily have met a child abuse and neglect registry check. Condition: Of the sixteen (16) beneficiaries that we tested, we noted two (2) instances where documentation was not maintained in the file to support that either a criminal records check or child abuse and neglect registry check had been performed for any of the adults in the household. Cause: Documentation was not retained in the file to support that criminal records check or child abuse and neglect registry check were performed for adults in the household, other than internal case notes stating that the checks had been performed. Effect: The DSS operated Adoption Assistance program was not in compliance with the eligibility compliance requirement as of June 30, 2019. Additionally, failure to perform required criminal records checks or child abuse and neglect registry checks could result in Adoption Assistance rendered to ineligible individuals. Auditor?s Recommendation: We recommend DSS implement a process to ensure that all relevant information for case records be properly scanned and stored in the electronic system for the proper length of time. Questioned Costs: None noted Management?s Response: The Department of Social Services is working with City IT to acquire the document imaging system called Laserfiche. Once the system is obtained, DSS will work with IT in ensuring client information is scanned and secured. DSS will train staff on how to utilize and scan case information in the system once it has been obtained.

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