CITY OF BILOXI

During the audit, expenditures related to the ARPA and Hazard Mitigation programs were found to have been omitted from the prior-year SEFA. The omission did not affect the major program determination, and no questioned costs were identified. Refer to Section II for the complete finding.

Non-compliance with Federal Award Requirement Identification of Federal Program 20.205 - Highway Construction and Planning; U.S. Department of Transportation; Passed-through State of Mississippi Department of Transportation Criteria 2 CFR 200.318(a) requires non-Federal entities to maintain and use documented procurement procedures that are consistent with applicable Federal statutes, regulations, and the standards identified in 2 CFR 200.317 through 200.327 as well as maintaining written standards of conduct covering conflicts of interest and governing the actions of employees engaged in the selection, award, and administration of contracts supported by Federal funds. Condition For the year under audit, the City did not have documentation of adopted procurement policies and procedures that addressed procurement standards or a written standard of conduct governing employees engaged in contract administration as required by Uniform Guidance. Cause Management had not established or adopted formal policies and procedures to ensure compliance with the procurement requirements of Uniform Guidance. Effect Without documented procurement policies and written standards of conduct, the City is at increased risk of noncompliance with Federal procurement requirements. Questioned Costs No questioned costs resulted from this matter. Repeat Finding This is not a repeat finding. Recommendation We recommend management development, approve, and implement written procurement policies and procedures and adopt a written standard of conduct addressing conflicts of interest and ethical expectations for employees and officials involved in the procurement process. Views of Responsible Officials Managment contends they have followed state procurement law and has since adopted a formal policy stipulating compliance with State of Mississippi procurement and Federal procurement requirements. A written standard of conduct for employees engaged in contract selection, award, and administration is in process and expected to be formally adopted in the near future.

Criteria - Uniform Guidance requires the audit reports to be filed with the FAC within nine months after the year end of the audit period (or by June 30). Condition - Audit reports were not prepared and filed timely with the Federal Audit Clearinghouse (FAC) in accordance with Uniform Guidance. Cause - The City did not submit the audit reports to FAC within nine months. Effect - The City risks losing federal award funding. Questioned Costs - There are no questioned costs associated with finding. Context - Issuance of prior year audits were delayed which caused delay in beginning current year audit and additional current year audit procedures related to implementation of new accounting standard GASB 96 - Subscription-based Technology Arrangements. Repeat Finding - This is a repeat finding. Recommendation - We recommend City continue efforts to improve processes to ensure timely audit preparation and filings. View of Responsible Officials and Planned Corrective Actions - The City concurs with the finding and has provided a response in the Corrective Action Plan.

Condition - Audit reports were not prepared and filed timely with the Federal Audit Clearinghouse (FAC) in accordance with Uniform Guidance. Criteria - Uniform Guidance requires the audit reports to be filed with the FAC within nine months after the year end of the audit period (or by June 30). Cause - The City did not submit the audit reports to FAC within nine months. Effect - The City risks losing federal award funding. Questioned Costs - There are no questioned costs associated with finding. Context - Issuance of prior year audits were delayed which caused delay in beginning current year audit and additional curren year audit procedures related to implementation of new accounting standard GASB 87 - Leases. Repeat Finding - This is a repeat finding. Recommendation - We recommend the City continue efforts to improve processess to ensure timely audit preparation and filings. View of Responsible Officials and Planned Corrective Actions - The City concurs with the finding and has provided a response in the Corrective Action Plan.

2021-002 ? Significant Deficiency Condition Audit reports were not prepared and filed timely with the Federal Audit Clearinghouse (FAC) in accordance with Uniform Guidance. Criteria Uniform Guidance requires the audit reports to be filed with the FAC within nine months after the end of the audit period (or by June 30). Cause The City did not submit the audit reports to FAC within nine months. Effect The City risks losing federal award funding. Questioned Costs There are no questioned costs associated with finding. Context Issuance of prior year audit was delayed and contained material misstatements which caused delay in beginning current year audit and additional current year audit procedures. Repeat Finding This is not a repeat finding. Recommendation We recommend the City continue efforts to improve processes to ensure timely audit preparation and filings. View of Responsible Officials and Planned Corrective Actions The City concurs with the finding and has provided a response in the Corrective Action Plan.