City of FairhopeLocal Government

Across five individual Airport Improvement Program grants, a total of 13 reports were required by the compliance supplement and/or the grant agreement. Four of these were financial reports and nine were performance reports. The four financial reports and one of the performance reports were not prepared or submitted as required.

Finding 2019-010 Schedule of Federal Expenditures Material Weakness and Material Noncompliance Information on the federal program: U.S. Department of Transportation CFDA 20.106 Airport Improvement Grant Criteria: 2 CFR Part 200-Subpart D establishes post federal award requirements including the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Condition: The City did not prepare a Schedule of Expenditures of Federal Awards (SEFA). Questioned Costs: N/A Context: The SEFA was not completed accurately until audit procedures identified missing expenses and federal grants. Cause: The City has financial policies and procedures in place for basic governmental accounting but have not included accurately maintaining a SEFA. Effect: The City did not comply with the standards for financial management and ultimately did not record $373,744 of federal expenditures and $342,177 of federal revenue until they were identified through audit procedures and were subsequently recorded. Repeat Finding: Yes. Recommendation: We recommend the City maintain a SEFA, updating it on a monthly basis through a reconciliation to the state payments as a normal closeout procedure. The SEFA should be reviewed no less than quarterly by individual grant managers to ensure the grants under their care are accurately reflected. View of responsible officials and planned corrective actions: The City concurs. The City will maintain a SEFA and reconcile it to both grant activity and the general ledger on a quarterly basis. This will be implemented by September 30, 2020.

Finding 2019-011 Reporting Significant Deficiency and Noncompliance Information on the federal program: U.S. Department of Transportation CFDA 20.106 Airport Improvement Grant Criteria: The reporting requirements set forth by the Compliance Supplement state that the form SF 425 and the form 271 are to be completed accurately and timely. Condition: The form SF 425 and the form 271 were submitted with inaccurate information. Questioned Costs: N/A Context: Both the required form SF 425 and form 271 were examined along with five form F-25As (finance request forms). The SF 425 and the 271 were the only ones where incorrect grant period information was noted (this was subsequently corrected, and corrected reports resubmitted upon notification). All financial information on all reports examined was correct. Cause: Controls over reporting did not capture the clerical error related to grant period dates. Effect: Incorrect form SF 425 and the form 271 was submitted. Repeat Finding: No. Recommendation: We recommend that each report is corrected, reviewed and resubmitted. Reports should be reviewed and reconciled to the grant agreement and any grant modifications as the final part of the review. View of responsible officials and planned corrective actions: The Airport Authority concurs. The reports in question were corrected and resubmitted upon notification in March of 2020. The Airport Authority will review each report submitted, reconciling it to the original grant agreement and expenditure listing where applicable. This will be implemented by September 30, 2020.

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