City of Lake Worth Beach, Florida

Reviews of Grant Reports U.S. Department of Treasury ALN 21.027 - COVID 19 Coronavirus State and Local Fiscal Recovery Funds Contract No. Y5177 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 an independent individual for the reports submitted to the US Treasury department prior to submittal. Cause: The City did not have a process in place to document the review of reports to the US Treasury was prior to submittal. Effect: Reports submitted to the Florida Department of State may be incomplete, include errors, or be submitted late. Perspective: There was no evidence of review provided for the reports submitted during Fiscal Year 2025. Questioned Costs: None, 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 and the review is documented. Management Response: Management agrees with the finding. Management will implement procedures to document independent review of all reports submitted to the U.S. Treasury to ensure completeness, accuracy, and timeliness.

Compliance over Negotiation Process U.S. Department of Treasury ALN 21.027 - COVID 19 Coronavirus State and Local Fiscal Recovery Funds Contract No. Y5177 2021 Funding Criteria: 2 CFR 200.11 and 49 CFR 24 govern real property acquisition with Federal funds. 49 CFR 24.9 requires agencies to maintain adequate records of its acquisition and displacement activities in sufficient detail to demonstrate compliance with the Federal code. Records shall be retained for at least three years after each owner of the property receives final payment or in accordance with grantor regulations, whichever is later. Condition: During our audit procedures it was noted by City staff that there was insufficient communication to the seller regarding eminent domain and that this power would not be used to acquire the property if negotiations fail. Cause: During the course of our audit procedures, City staff noted that federal funded real property acquisitions were not conducted in accordance with 2 CFR 200 and 49 CFR 24 as the City’s control for procurement of real property did not identify the City’s procedures were not completed in accordance with 2 CFR 200 and 49 CFR 24. Effect: Without adequate controls over the documentation of communications with sellers, the City may not be in compliance with Federal code or able to demonstrate compliance with Federal code. Perspective: The City did not have proper controls in place to ensure the City was acquiring property in compliance with 2 CFR 200 and 49 CFR 24. Questioned Costs: None, reported finding is a deficiency in internal control. Recommendation: The City should review the documentation sent to the seller during the procurement process to ensure the City is providing all necessary documentation to the seller according to 2 CFR 200 and 49 CFR 24. Management Response: Management agrees with the finding. The issue resulted from procedures not fully aligning with federal requirements for real property acquisition documentation and communication. Management will implement procedures to ensure all required communications and documentation are provided and retained in accordance with 2 CFR 200 and 49 CFR 24, including clear communication to sellers and proper recordkeeping to demonstrate compliance.

Criteria: Uniform Guidance requires that the City’s annual audit package and data collection form are required to be submitted to the federal audit clearinghouse within 30 days after receipt of the auditor’s reports or 9 months after the end of the City’s fiscal year, whichever comes first. Condition: The City’s audit package and data collection form for the years ended September 30, 2023 and 2022, were not submitted timely to the federal audit clearinghouse. Cause: Employee turnover at the City delayed the completion of the City’s annual audits. Context: See “Condition” above. Possible or Known Effect: Failure to submit the annual audit package and data collection form to the federal audit clearinghouse in a timely manner resulted in the auditee being a high-risk auditee for fiscal years 2023 and 2024. This could also result in a loss of future grant funding. Questioned costs: None Identification as a repeat finding, if applicable: Repeat of finding IC 2022-002 Recommendation: We recommend that the City establish internal control policies and procedures to allow for the timely submission of the City’s annual audit package and data collection form to the federal audit clearinghouse on an ongoing basis. Views of Responsible Officials and Planned Corrective Action: Management accepts the finding and recommendation. During fiscal year 2023, the finance department hired additional personnel to assist with the completion of the year-end closing processes and procedures. We have discussed with employees the importance of timely submission of the City’s annual audit package and data collection form to the federal audit clearinghouse on an ongoing basis

IC 2022-002 – Data Collection Form Criteria: Uniform Guidance requires that the City’s annual audit package and data collection form are required to be submitted to the federal audit clearinghouse within 30 days after receipt of the auditor’s reports or 9 months after the end of the City’s fiscal year, whichever comes first. Condition: The City’s audit package and data collection form for the years ended September 30, 2022 and 2021, were not submitted timely to the federal audit clearinghouse. Context: See “Condition” above. Cause: Employee turnover at the City delayed the completion of the City’s annual audits. Effect: Failure to submit the annual audit package and data collection form to the federal audit clearinghouse in a timely manner resulted in the auditee being a high-risk auditee for fiscal years 2023 and 2024. This could also result in a loss of future grant funding. Recommendation: We recommend that the City establish internal control policies and procedures to allow for the timely submission of the City’s annual audit package and data collection form to the federal audit clearinghouse on an ongoing basis. Views of Responsible Officials and Planned Corrective Action: Management accepts the finding and recommendation. During fiscal year 2023, the finance department hired additional personnel to assist with the completion of the year-end closing processes and procedures. We have discussed with employees the importance of timely submission of the City’s annual audit package and data collection form to the federal audit clearinghouse on an ongoing basis.

IC 2020-006 ? Reporting U.S. Department of Homeland Security Disaster Grants-Public Assistance Assistance Listing No. 97.036 Criteria: Grantees are required to file quarterly progress reports with the grantor within 30 days after the end of each quarter, until submission of the administrative closeout report. Condition: We noted that the progress report for the quarter ended March 31, 2020 (which was due on April 30, 2020) was submitted late to the grantor on May 28, 2020. Additionally, there was no evidence of supervisory review/approval of the report that was filed. Context: One of the two quarterly reports selected for testing lacked proper supervisory review/approval and was not filed in a timely manner. Questioned Costs: Not applicable. Cause: Lack of administrative oversight of the program. Effect: Failure to comply with program reporting requirements may result in a disallowance of program expenditures and/or loss of future grant funding. Recommendation: We recommend that management adhere to its established internal control policies and procedures requiring supervisory review/approval of reports on an ongoing basis. Also, additional training should be provided to employees emphasizing the importance of executing internal control procedures over all grant activities. Views of Responsible Official and Planned Corrective Actions: Management accepts the finding and recommendation. During fiscal year 2020, the finance department hired additional personnel to assist with the submission of required reports from respective grantors. We have discussed with employees the importance of timely submission and review/approval of such reports.

IC 2020-007 ? Allowable Costs/Cost Principles U.S. Department of Homeland Security Disaster Grants-Public Assistance Assistance Listing No. 97.036 Criteria: Grantees must maintain complete and accurate accounts and other records for programs. Condition: There is a lack of supervisory review/approval of expenditures being charged to the program on an ongoing basis. Context: 59 of 81 items selected for testing were not reviewed/approved by supervisory personnel. Questioned Costs: Not applicable. Cause: Established controls requiring supervisory review/approval of expenditures being charged to the program did not operate as designed. Effect: This could result in unallowed costs being charged to the program and a loss of grant funding. Recommendation: We recommend that management adhere to its established internal control policies and procedures requiring supervisory review/approval of expenditures on an ongoing basis. Also, additional training should be provided to employees emphasizing the importance of executing internal control procedures over grant activities. Views of Responsible Official and Planned Corrective Actions: Management accepts the finding and recommendation. The finance department has implemented policies and procedures for all expenditures across the departments. We have communicated to the departments the importance of supervisory review/approval of expenditures on an ongoing basis.

2019-11: Written Policies Criteria The City should have written policies and procedures in place that meet the requirements of the Uniform Guidance. Condition The Uniform Guidance requires certain policies and procedures to be documented in order to help grantees establish a control environment that minimizes noncompliance relating to the expenditure of federal awards. Cause Certain required policies have not been formally adopted by the City. Effect The City?s employees do not have formal written policies to follow as they engage in the spending and utilization of federal awards. Recommendation We recommend that the City adopt formal, written policies for the following compliance attributes of federal programs: activities allowed and unallowed, allowable costs/cost principles, cash management, period of performance, conflicts of interest, and a verification process to ensure that contractors are not suspended or debarred. Management?s Response The Finance Department accepts the finding and recommendation. The Finance Department is currently in the processing of forming and adopting the policies mentioned above in order to comply with the requirements of the Uniform Guidance.