CITY OF LOVELANDLocal Government

Assistance Listing, Federal Agency, and Program Name - ALN 21.027, U.S. Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Award Identification Number and Year - FAIN not available, 2022 Pass through Entity - N/A Direct funded Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities 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 did not have controls in place surrounding the review of annual performance reporting. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - As the City received less than $10 million of CSLFRF funding, the City is required to submit an annual report for the program and have controls in place to ensure the report is filed on time and no errors in reporting occur. During the review of internal controls over the annual performance report required by the program, the City was unable to produce evidence of a secondary review of the annual report before or after submission; however, the report was filed on time and no errors in reporting were noted as a result of our audit procedures. Cause and Effect - Due to significant staff turnover at the City, the City did not have controls in place over reporting for this grant. The lack of countrols could have resulted in material misstatements to the reports filed with the funding agency. Recommendation - In order to ensure reporting requirements are met and that reports are accurate and filed timely, we recommend the City incorporate a formal review process of the reports. Views of Responsible Officials and Corrective Action Plan - The City agrees with this finding. The City is in the process of strengthening our formal grant review process for all reports to ensure accuracy and timeliness. See the corrective action plan.

Assistance Listing, Federal Agency, and Program Name - ALN 14.251, U.S. Department of Housing and Urban Development, Economic Development Initiative Special Project, Neighborhood Initiative and Miscellaneous Grants Federal Award Identification Number and Year - B-22-CP-CO-0158, 2022 Pass through Entity - N/A Direct funded Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities 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 did not have controls in place surrounding the filing of semi annual performance and financial reports nor did it submit the required reports. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - According to the terms of the award, the City is required to submit a performance report to the granting agency on a semi annual basis and must include a completed Federal financial report as an attachment to each performance report. Cause and Effect - The City was unable to access the granting agency's web portal and, therefore, did not submit the required reports during the year. Recommendation - In order to ensure reporting requirements are met and that reports are accurate and filed timely, we recommend the City incorporate a formal review process of the reports. Views of Responsible Officials and Planned Corrective Actions - The City agrees with this finding. The City is in the process of strengthening our formal grant review process for all reports to ensure accuracy and timeliness. See the corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAIN not available, 2024 Pass through Entity - Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities 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. Condition - The City did not have controls in place surrounding the review of requests for reimbursement to ensure the underlying invoices were allowable and that the local matching contribution was calculated correctly. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The same individual at the City prepared and submitted the requests for reimbursement without a second person reviewing the request. The City submitted two requests for reimbursement during the year under audit with grant reimbursement amounts totalling $550,495. The City submitted a third request for reimbursement subsequent to the year under audit that included 2024 expenditures of federal awards in the amount of $653,591. Cause and Effect - The City did not have a policy in place to ensure an individual in the finance department reviewed the requests for reimbursement prepared by department staff; however, no unallowable costs, incorrect matching calculations, or inappropriate reimbursement requests were noted as a result of our audit procedures. Recommendation - We recommend the City implement a process to ensure all requests for reimbursement are reviewed prior to submission. Views of Responsible Officials and Planned Corrective Actions - The City agrees with this finding. The grant accountant is revising our grant regulations and requirements to improve our internal controls and processes. Part of this update will include a requirement that all RFRs prepared by departments are forwarded to the Finance department for review and approval prior to submission. See the corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAIN not available, 2024 Pass through Entity - Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 184.4(b), the Buy America Preference, which is to ensure none of the funds made available for a Federal award for an infrastructure project may be obligated unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States, must be included in all subawards, contracts, and purchase orders for the work performed under the Federal award. Per 2 CFR 200.318 (b), nonfederal entities "must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders." Condition - The City did not have controls in place surrounding the review of contracts and bid documents and omitted the Build America Buy America clause. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The City entered into one vendor contract during the year related to this federal award. The contract was for an infrastructure project, but the required Build America Buy America clauses were excluded from the contract. Cause and Effect - The City did not have a process in place to review the contract to ensure it was in compliance with Uniform Guidance; therefore, the CIty omitted the required clauses and was not in compliance with 2 CFR 200.318(b). Recommendation - We recommend the City review all contract and bid documents to ensure they are in compliance with all federal laws and regulations. Views of Responsible Officials and Planned Corrective Actions - The City accepts this finding. The City did have internal policies in place to ensure compliance with federal procurement requirements. However, the project was bid and awarded prior to receipt of any grant funding, so the Buy America Preference was not included in the contracts. While unintentional, the contract requirement was not followed. The City will require an amendment to the contract to include the Build America, Buy America clause. See the corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAIN not available, 2024 Pass through Entity - Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 29 CFR 5.5, all laborers and mechanics employed by contractors or subcontractors to work on constuction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor. Nonfederal entities must include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. Condition - The City did not have controls in place surrounding the review of contracts and bid documents and omitted the prevailing wage rates provisions from the construction contract it entered into that was financed by the federal award. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - The City incurred expenditures during the year under audit under one contract related to this federal award that was subject to the wage rate requirements. Cause and Effect - The City did not have a process in place to review the contract to ensure it was in compliance with the requirements of the federal award and, therefore, the required clauses were omitted from the contract and the City was not in compliance with the regulation; however, it did obtain and review the required weekly payroll reports to ensure prevailing wage rates were paid. Recommendation - We recommend the City review all contract and bid documents to ensure they are in compliance with all federal laws and regulations. Views of Responsible Officials and Planned Corrective Actions - The City accepts this finding. The City did have internal policies in place to ensure compliance with federal wage requirements. However, the project was bid and awarded prior to receipt of any grant funding, so the prevailing wage rate requirements were not included in the contracts. While unintentional, the contract requirement was not followed but was complied with in practice. The City will require an amendment to the contract to include ensure the prevailing wage requirement is included. See the corrective action plan.

Assistance Listing, Federal Agency, and Program Name - 20.205, U.S. Department of Transportation, Highway Planning and Construction; 15.916, U.S. Department of the Interior, Outdoor Recreation, Acquisition, Development and Planning Federal Award Identification Number and Year - FAINs not available Pass through Entity - ALN 20.205 Colorado Department of Transportiation; ALN 15.916 Colorado Parks and Wildlife/Land and Water Conservation Fund Finding Type - Material weakness Repeat Finding - No Criteria - The Single Audit Act and Uniform Guidance require a nonfederal entity that expends $750,000 or more of federal awards in a fiscal year to have a single or program specific audit. 2 CFR §200.508 (b) indicates that the auditee must prepare financial statements, including the schedule of expenditures of federal awards, in accordance with 2 CFR §200.510. Additionally, 2 CFR §200.502 describes the basis for determining the timing of when federal awards are deemed expended and, therefore, reportable on the schedule. Condition - The schedule of expenditures of federal awards (the "SEFA") was not accurate. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - During the fiscal year ended December 31, 2024, the City expended approximately $22,617,000 of federal funding. The initial draft of the SEFA included the following inaccuracies: ALN 20.205 The expenditures reported on the SEFA were overstated by $19,522 for one award and understated by $145,869 for another award. ALN 15.916 The expenditures reported on the SEFA were overstated by $45,915 The errors noted above have been corrected on the SEFA as of December 31, 2024. Cause and Effect - Controls in place did not ensure the SEFA was complete and accurate for the fiscal period under audit. The errors resulted in the understatement of federal expenditures. Recommendation - We recommend the City implement a process to ensure that the SEFA is complete and accurate. Views of Responsible Officials and Planned Corrective Actions - The City accepts this finding. As part of the revision to the City’s grant process and procedures, we will enhance our master grant tracking spreadsheet to ensure grant expenditures are reported correctly. We will collaborate with city departments to ensure costs are recorded correctly. See the corrective action plan.

Finding 2019-001: Reporting Significant Deficiency, Internal Control over Compliance CFDA 97.044: Assistance To Firefighters Grant Federal Agency: U.S. Department Of Homeland Security Pass-Through Entity: N/A Criteria: 2 CFR Section 200.302 requires accurate, current and complete disclosure of the financial results of programs in accordance with reporting requirements. Per the Compliance Supplement, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. Condition: The controls established by the City do not provide reasonable assurance of the accuracy of the required submitted reports or compliance with the reporting requirements. In the particular instance noted, the required report was filed with the federal awarding agency with inaccurate and incomplete information. Cause: The City?s controls over reporting requirements are not able to ensure the accuracy and completeness of the disclosure of the financial results of programs in accordance with reporting requirements. Effect: As a result of the error, the required financial reporting form for the grant was rejected and required to be resubmitted by the City with the correct information. Questioned Costs: N/A Context: During testing of the reporting process, it was noted that the financial semiannual report required for this grant had been rejected by the reporting agency and required resubmission due to errors. Identification As A Repeat Finding: Yes Recommendation: We recommend that each respective City department or office that expends federal funding submit federal reporting forms to the City finance department prior to submittal for review of accuracy and compliance with requirements. Views Of Responsible Officials And Planned Corrective Action: The City agrees with finding and has put together a corrective action plan for the finding. See the corrective action plan included in this report. CORRECTIVE ACTION PLAN For the Year Ended December 31, 2019 Finding 2019-001: Significant Deficiency, Internal Control over Compliance CFDA 97.044: Assistance to Firefighters Grant Personnel Responsible for Corrective Action: LFRA administrative and Emergency Service Staff Anticipated Completion Date: June 30, 2020 Corrective Action Plan: Review of all federal grant reporting to be completed by the City?s Grant Accountant before any reports are submitted to the Federal awarding agency by LFRA administrative and Emergency Service staff. Continued review of city of Loveland grant procedures and completion of City of Loveland grant routing form for all grants. Quarterly review with LFRA staff on any new or outstanding grants and ensuring proper grant compliance has been followed. SUMMARY OF SCHEDULE OF PRIOR AUDIT FINDINGS For the Year Ended December 31, 2019 Finding 2018-001: Material Weakness, Inaccurate Schedule of Expenditures of Federal Awards (SEFA) CFDA 97.044 ? Assistance to Firefighters Grant Federal Agency ? U.S. Department of Homeland Security Pass Through Entity: N/A Summary of Prior Audit Finding: Incomplete information was used to prepare the Schedule relating to this program and the internal control related to the Schedule preparations to reconcile to revenues and expenditures was not functioning properly. Status: Corrective Action Taken Finding 2018-002: Material Weakness, Reporting Compliance and Internal Control Over Compliance CFDA 97.044 ? Assistance to Firefighters Grant Federal Agency ? U.S. Department of Homeland Security Pass Through Entity: N/A Summary of Prior Audit Finding: The City?s controls over reporting requirements are not able to ensure accuracy, timeliness and completeness of the disclosure of the financial results of programs in accordance with reporting requirements. Status: See 2019-001

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