City of Satellite BeachLocal Government

2025-004 Suspension and Debarment 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds US Department of Treasury Passed through Florida Department of Environmental Protection 2024 Funding Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Documentation of the check for suspension or debarment needs to be retained. Condition: Review of checking for suspension and debarment was not done prior to contracting with the vendor. Cause of condition: The City did not consistently complete reviews for all vendors to ensure that the vendors were not suspended and debarred before projects had. Perspective (context): For 5 of the 8 vendors selected, suspension and debarment was not checked prior to paying the vendor. The sample was not statistically valid. Potential effect of condition: Good or services could be contracted with a suspended or debarred vendor, creating questioned costs. Questioned Costs: None noted. Reported finding is a deficiency in internal control. Recommendation: The City should require all vendors to provide certification of their status before a contract or purchase order is completed with the vendor and the City should obtain new certificates annually to ensure the vendors status has not changed. Management’s response on planned corrective action: Management agrees with the recommendation. The City has implemented procedures requiring all departments to obtain vendor certification of status prior to executing a contract or issuing a purchase order. Over the past year, we have worked diligently to educate departments on the importance of obtaining and maintaining proper vendor certifications to ensure compliance with applicable requirements. We will continue to reinforce this expectation and monitor compliance, including obtaining updated certifications annually to ensure vendor status has not changed.

2025-005 Lack of Report Review 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds US Department of Treasury 2021 Funding Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Reports should be subject to independent review to verify completeness, validity and timeliness of submission. Condition: There was no documented review by the City Manager of the annual report submitted to the Us Treasury department prior to submittal. Cause of condition: The annual report to the US Treasury was not reviewed prior to submittal. Perspective (context): The one annual report was not reviewed. Potential effect of condition: Review could contain errors, could be submitted incomplete or late. Questioned Costs: None noted. Reported finding is a deficiency in internal control. Recommendation: The City should have controls in place to ensure all reports are reviewed prior to submittal. Management’s response on planned corrective action: Management agrees that reports should be reviewed prior to submission and notes that the City does have controls in place to ensure appropriate review procedures are performed. In this instance, the report was prepared and submitted by the City Manager, and due to limitations within the Federal Government’s online reporting system, there was not a built-in approval workflow available to document the review process.

2024-002 Lack of Report Review 21.027 COVID-19 Coronavirus & Local Fiscal Recovery Funds US Department of the Treasury Passed through Florida Department of Environmental Protection 2024 Funding Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. Reports should be subject to independent review to verify completeness, validity and timeliness of submission. Various reports are required to be submitted throughout the course of the work, as per the grant agreements between the City and Florida Department of Environmental Protection. Condition: Quarterly reports were not reviewed throughout the period under audit. Cause of condition: There is no process to document review of reports submitted to Florida Department of Environmental Protection. Potential effect of condition: Reports submitted to Florida Department of Environmental Protection may be incomplete, include errors, or be submitted late. Questioned Costs: None. Recommendation: Review of reports should be documented prior to submission to the grantor. Management’s response on planned corrective action: The City has worked and will continue to work diligently on this issue. The City is working to ensure that all reports are properly reviewed prior to submission and that evidence of the review process is properly documented.

2024-003 Suspension and Debarment 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds US Department of Treasury Passed through Florida Department of Environmental Protection 2024 Funding Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls. 2 CFR 180 prohibits entering into covered transactions with entities that have been suspended or debarred from Federal funding. Documentation of the check for suspension or debarment needs to be retained. Condition: Review of checking for suspension and debarment was not done prior to contracting with the vendor. Cause of condition: There is no consistent process to ensure that the vendors were not suspended and debarred, prior to procuring goods or services. Perspective (context): For 29 of the 37 invoices selected, suspension and debarment was not checked prior to paying the vendor. Potential effect of condition: Good or services could be contracted with a suspended or debarred vendor, creating questioned costs. Questioned Costs: None. Recommendation: Review of vendors suspension and debarment should be done prior to entering into a contract or obtaining good or services. Management’s response on planned corrective action: The City has worked and will continue to work diligently on this issue. The City is working to ensure that all vendors are properly reviewed for suspension and debarment on an ongoing basis.

2023-002 Procurement U.S. Department of the Treasury ALN 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Fund Contract No. Y5283 FL0283 (2021) Criteria: 2 CFR Sections 202.303(a) and 200.320 set forth the requirements to establish and maintain effective internal controls over federal awards and for acquisition contracts awarded to vendors including the requirement to obtain price or rate quotations from an adequate number of qualified sources and the circumstances in which noncompetitive procurement methods can be used. The City’s Financial & Budget Operational Guidelines specify that purchases over $25,000 must go through a formal bid and proposal process. In addition, the City’s practice is to obtain three quotes for purchases between $5,000 and $25,000. Condition: Competitive quotes and/or bids were not appropriately obtained for purchases from two vendors. These purchases, however, were beneath the Simplified Acquisition Threshold required by Uniform Guidance. Cause of condition: The vendors were established vendors of the City selected for continuity of service and for their ability to obtain identical materials as previously used by the City. As a result, the City inadvertently exceeded procurement thresholds. Questioned costs: Known questioned costs $140,644. We calculated these costs by identifying all award expenses with vendors not subjected to competitive procurement practices. Perspective (context): We noted competitive procurement was not followed for three of the 40 expenses tested, representing two (2) different vendors (out of 14 vendors). The costs associated with these purchases were allowable costs for activities allowed under the grant program, confining the issue to procurement. While the City did not document competitive quotes for these purchases, we did not note any misuse of grant funds. Potential effect of condition: The City did not comply with Federal compliance requirements or City policies established to promote competition and make the procurement process more transparent. Recommendation: Competitive quotes should be obtained and retained as specified in the City’s procurement policies and Uniform Guidance. Non-competitive procurement (for sole source vendors) should be documented and approved prior to incurring expenses. The City should update and expand procurement policies to document competitive procurement practices for procurement less than the bid threshold Management’s response on planned corrective action: Staff have already implemented a procurement policy to attach all the quotes received from vendors to the purchase order. In the future when reviewing, staff will be able to see all the vendors that provided a quote and see the lowest quote was used to procure the item(s).