CITY OF COMMERCE CITY, COLORADOLocal Government

Assistance Listing Number, Federal Agency, and Program Name - 14.218 - U.S Department of Housing and Urban Development (HUD) CDBG Entitlement Grants Cluster Community Development Block Grant Program Federal Award Identification Number and Year - B-21-MC-08-0016 Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303, a nonfederal entity 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). The U.S. Department of Housing and Urban Development requires PR26 CDBG Financial Summary Reports to be included with the submission of the Consolidated Annual Performance and Evaluation Report (CAPER). Condition - The PR26 report included in the CAPER was not reconciled to the underlying accounting records at the time of the submission of the CAPER. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - At the time of the initial audit procedures, the City was unable to provide a reconciliation of the PR26 report to the underlying accounting records. Cause and Effect - Procures and controls were not in place to ensure that the financial information included in the PR26 report agreed to the underlying accounting records. Recommendation - We recommend that the City implement a process to ensure that the PR26 report is reconciled to the underlying accounting records. Views of Responsible Officials and Planned Corrective Actions - The prior CDBG grant coordinator left in July 2021, and a new CDBG grant coordinator came in November 2021. Due to staff turnover, many processes changed. The prior CDBG grant coordinator completed the PR 26 report and all other reports. Beginning in 2022, finance will be responsible for all reconciliations. In order for finance to complete all reports reconciliation, finance is gaining full access to the IDIS system. Finance staff have already requested full IDIS system access and have also requested training from Civitas. Finance staff will learn all the systems and satisfy the monthly, quarterly, and yearly financial requirements. After the training, all procedures and controls will be in place to ensure the reports are reconciled to the accounting records.

CFDA Number, Federal Agency, and Program Name - 14.218 U.S Department of Housing and Urban Development CDBG Entitlement Grants Cluster Community Development Block Grant Program Federal Award Identification Number and Year - B-21-MC-08-0016 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per the 2021 Compliance Supplement, when CDBG funds are used for rehabilitation, the grantee must ensure that the work is properly completed (24 CFR Section 570.506). Condition - The City did not maintain documentation to support that rehabilitation work was properly completed. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - Not applicable, as there are no questioned costs Context - The City does not maintain documentation to support that rehabilitation work is inspected upon completion. Cause and Effect - Procedures and controls were not in place to ensure that rehabilitation work was inspected upon completion. Recommendation - We recommend that the City implement a process to ensure that rehabilitation work is inspected upon completion. Views of Responsible Officials and Planned Corrective Actions - Staff will research 24 CFR Section 570.56 and work to better understand these requirements. Staff will also reach out to surrounding CDBG funded jurisdictions and compare practices to ensure the City is following best practices moving forward. This may include development of a checklist specific to rehabilitation projects and other artifacts related to this program.

CFDA Number, Federal Agency, and Program Name - CFDA 14.218, Community Development Block Grants Cluster, Community Development Block Grants Program (CDBG) and COVID-19 Community Development Block Grants Program ? CV (CDBG-CV) Federal Award Identification Number and Year ? B-20-MW08-0016 Pass through Entity - N/A Finding Type ? Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The Federal Funding Accountability and Transparency Act (FFATA), as amended by 6202 of Public La 110-252, requires a prime grant awardee to report its subgrants using the FFATA Subaward reporting System (FSRS) tool. The prime recipient will have until the end of the month plus one additional month after an award or sub-award is obligated to fulfill the reporting requirement. Condition ? The City did not file the FFATA report for CDBG and CDBG-CV. Questioned Costs ? None Identification of How Questioned Costs Were Computed - N/A Context - The following table summarizes the transactions examined and the noncompliance identified. See finding 2021-005 for table. Cause and Effect - The City?s processes did not properly identify the FFATA filing requirements. Recommendation - The City should implement controls to ensure that required reports are filed and in a timely manner. Views of Responsible Officials and Corrective Action Plan ? Finance staff will be responsible for setting up the FFATA account and will check it on a monthly basis. When submitting the FFATA, the document will be printed and kept in CDBG folder. FFATA procedure will be drafted before July 2022

2019-003 Department of Transportation Passed-Through Colorado Department of Transportation CFDA #20.205, Highway Planning and Construction Procurement and Suspension and Debarment Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR Part 200 (Uniform Guidance) requires that a non-Federal entity must use its own documented procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal law and standards. Uniform Guidance also requires contracts contain the applicable provisions described in Appendix II to Part 200 for contracts under federal awards. Condition: We noted that the City updated it?s procurement policy in 2018; however, the update did not include procurement procedures to conform to applicable federal law and standards. In addition, certain applicable provisions described in Appendix II to Part 200 were not included in a contract as required. Cause: The District did not have adequate internal controls to monitor changes in federal legislation that required an update to its procurement procedures. Effect: The City?s procurement policies do not follow federal standards and the best price for the contracts may not have been obtained. Questioned Costs: None Context/Sampling: The City?s procurement procedures were examined in their entirety. Report Finding from Prior Year(s): No Recommendation: We recommend the City monitor changes in federal legislation and implement controls, when necessary, to ensure its procurement procedures are updated to conform to with federal requirements. Views of Responsible Officials: Management agrees with the finding.

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