City of Albuquerque

Federal Agency: U.S. Department of Transportation Federal Program Name: Airport Improvement Program Assistance Listing Number: 20.106 Federal Award Identification Number and Year: Multiple Award Period: 8/23/2020 –1/28/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the Federal Aviation Administration's Advisory Circular 150-1500-19D, Guide for Airport Financial Reports Filed by Airport Sponsors, Financial Reports 5100-126 & 5100-127 "are due within 120 days of the end of the airport's fiscal year. A sponsor may request an automatic 60-day extension on the website. An airport that cannot file within the 60-day expensive should send a written explanation to Airport Compliance and Management Analysis" of the FAA. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure timely report submission. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, it was noted that two of the six financial reports were not submitted timely. Form 5100-126 and Form 5100-127 were submitted on 02/26/2025 and 02/28/2025, respectively. These submissions occurred 61 and 63 days beyond the prescribed filing deadline of 180-days following the fiscal year end. Cause: Management oversight. The City did not submit the performance report by the due date. Effect: The auditor noted an instance of noncompliance. Noncompliance results in untimely submission of information to the federal agency. Recommendation: We recommend the City establish a reporting calendar and perform periodic reviews of the completeness, accuracy and adherence to the reporting calendar. Management Response: The City concurs with the finding. Beginning in December 2025, the Aviation Revenue and Finance Officer has implemented an internal control to strengthen compliance with federal reporting requirements. A centralized spreadsheet has been created to track all required financial report deadlines, including FAA Forms 5100-126 and 5100-127. This spreadsheet identifies the due dates, responsible personnel, and submission status to help ensure reports are prepared, reviewed, and submitted timely in accordance with applicable federal regulations. The Aviation Revenue and Finance Officer will also perform periodic reviews of the reporting calendar to monitor completeness, accuracy, and compliance to required deadlines. Timeline and Responsible Position: June 2026 – Aviation Department Revenue and Finance Officer

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Federal Award Identification Number and Year: M20-MC350209 - 2020 M21-MC350209 - 2021 Award Period: 5/29/2020 - 9/01/2028 8/03/2021 - 9/01/2029 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.403 Factors affecting allowability of costs of 2 CFR Part 200, costs must conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. Additionally, according to §200.431 costs of fringe benefits in the form of regular compensation paid to employees during periods of authorized absences should be equitably allocated to all related activities, including Federal awards. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure proper allocation of fringe benefits. Management 's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: $973.77 Context: During our testing, it was noted that for one of twenty-four samples, the City applied incorrect fringe benefits to the grant, resulting in $371.11 that should have been allocated to the grant. Additionally, for one of twenty-four samples, the City did not accurately apply sick leave conversion to wages, resulting in $973.77 of wages improperly allocated to the grant. Cause: Management oversight. The city did not have adequate controls in place to ensure proper allocation of fringe benefits. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential pay back of federal funds. Recommendation: We recommend the City review fringe benefits charged to the grant to equitably allocate fringe benefits between federal and city funding sources. Management Response: The City concurs with the finding. The Department of Health, Housing & Homelessness will review the allocation of fringe benefits to grant payroll charges on a quarterly basis to ensure fringe benefits are properly allocated to funding sources. The reconciliations will be prepared by fiscal staff and approved by the Fiscal Manager. Additionally, the DFAS Grant Administrator will perform a semi-annual review of excess leave payouts to ensure they are charged to the correct grant funding string. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Fiscal Manager

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: NM0014L6B002316 NM0015L6B002316 NM0017L6B002215 NM0101L6B002308 NM0156L6B002200 Award Period:7/1/24-6/30/25 7/1/24-6/30/25 10/1/23-9/3/24 7/1/24-6/30/25 10/1/23-9/3/24 Type of Finding: • Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.306 The fair market value of third-party in-kind contributions must be documented and, to the extent feasible, supported by the same methods used internally by the recipient or subrecipient. Condition: During our testing, we noted the City lacked sufficient internal controls to ensure subrecipients complied with cost‑sharing and matching requirements. We also noted that the City did not maintain documentation to substantiate the fair market value of in‑kind contributions. Questioned costs: None Context: During our testing, we noted the following: • For one of 5 samples tested, we noted the City did not have sufficient documentation for the values placed on in-kind contributions. • For 5 of 5 samples tested, the City only performed one monitoring review of subrecipient related match expenditures, resulting in partial coverage of the award period. Additionally, there was a lack of documentation of the City's process for selecting match samples to review. Finally, there was no review performed at the close out of the grant to ensure the subrecipient met the match requirement. • For 5 of 5 grant awards tested, we noted the amount of match reported on the HUD Annual Performance Report (APR) did not agree to underlying City records. Cause: Management oversight. The City did not have adequate controls in place to ensure proper monitoring of matching expenditures for subrecipients. 2025 – 007 Matching/Cost Sharing (continued) Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City design controls to ensure monitoring occurs related to subrecipient's adherence to the Continuum of Care program's Match requirements and the eligibility of the program's match expenditures. Additionally, we recommend implementing a tracking mechanism to ensure match expenditures are accurately reported to HUD. Management Response: The City concurs with the finding. The City will update Continuum of Care procedures related to subrecipient monitoring, in-kind contribution documentation, match tracking and reporting, and grant closeout review to strengthen compliance and oversight. Additionally, the City will provide additional grants training and a list of subject matter experts within each department that can work with auditors during the single audit. Timeline and Responsible Position: June 2026 – Department of Health, Housing and Homelessness Deputy Director of Social Services and Connections and Department of Finance & Administrative Services Grant Administrator

2024 - 009 Reporting - Capital Expenditures (2023-005 and 2022-008) Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21. 027 Federal Award Identification Number and Year: Pub. L. No. 117-2-2021 Award Period: 5/10/2021 - l 2/3 l /2026 Type of Finding • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the 2022 Final Rule, for projects with total expected capital expenditures of $1 million or greater, recipients must complete and meet the substantive requirements of a written justification for their capital expenditure. Such written justification must include the following elements: (i) Describe the harm or need to be addressed; (ii) Explain why a capital expenditure is appropriate; and (iii) Compare the proposed capital expenditure to at least two alternative capital expenditures and demonstrate why the proposed capital expenditure is superior. Condition: During our testing, we noted two of the two written justifications did not include all the elements outlined in the 2022 Final Rule. Questioned costs: None Context: During our testing, it was noted that the written justifications for the WECH Kitchen and Gibson Medical Respite projects did not compare the proposed capital expenditure to at least two alternative capital expenditures and demonstrate why the proposed capital expenditure is superior. Total federal expenditures for WECH Kitchen and Gibson Medical Respite as of June 30, 2024 are $1,484,411 and $6,236,193, respectively. Cause: Management oversight. The City did not follow the requirements of a written justification for capital expenditures as outlined in the 2022 Final Rule. Effect: The auditor noted instances of noncompliance. Noncompliance results in inaccurate reporting. Recommendation: We recommend the City update the written justifications to include all the elements outlined in the 2022 Final Rule. Management Response: The City concurs with the finding. The City's Grant Administrator will work with the Department of Health, Housing and Homeless and the Department of Municipal Development to adequately document the comparison of capital expenditure options and demonstrate the superiority of the chosen capital project in the final written justifications. Timeline and Responsible Position: March 2025 - Grant Administrator

2024 - 010 Allowable Activities and Costs/Cost Principles - Payroll (2023-010 and 2022-005) Federal Agency: U.S. Department of Transportation Federal Program Name: Federal Transit Cluster - Federal Transit - Formula Grants Assistance Listing Number: 20.507 Federal Award Identification Number and Year: N1vl-2023-022-00 - 2023 N1vl-2023-036-00 - 2023 Award Period: 5/31/2023 - 9/30/2024 12/18/2023 - 6/30/2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.511 Audit findings follow-up of 2 CFR Part 200, the auditee is responsible for follow-up and corrective action on all audit findings. At the completion of the audit, the auditee must prepare a corrective action plan to address each audit finding included in the auditor's report for the current year. According to the City's Corrective Action Plan for the year ended June 30, 2023, the Transit department has established a timeline for the completion and approval of the time card policy, and it is expected that the policy will take effect in April 2024. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure proper timecard approval. Management's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, it was noted that thirteen out of sixteen payroll disbursements did not have approval of the employees' timecards. Cause: The City has not implemented corrective action from the audit for the year ended June 30, 2023. The Transit department is working on the policy and in the final stages of getting the policy updated. Effect: The auditor noted no instances of noncompliance with the provisions of allowable activities and costs/cost principles; however, the lack of internal controls over these compliance requirements provides an opportunity for noncompliance. Recommendation: We recommend the City work to implement full corrective action. Management Response: The City concurs with the finding. Transit Department staff is in the process of developing a policy establishing internal controls over timekeeping and is near finalizing the policy. Once finalized, the policy will be reviewed with appropriate parties. Further, the Transit Department is exploring the purchase and implementation of additional software to assist with enacting these controls. Timeline and Responsible Position: April 2025 - Transit Department Director

2024 - 011 Allowable Activities and Costs/Cost Principles - Payroll Federal Agency: U.S. Department of Justice Federal Program Name: Public Safety Partnership and Community Policing Grants Assistance Listing Number: 16. 710 Federal Award Identification Number and Year: 2020ULWX0001 - 2020 Award Period: 7/1/2020 - 6/30/2024 Type of Finding • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to §200.403 Factors affecting allowability of costs of 2 CFR Part 200, costs must conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. The FY 2020 COPS Hiring Program (CHP) award provides funding to law enforcement agencies to hire and/or rehire career law enforcement officers. Specific to the City, CHP funding is for forty new hires. According to the award, the City may only be reimbursed for the approved cost categories that are documented within the Financial Clearance Memorandum (FC:M). Condition: During our testing, we noted the City paid incentive pay with CHP funding. Also, we noted the City paid salaries and fringe benefits for four officers not listed in the Date of Hire - COPS Officer List with CHP funding. Questioned costs: $16,882.17 Context: During our testing, it was noted that the City paid incentive pay of $3,000.00 for the pay period end 12/01/2023. The FCM does not have a cost category for incentive pay. Also, it was noted that the City paid salaries and fringe benefits of $13,882.17 for four officers not listed in the Date of Hire - COPS Officer List provided to the federal agency. Cause: The City charged the incentive pay to the grant by mistake. The City transferred the four officers to the grant during its initial years. The City moved the original forty officers to the grant and transferred any officers off the grant back to their positions funded by the general fund. These officers should have been moved out. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential pay back of federal funds. Recommendation: We recommend the City review costs charged to the grant to ensure the FCM has a cost category for the costs. We recommend the City review the officers charged to the grant to ensure they are listed in the he Date of Hire - COPS Officer List provided to the federal agency. For any questioned costs, we recommend the City work with the federal agency for resolution. Management Response: The City concurs with the finding. Albuquerque Police Department (APD) Grant Administrator will meet with the City Grant Administrator to review and prepare the necessary payroll corrections, ensuring that all payroll charges allocated to the grant are accurate. The APD Grant Administrator will be responsible for submitting correcting payroll reclassifications to the City's Grants Management Section for review, entry and approval no later than January 31, 2025. APD will work directly with the City's Grants Management Section to establish new reconciliation, reclassification and validation processes to ensure that only eligible officers and pay types are charged to the grant. Timeline and Responsible Position: January 2025 - APD Grant Administrator

2024 - 012 Reporting Federal Agency: U.S. Department of Justice Federal Program Name: Public Safety Partnership and Community Policing Grants Assistance Listing Number: 16. 710 Federal Award Identification Number and Year: l SJCOPS-23-GG-01715-TECP - 2023 Award Period: 12/29/2022 - 12/31 /2024 Type of Finding • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the recipient and subrecipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to Part 3 of the Compliance Supplement 2024, compliance testing of performance and special reports is only required for data, identified by agencies in parts 4 and 5 as key line items, that are quantifiable and are capable of evaluation against objective criteria stated in the statutes, regulations, contract or grant agreements pertaining to the program. Performance and special reports in parts 4 and 5 are assumed to meet the above criteria. However, if an agency does not identify key line items for a performance or special report, auditors are only required to test that the report was submitted in a timely manner and no other procedures are required. According to the terms and conditions of the award, the City is responsible for submitting semi-annual programmatic performance reports that describe project activities during the reporting period. Performance reports are due August 30 and March 1. Condition: During our testing, we noted one of the three performance reports was not submitted timely. Questioned costs: None Context: During our testing, it was noted that one of the three performance reports was not submitted timely. The performance report for the reporting period end date January 31 , 2024 and due March 1, 2024 was submitted on March 11 , 2024. Cause: Management oversight. The City did not submit the performance report by the due date. Effect: The auditor noted an instance of noncompliance. Noncompliance results in untimely submission of information to the federal agency. Recommendation: We recommend the City establish a reporting calendar. We recommend the City periodically reviews the completeness and accuracy of and adherence to the reporting calendar. Management Response: The City concurs with the finding. The APD Grant Administrator will establish a process to ensure that all programmatic reports are submitted on time by creating a spreadsheet to track the due dates for each programmatic report. Once the reports are submitted, it will be the responsibility of the Grant Coordinator to record the submission date. If a report is submitted late, the Grant Coordinator must contact the grantor by the end of the day to explain the reason for the delay. Timeline and Responsible Position: December 2024 -APD Grant Administrator

2024- 013 Reporting- Special FFATA Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grant Program for Entitlement Communities Assistance Listing Number: 14.218 Federal Award Identification Number and Year: B-23-MC-35-0001 - 2023 Award Period: 7/1/2023 - 9/1/2030 Type of Finding • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of reporting. The City should have internal controls designed to ensure compliance with those provisions. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the "Transparency Act" that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The key data elements are to be accurately reported and supported by the source documentation. The action is to be reported in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Condition: During our testing, we noted the City did not have adequate internal controls designed to ensure the accuracy of the subaward project description for two of the four subawards. Also, the report was not timely for three of the four subawards. Lastly, the subaward amount was incorrect for one of the four subawards. Questioned costs: None Context: During our testing of special reporting under the requirements of the Federal Funding Accountability and Transparency Act (FFATA), we noted the following instances of noncompliance: transactions tested - 4, subawards not reported - 0; report not timely - 3; subaward amount incorrect - 1; subaward missing key elements - 2; dollar amount of tested transactions -#2,444,598.00; Subaward not reported - $0; Report not timely - $1,444,598; subaward amount incorrect - $1,179,000; Subaward missing key elements - $2,179,000.00 Cause: :tvfanagement oversight. Specific to report not timely, the delay was due to staff turnover. Specific to subaward amount incorrect, the difference was due to the amount used from the investment summary which included the Program Income. Effect: The auditor noted instances of noncompliance with special reporting under the requirements of the FF AT A Recommendation: We recommend the City establish a reporting calendar. We recommend the City periodically reviews the completeness and accuracy of and adherence to the reporting calendar. Also, we recommend the City implement a formal review process of the reporting of first-tier subawards of $30,000 or more to the FSRS. Management Response: The City concurs with the finding. The CDBG contract check list has been updated to include the FF AT A reporting requirement. The Fiscal CDBG Policies and procedures have been modified to include a section on FFATA reporting to be completed with the time frame set forth in the FF AT A requirements. Timeline and Responsible Position: December 2024 - Department of Health, Housing and Homelessness Fiscal Manager

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: Pub. L. No. 117-2 2021 Award Period: 5/10/2021 - 12/31/2026 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to§ 200.303 Internal controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the Coronavirus State and Local Fiscal Recovery Funds 2023 Program Compliance Supplement Part 4, recipients may use payments from SLFRF to replace lost public sector revenue to provide government services. Recipients may use this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic. The dollar amount of the revenue loss determines the limit for the amount of SLFRF funds that can be used to "provide government services" (which is one of four eligible uses of SLFRF funds). Condition: During our testing, we noted the City used SLFRF funds in excess of its estimated revenue loss. Management's Progress for Repeat Findings: This is a repeated and modified.finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, it was noted that the City used SLFRF funds of $69,478,937.39 to provide government services in the revenue replacement expenditure category. However, the City calculated total estimated revenue loss of $66,909,843 comprised of 2020 and 2021 revenue loss of $10,042,104 and $56,867,739, respectively. The City's use of SLFRF funds was in excess of its estimated revenue loss by approximately $2,569,094. The City posted an entry moving the expenditures of $2,569,094 to the General Fund. Cause: The City did not perform a comparison of actual expenditures to the total estimated revenue loss to ensure the limit for the amount of SLFRF funds that can be used to "provide government services" was not exceeded by the City. Effect: The auditor noted an instance of noncompliance. Recommendation: We recommend the City implement a quarterly reconciliation process of actual expenditures to program limitations on use of funds to ensure limits are not exceeded on expenditures. Management Response: The City agrees with the finding. The City will ensure that the federal report preparers reconcile all entries to program limitations prior to having the report submitted for final certification. This will be complete by June 30, 2024. Timeline and Responsible Position: June 2024 - City Controller and Grants Administrator

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Emergency Rental Assistance Program Assistance Listing Number: 21.027 and 21.023 Federal Award Identification Number and Year: ALN 21.027 -Pub. L. No. 117-2 2021 ALN 21.023 -ERA0335 2021 ALN 21.023 - ERAOl 14 2021 Award Period: ALN 21.027 - 5/10/2021 - 12/31/2026 ALN 21.023 - 1/20/2021 - 9/30/2022 ALN 21.023 - 5/17/2021 - 9/30/2025 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to§ 200.302 Financial management of 2 CFR Part 200, the non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program -specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Further, the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements. According to § 200.303 Internal controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing, it was noted that the City did not have effective internal controls in place to ensure accurate reporting. Management's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, we noted the following exceptions related to reporting. ALN 21.027 • For the Project and Expenditure Report 5 and 6, it was noted that the City reported a total estimated revenue loss of $76,951,947.00 with 2022 accounting for $10,042,104.00 of the total. However, the City did not have any revenue loss for 2022. According to the City, its gross receipts tax grew 20.7% over the previous year in fiscal year 2022. • During the fiscal year 2023, the City incorrectly reported total cumulative expenditures of $29,700,000.00 for the Revenue Replacement First Responder Payroll project -Project Identifier Number 120. The amount reported should have been $27,130,906.00 resulting in a variance of $2,569,094.00. ALN 21.023 • For three of the four quarterly financial reports, the City was unable to reconcile the expenditure reports used as supporting documentation to the current quarter expenditures reported to the Treasury nor the schedule of expenditures of federal awards. Total variance of approximately $404,951 with ERAl Q3 2022 of $173,499, ERA2 Q4 2022 of $61,196, andERA2 Ql 2023 of$170,256. • For one of the five performance reports, the City was unable to provide documentation supporting the Total Dollar Amount of ERA funds Paid (Expended) and (Obligated) for Administrative Expenses of$312,822 related to key line item one -Administrative Costs Ratio. This is ERA Compliance Report for ERAl Q3 2022. • For one of the five performance reports, the City was unable to provide documentation supporting the number of unique households that received ERAl assistance over the award period of performance by income categories of 4,426 nor the number of unique recipient households whose income eligibility was determined based on their eligibility for other federal benefit programs of 9,489 related to key line item three -System for Prioritizing Assistance. This is ERA Compliance Report for ERAl Final Report. • For two of the five performance reports, it was noted that the total households receiving assistance was greater than the sum of Area Median Income (AMI) banded eligible households with a 5 to 10% margin of error to avoid false positives for medium to large recipients by 513 and 5,355 for ERAl Q3 2022 and ERAl Final Report, respectively. This is key line item four -Participant Households at Certain Income Levels Eligibility. • For one of the five performance reports, we were unable to trace the reported data to records that accumulate and summarize data for key line items one through four as the Demographics and Award Activity Amounts Approved (Obligated) and Amounts Paid (Expended) During the Quarter are blank in the Treasury report provided to us. This is ERA Compliance Report for ERA2 Ql 2023. Cause: Specific to the Project and Expenditure Report 5 and 6, the 2022 estimated revenue loss of $10,042,104.00 is a duplicate of the 2020 estimated revenue loss of $10,042,104.00. The City failed to identify this error prior to submission of the reports to the Treasury. Specific to the Revenue Replacement First Responder Payroll project, the City did not perform a comparison of actual expenditures to the total estimated revenue loss to ensure the limit for the amount of SLFRF funds that can be used to "provide government services" was not exceeded by the City. During the audit, the City posted an entry moving the expenditures of $2,569,094 to the General Fund. Specific to the remaining, the City lacks effective internal controls over financial grant management to ensure submitted reports are accurate and agree to supporting documentation. Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City implement a secondary review process of reports and supporting documentation prior to certification and submission of reports to federal funding agencies. Management Response: The City agrees with the finding. The Treasury Portal automatically fills in the amounts for revenue loss for 2022 with amounts reported in 2020. The Treasury portal has many flaws that would cause errors in reporting. In addition, the portal has changed every quarter, which makes it challenging to report accurately. The City will implement controls to ensure that a second review is completed prior to certification of the report. Additionally, the Grant Administrator will work with department staff responsible for reporting and ensure that each report's supporting documentation is complete and ties to underlying subrecipient reports, the general ledger and grantor reports. All supporting documentation, along with a copy of the submitted report, will be stored in a central location to ensure that they are available for subsequent reviews and audits. This will be completed by June 30, 2024. Timeline and Responsible Position: June 2024 - City Controller and Grants Administrator

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: Pub. L. No. 117-2 2021 Award Period: 5/10/2021 - 12/31/2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to the 2023 Compliance Supplement Part 3, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov I Home (click on Search Record, then click on Advanced Search-Exclusions) (Note: The o:tvlB guidance at 2 CFR Part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). According to the City's Federal Procurement Guidance, www.sam.gov print screen of vendor (debarment check). Condition: During our testing, we noted that the City did not follow federal suspension and debarment regulation nor its federal suspension and debarment procedures. Management's Progress for Repeat Findings: This is a repeated and modified.finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: Unknown Context: During our testing, we noted the following exceptions related to suspension and debarment. • For one of the three procurement transactions, the City conducted an exclusion check at SAM.gov. However, there is no date and initial evidencing that the exclusion check was done nor reviewed and approved prior to the City entering into the covered transaction. • For one of the three procurement transactions, the executed contract/agreement was not provided to us. As such, we are unable to determine if the City collected the certification from the entity prior to the City entering into the covered transaction. • For two of the three procurement transactions and five of the five subawards, the City collected a certification from the entity rather than conduct an exclusion check on SAM.gov. Although collecting a certification from the entity is one of the three ways a non-federal entity may accomplish the verification, this is not in accordance with the City's suspension and debarment procedures which is a search at SAM.gov with a print out of the search results and date/initial to certify that the City has confirmed status. Cause: The City failed to follow suspension and debarment procedures. Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City update its procedures to allow for any of the three ways in which a non-federal entity may accomplish the verification that the entity it is entering into a covered transaction with is not suspended or debarred or otherwise excluded from participating in the transaction. Also, we recommend the City implement a quality control process to ensure documentation supports that the City's verification was accomplished prior to entering into the covered transaction. Management Response: The City agrees with the finding. Over the past several years, the City has developed a significant number of guidance documents and trainings in the area of federal procurement. All of the guidance documents for Central Purchasing are housed in the Purchasing SharePoint site. The guidance and training have in the past been directed at the members of the Purchasing Liaison User Group, but given the continued findings, the City intends to reach out to a much broader group to ensure compliance, including Directors, Deputy Directors, and program representatives. In addition, during Fiscal Year 2023 the City implemented a new system, Contracts Life :Management (CUA), which includes an intake form in the federal funding section. The intake form includes the question "Is the supplier suspended or debarred?" The user is required to upload the result of the SAMS check search, regardless of the status of the contractor. When the answer is yes, the contract process is not allowed to proceed. The system is set up for social services and professional services only at this time, with a slow rollout of the rest of the types of City contracts over the next year or so. This system did not go-live with the existing professional services contracts until the end of the Fiscal Year and management believes that, with sufficient time and build out of the system, this system will help to reduce the exceptions noted above. In addition, as discussed above, management will review and revise internal policies and procedures as appropriate and ensure changes are communicated to departments. This will be completed by June 30, 2024. Timeline and Responsible Position: June 2024 - Chief Procurement Officer and Grants Administrator

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: Pub. L. No. 117-2 2021 Award Period: 5/10/2021 - 12/31/2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to § 200.320 Methods of procurement to be followed of 2 CFR Part 200, when the value of the procurement for property or services under a federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-federal entity, formal procurement methods are required. According to the City's Federal Procurement Guidance, formal procurement methods are required when goods and services are over $100,000. Condition: During our testing, we noted the City did not follow federal procurement regulation nor its federal procurement policy. Management's Progress for Repeat Findings: This is a repeated and modified finding. While the City has improved its efforts, there are still opportUJ1itiesfor improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: Unknown Context: During our testing, we noted the following exceptions related to procurement. • For one of the five procurement transactions, the executed contract/agreement was not provided to us. • For two of the five procurement transactions, no cost analysis was provided to us. • For one of the five procurement transactions, no public notice was provided to us. Cause: The City failed to follow federal procurement regulation nor its federal procurement policy. Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City design controls to ensure compliance with federal procurement regulation and its federal procurement policy. Management Response: The City agrees with the finding. Over the past several years, the City has developed a significant number of guidance documents and trainings in the area of federal procurement. All of the guidance documents for Central Purchasing are housed in the Purchasing SharePoint site. The guidance and training have in the past been directed at the members of the Purchasing Liaison User Group, but given the continued findings, the City intends to reach out to a much broader group to ensure compliance, including Directors, Deputy Directors, and program representatives. This will be complete by June 30, 2024. Timeline and Responsible Position: June 2024 - Chief Procurement Officer

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Emergency Rental Assistance Program Assistance Listing Number: 21.027 and 21.023 Federal Award Identification Numberand Year: ALN 21.027 -Pub. L. No. 117-2 2021 ALN 21.023 -ERA0335 2021 Award Period: ALN 21.027 - 5/10/2021 - 12/31/2026 ALN 21.023 - 1/20/2021 - 9/30/2022 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to§ 200.303 Internal controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to § 200.331 Subrecipient and contractor determinations of 2 CFR Part 200, a pass-through entity must make case-by­ case determinations whether each agreement it makes for the disbursement of federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor. According to § 200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must: • Evaluate each subrecipient's risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. • Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. • Verify that every subrecipient is audited as required by Subpart F ohhis part when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in§ 200.501. • Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. According to the City's subrecipient monitoring policies and procedures, monitoring of subrecipients shall be conducted as often as may be required at the discretion of the Community Development Division or at least once per program year. An annual Risk Assessment will be completed to determine a ranking for the activity. The Risk Assessment ranking score will determine whether a monitoring review will occur. According to the City's Sub-recipient Agreement, the Sub-recipient will provide to the Department of Family and Community Services cumulative quarterly program performance reports covering the Services provided under this Agreement. Reports are due no later than fifteen (15) days after the end of the reporting quarter, and shall be in accordance with City of Albuquerque reporting instructions. Condition: During our testing, it was noted that the City did not follow federal subrecipient monitoring and management regulation nor its subrecipient monitoring policies and procedures. Management's Progress for Repeat Findings: This is a repeated and modified.finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, we noted the following exceptions related to subrecipient monitoring. ALN 21.027 • For one of the five subrecipients, the City did not utilize the risk assessment tool specific to ARPA which does have a different risk assessment ranking score determining the monitoring of the subrecipient. The City did, however, perform a monitoring visit for the subrecipient. • For one of the five subrecipients, the City was unable to locate the subrecipient/contract determination worksheet. • For one of the five subrecipients, the City was unable to locate the quarterly program performance reports submitted by the subrecipient. ALN 21.023 • For one of the five subrecipients, the most recent annual audit report for the year ended June 30, 2022 was not reviewed by the City nor included in the risk assessment. Cause: The City does not have sufficient internal controls to ensure appropriate risk assessment and subrecipient monitoring. Effect: The auditor noted instances of noncompliance. Recommendation: The City has developed standard City-wide subrecipient management and monitoring policies and procedures effective June 2023. We recommend the City design controls to ensure departments are abiding by the subrecipient management and monitoring policies and procedures including Individual departments that develop their own department­ specific and/or grant-specific subrecipient management policies and procedures. Management Response: The City agrees with the finding. The City's Grant Administrator will provide training to each City department which currently oversees subrecipients, ensuring that all department staff understand general and ARPA-specific subrecipient requirements. Additionally, the Grant Administrator will review City departments' subrecipient management checklists to ensure all required documentation is obtained from subrecipients and reviewed as required. This will be complete by June 30, 2024. Timeline and Responsible Position: June 2024 - Grants Administrator

Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Federal Award Identification Number and Year: A301032 - 2021 35A301050M23E - 2015 693JJ22030000Z230NMA301050 - 2015 693JJ22130000M23ENMA300759 - 2021 693JJ22130000M230NMA300847 - 2021 693JJ22130000M23ENMA300847 - 2021 Pass-Through Agency: New Mexico Department of Transportation (NMDOT) Pass-Through Number(s): A301032, A301050, A300759, and A300847 Award Period: A301032 - 9/22/2021 - 9/30/2023 A301050 - 6/17/2015 - 6/26/2024 A300759 - 9/17/2021 - 3/27/2025 A300847 - 9/22/2021 - 12/30/2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: According to§ 200.303 Internal controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to the 2023 Compliance Supplement Part 4, 20.001 Wage Rate Requirements Cross-Cutting Section, nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). According to the New Mexico Department of Transportation TLPA Handbook for Federal Projects, the contractor and each subcontractor shall furnish certified payrolls to the T/LPA for each consecutive week starting from the second week it performs work on the project. Certified payrolls shall be submitted by uploading required payroll information into LCPtracker. The T/LPA shall verify the data contained on each certified payroll and, should errors or discrepancies be found, the T/LPA shall reject the payroll in LCPtracker and notify the contractor or subcontractor of the error. The contractor or subcontractor will be required to correct the error and submit a revised payroll. The T/LPA may utilize Form A-1102, NMDOT Contractors and Subcontractors Payroll Checklist on a weekly basis. Condition: During our testing, we noted that the City did not follow wage rate requirements nor state requirements. Management's Progress for Repeat Findings: This is a repeated and modified.finding. While the City has improved its efforts, there are still opportunities for improvement to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements as well as compliance with City policy. Questioned costs: None Context: During our testing, we noted the following exceptions related to wage rate requirements. • For one of the five contracts, the City does not have a monitoring process in place to ensure that the consultant hired to perform the duties related to certified payrolls is done correctly and in compliance with federal requirements. • For two of the five contracts, there are certified payrolls after the completion date on the change order provided to us. However, the City was unable to provide clarification or supporting documentation to confirm if the completion date on the change order provided to us is the final completion date. As such, we are unable to verify that the contractor or subcontractor submitted the required certified payrolls. • For one of the five contracts, the contract book was not provided to us. • For three of the five contracts, the City did not provide all of the signed and dated NMDOT contractors and subcontractors payroll checklists to us. Cause: The City was unaware of it being ultimately the responsible party for the project even in situations in which the City hires consultants. Specific to the remaining, the City lacks effective internal controls over wage rate requirements to ensure documentation is in place supporting compliance with federal requirements. Effect: The auditor noted instances of noncompliance. Recommendation: We recommend the City design controls to ensure compliance with federal and state wage rate requirements. Management Response: The City agrees with the finding. The Grant Administrator will work with City departments with construction contracts subject to wage rate requirements to ensure policies and procedures are documented and that a monitoring process is implemented to ensure adherence to established policies and grantor requirements. This will be complete by June 30, 2024. Timeline and Responsible Position: June 2024 - Grants Administrator

2022 ? 004 (Previously 2021-012) Suspension and Debarment (Significant Deficiency and Noncompliance) Federal Agency: U.S. Department of Treasury U.S. Department of Transportation Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Federal Transit Cluster Assistance Listing Number: 21.027, Multiple Federal Award Identification Number and Year: ALN 21.027 ? Pub. L. No. 117-2- 2021; ALN Multiple ? 1523-2020-2 Award Period: ALN 21.027 ? 5/10/2021 - 12/31/2026 ALN Multiple ? 7/1/2019 ? 12/31/2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to the Program Compliance Supplement 2022 Part 4, prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Per 31 CFR Part 19, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person. Condition: During our testing, it was noted that the City did not follow federal suspension and debarment regulation nor its federal suspension and debarment procedures. Questioned costs: None Context: During single audit testwork over reporting, the following issues were noted which are detailed by ALN Number. ALN 21.027 ? For 1 of 2 procurement transactions, the City did not use one of the three ways a non-federal entity may accomplish the verification. The City included the suspension and debarment language on the back of the purchase order. 2022 ? 004 (Previously 2021-012) Suspension and Debarment (Significant Deficiency and Noncompliance) (Continued) ALN 21.027 (continued) ? For 1 of 3 subawards, the City did not perform searches in sam.gov with all potential entity names. The entity name used by the City in the search is not the entity name used in sam.gov. ? For 2 of 2 procurement transactions and 3 of 3 subawards, the City did not perform an exclusion check on sam.gov. This is not in accordance with the City's suspension and debarment procedures which is a www.sam.gov print screen of vendor (debarment check). Also, the City did not provide us with the SAMS (System for Award Management) form required as part of the requisition process. No evidence of review and approval of suspension and debarment verification checks. ALN Multiple ? For 1 of 1 procurement transactions, the City did not perform an exclusion check on sam.gov. This is not in accordance with the City's suspension and debarment procedures which is a www.sam.gov print screen of vendor (debarment check). Also, the City did not provide us with the SAMS (System for Award Management) form required as part of the requisition process. No evidence of review and approval of suspension and debarment verification checks. Management?s Progress for Repeat Findings: The 2021 finding was specific to one department and those controls were put in place. During 2022 other departments were not following suspension and debarment procedures. The 2022 management response will facilitate all City departments to follow the procedures. Cause: The City failed to follow suspension and debarment procedures. Repeat Finding: 2021-012 Effect: The auditor noted instances of noncompliance. Noncompliance results in entering into covered transactions with federally suspended and debarred entities. Recommendation: We recommend the City follow its procedures to ensure compliance with federal suspension and debarment regulation. Management Response: Management agrees with the finding. The City is implementing a new system, Contracts Life Management (CLM) that will go live in March 2023. We will add an intake form under the federal funding section. The intake form will include the question ?Is the Supplier suspended or debarred?? If the answer is yes, the contract process will not be allowed to proceed. Timeline and Responsible Position: June 2023 ? Chief Procurement Officer

2022 ? 005 Allowable Activities and Costs/Cost Principals (Significant Deficiency and Noncompliance) Federal Agency: U.S. Department of Treasury U.S. Department of Housing U.S. Department of Transportation Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds HOME Investment Partnerships Program Federal Transit Cluster Assistance Listing Number: 21.027, 14.239, Multiple Federal Award Identification Number and Year: ALN 21.027: Pub. L. No. 117-2-2021 ALN 14.239 M-19-MC-35-0209 2019 & M-16-MC-35-0209 2016; ALN Multiple: NM-2020-010 Award Period: ALN 21.027 ? 5/10/2021 - 12/31/2026 ALN 14.239 ? 7/22/2016-9/1/2027 ALN Multiple ? 1/20/2020-12/31/2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to ? 200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to the City's ARPA Program Plan Memorandum, all applicants must have 50 or fewer full-time equivalent (FTE) employees. Once the application is complete, it will enter a secondary review for final decision. Once a business receives a grant they must submit a report six months after as detailed in the grant agreement. Condition: During single audit testwork over reporting, the following issues were noted which are detailed by ALN Number. ALN 21.027 ? The City did not obtain employment verification for one applicant, perform a secondary review for two applications, nor obtain the six-month report for six applications. ALN 14.239/Multiple ? The City did not have effective internal controls in place to ensure timesheets are prepared timely as well as payroll grant hours accurately recorded in the accounting system. 2022 ? 005 Allowable Activities and Costs/Cost Principals (Significant Deficiency and Noncompliance) (Continued) Questioned costs: ALN 21.027: $30,000 ALN 14.239: $69.63 ALN Multiple: None Context: During our testing, we noted the following exceptions, which are detailed by ALN Number. ALN 21.027 ? 1 of the 60 small business applications did not have the number of employees. ? 2 of the 60 small business grant applications did not have a secondary review for final decision. ? 6 of the 60 small businesses did not submit a report six months after receiving the grant. ALN 14.239 ? During our testing, we noted three instances in which an employee's timesheet was not signed by the employee and their supervisor until between 8-12 months after the pay period ended. Also, we noted three instances in which grant hours listed on timesheets did not agree to the hours recorded in the accounting system and charged to the grant. ALN Multiple ? During our testing, we noted two instances in which an employee's time was not approved by their supervisor. Cause: The City did not follow its ARPA Program Plan Memorandum. Additionally, the City lacks a policy and internal control related to the required timing of timesheet preparation, review and approval. Effect: The auditor noted instances of noncompliance and lack of effective internal controls. Noncompliance results in ineligible small businesses receiving grant funding and the City not receiving the required reporting by the small businesses. Recommendation: We recommend the City design controls to ensure an adequate review process is in place to review applications to determine the eligibility of small business for grant funding. Also, we recommend the City design controls to ensure any required reports are submitted by grantees. Additionally, we recommend the City create a policy related to timesheet preparation, review and approval as well as develop a procedure to ensure all grant hours listed on timesheets are reconciled to the accounting system. Management Response: Management agrees with the finding. The grants distributed by the Economic Development Department were a lifeline to small businesses that were just holding on. While a strong program was set up in a very short timeframe some reviews and follow-up were not completed. Additionally, the Family & Community Services Department will ensure timesheets are signed timely. Additionally, the department will work with the Grants Section to ensure timesheets, Kronos and Peoplesoft agree. Timeline and Responsible Position: June 2023 ? Department Directors, Economic Development, Family & Community Services and Transit

2022 ? 006 (Previously 2021-012) Procurement (Significant Deficiency and Noncompliance) Federal Agency: U.S. Department of Treasury, U.S. Department of Transportation Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027, Multiple Federal Award Identification Number and Year: Pub. L. No. 117-2-2021, Various Award Period: 5/10/2021 - 12/31/2026 Various Type of Finding: ? Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to ? 200.320 Methods of procurement to be followed of 2 CFR Part 200, when the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. According to the City's Federal Procurement Guidance, formal procurement methods are required when goods and services are over $100,000. Condition: During our testing, it was noted that the City did not follow federal procurement regulation nor its federal procurement policy. Questioned costs: $160,181 Context: During our testing, we noted the following exceptions, which are detailed by ALN Number. ALN 21.027 ? For 1 of 4 procurement transactions totaling approximately $160.2K, the City utilized a RFB with a closing date of 09/05/2016. ALN Multiple ? For 3 of 7 procurement transactions, the executed contract/agreement was not provided to us. ? For 2 of 7 procurement transactions, the RFP and evaluation sheets were not provided to us. ? For 1 of 7 procurement transactions, only the Cost Price Analysis, ICE, and Purchase Order Release were provided to us. No other supporting documentation. ? For 1 of 7 procurement transactions, the SPA provided to us was not current. Management?s Progress for Repeat Findings: The City plans to review the controls in place to ensure that our federal procurement guidelines are clear on City process and the need for retention of proper supporting documentation. In addition, we will also plan to have the SEFA completed well before the deadline to allow sufficient management review and major programs can be identified earlier in the audit process. The additional time will allow City departments to provide requested audit documentation within the Auditor?s deadlines. 2022 ? 006 (Previously 2021-012) Procurement (Significant Deficiency and Noncompliance) (Continued) Cause: The City failed to follow federal procurement regulation nor its federal procurement policy. Repeat Finding: 2021-012 Effect: The auditor noted instances of noncompliance. Noncompliance results in procurement transactions for the acquisition of property or services required under a federal award not conducted in a manner providing full and open competition. Recommendation: We recommend the City design controls to ensure compliance with federal procurement regulation and its federal procurement policy. Management Response: The City respectfully disagrees with the finding. The two exceptions noted above are, on the contrary, examples of good fiscal management by the City. The statewide price agreement and the cooperative education services contract were both competitive. The uniform grant guidance in to ? 200.318(e) below encourages state and local intergovernmental agreements. To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services across the Federal Government, the non-Federal entity is encouraged to enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. Competition requirements will be met with documented procurement actions using strategic sourcing, shared services, and other similar procurement arrangements. In addition, the City did compete the temporary employment services. The request for bids awarded contracts in October 2016. Three (3) years, three (3) months into the five (5) year term of the contract, the first COVID case was reported in the United States and the President declared a public health emergency on January 31. New Mexico and the City of Albuquerque soon followed with their declarations. The City made the decision to extend the existing contract with the existing rates. There is nothing in City policy that prevents extension of contracts for a specific length of time. Extending the contract most likely was a cost savings to the City because the rates would most likely would have increased. Auditor?s Response: We were not provided supporting documentation, as identified in management?s response, during our testwork over procurement to apply the necessary procedures to resolve this exception. Timeline and Responsible Position: June 2023 ? Chief Procurement Officer

2022 ? 007 (Previously 2021-003) Subrecipient Monitoring (Significant Deficiency and Noncompliance) Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: Pub. L. No. 117-2-2021 Award Period: 5/10/2021 - 12/31/2026 Type of Finding: ? Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to ? 200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to ? 200.332 Requirements for pass-through entities of 2 CFR Part 200, all pass-through entities must: ? Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. ? Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. ? Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. According to the City's subrecipient monitoring policies and procedures, monitoring of subrecipients shall be conducted as often as may be required at the discretion of the Community Development Division or at least once per program year. An annual Risk Assessment will be completed to determine a ranking for the activity. The Risk Assessment ranking score will determine whether a monitoring review will occur. Condition: During our testing, it was noted that the City did not follow federal subrecipient monitoring and management regulation nor its subrecipient monitoring policies and procedures. Questioned costs: None 2022 ? 007 (Previously 2021-003) Subrecipient Monitoring (Significant Deficiency and Noncompliance) (Continued) Context: During our testing, we noted the following exceptions: ? For 2 of 4 subrecipients, the City did not utilize the risk assessment tool specific to ARPA which does have a different risk assessment ranking score determining the monitoring of the subrecipient. The City did, however, perform a monitoring visit for the subrecipients. ? For 1 of 4 subrecipients, the City did not utilize the risk assessment tool specific to ARPA. The City utilized the AGA Risk Assessment Monitoring Tool. We noted the following exceptions. ? According to the Introduction of the AGA Risk Assessment Monitoring Tool, while the risk assessment monitoring tool may be useful in supplementing existing tools, it is not intended to replace any risk assessment tools that may already be in use by monitoring agencies. Further, the City omitted the Programmatic Assessment of the AGA Risk Assessment Monitoring Tool. ? According to the Introduction of the AGA Risk Assessment Monitoring Tool, in using the risk assessment tool, monitoring agencies are encouraged to develop applicable risk factors to evaluate programmatic compliance risk and should use professional judgment in developing a weighted scoring system for each component of the assessment. The City did not develop a weighted scoring system for each component of the assessment. ? No evidence of approval of the AGA Risk Assessment Monitoring Tool. ? In the Monitoring/Audit Assessment section of the AGA Risk Assessment Monitoring Tool, the City marked all N/A based on a response of the subrecipient has not needed to complete a single audit in the past. However, the subrecipient did have a single audit for the fiscal year end date of 12/31/2020 with the Federal Audit Clearinghouse receiving the audit report on 5/27/2021. No review of the single audit by the City. Management?s Progress for Repeat Findings: The City Controller reviewed the listing of subrecipient risk assessments for 2022 and the listing was determined to be complete. The City will update the subrecipient monitoring policies and procedures ad provide training to the departments. Cause: The City failed to follow federal subrecipient monitoring and management regulation nor its subrecipient monitoring policies and procedures. Repeat Finding: 2021-003 Effect: The auditor noted instances of noncompliance. Noncompliance results in subrecipients' noncompliance with federal statutes, regulations, and the terms and conditions of the subaward. Recommendation: We recommend the City design controls to ensure compliance with federal subrecipient monitoring and management regulation and its subrecipient monitoring policies and procedures. Management Response: Management agrees with the finding. The City will develop standard City-wide subrecipient management policies and procedures including risk assessment and monitoring tools. Additionally, any federal program with two or more City departments managing subrecipients will use the same subrecipient tools to ensure consistency. Timeline and Responsible Position: June 2023 ? City Controller/DFAS Deputy Director

2022 ? 008 Reporting (Significant Deficiency and Noncompliance) Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Emergency Rental Assistance Program Assistance Listing Number: 21.027, 21.023 Federal Award Identification Number and Year: ALN 21.027 ? Pub. L. No. 117-2 2021 ALN 21.023 ? ERA0335 - 2021 Award Period: ALN 21.027 ? 5/10/2021 - 12/31/2026 ALN 21.023 ? 1/20/2021 - 9/30/2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to ? 200.302 Financial management of 2 CFR Part 200, the non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to ? 200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. According to the Compliance Supplement 2022 Part 3, program income does not include interest earned on advances of federal funds. Condition: During our testing, it was noted that the City did not have effective internal controls in place to ensure accurate and complete reporting. Questioned costs: None Context: During our testing, we noted the following exceptions, which are detailed by ALN Number. ALN 21.027 ? For the interim report, support was not provided for Category 1.7 Capital Investments or Physical Plant Changes to Public Facilities that respond to the COVID-19 public health emergency Cumulative Obligations of approximately $280.2K. The City did, however, cancel this project after the initial reporting. 2022 ? 008 Reporting (Significant Deficiency and Noncompliance) (Continued) ALN 21.027 (continued) ? For the Project and Expenditure Report 1, we noted the following exceptions. o Project Name: Police Vehicles Total Cumulative Obligations of approximately $2,654,705. The City identified requisitions and purchase orders of approximately $2,655,183. Thus, a variance of $478. o Project Name: Police Vehicles Total Cumulative Obligations and Total Cumulative Expenditures of approximately $2,654,705 and $1,095,985, respectively, are listed twice in the project overview. Thus, the project is duplicated in the Total Obligations and Total Expenditures in the overview section. The City states this to be a glitch of the portal. However, there is no communication between the City and Treasury to evidence the Treasury's acknowledgment of this glitch in the portal. o Project Name: Eviction Prevention: New Mexico Legal Aid Total Cumulative Obligations of approximately $216K. The total should be approximately $26K. Thus, a variance of $190K. ? Subaward No: SUB-0034501 Period of Performance Start and End of 9/1/2021 to 12/31/2022. However, the subrecipient agreement signed by all parties early September 2021 has a Subaward Period of Performance Start and End Date 9/14/2021 to 3/31/2022. ? Subaward No: SUB-0034394 Period of Performance Start and End of 10/25/2021 to 12/31/2022. However, the contract control form approved by all parties late October 2021 has a contract term 10/20/2021 to 10/19/2022. ? Subaward No: SUB-0034455 Subaward Date of 3/11/2021. This date is the Federal Award Date of Award to the Recipient by the Federal Agency not the subaward start date of 9/1/2021. The subrecipient agreement signed by all parties 9/29/2021 and 10/1/2021. ? Subaward No: SUB-0034462 Subaward Date of 3/11/2021. This date is the Federal Award Date of Award to the Recipient by the Federal Agency not the subaward start date of 9/1/2021. The subrecipient agreement signed by all parties late December 2021. ? Expenditures for Awards more than $50,000 ? All projects have a Subaward Amount of 54405428.50. The City states this to be an error with the portal exporting. However, there is no communication between the City and Treasury to evidence the Treasury's acknowledgment of this error with portal exporting. ? Subaward Crossroads for Women amount of $750K with Subaward Period of Performance Start and End Date of 12/1/2021 to 12/31/2024 not included in the report. Agreement signed by all parties end December 2021. ? Contractual 2021 expenditures of approximately $122K not included in the report. o For the Project and Expenditure Report 2, we noted the following exceptions. ? Subaward No: SLFRP0013-RIVENROCK Subaward Obligation of $50K. However, total purchase order amount of approximately $74.5K. Thus, a variance of approximately $24.5K. ? Subaward No: 33-202200796 Subaward Date of 9/1/2021 and Period of Performance Start and End of 9/1/2021 to 12/31/2023. However, the subrecipient agreement signed by all parties end December 2021 has a Subaward Date of 12/1/2021 and Subaward Period of Performance Start and End Date 12/1/2021 to 12/31/2024. ? Payments To Individuals Expenditure: EN-00044853 Total Period Expenditure Amount of approximately $6.9 million. Amount includes approximately $128.1K of contractor payments not business grants. 2022 ? 008 Reporting (Significant Deficiency and Noncompliance) (Continued) ALN 21.023 ? For 3 of 5 financial reports, the City reported interest earned on advances of federal funds totaling approximately $380.8K as program income. However, interest earned on advances of federal funds is not program income. ? For 1 of 5 special quarterly reports, we noted the following exceptions. o The City did not provide support for any changes from the last report we had which was ERA 1 Quarter 3 2021 (July-September). o The City incorrectly reported cumulative expenditures to date of approximately $13.1 million The amount reported should have been approximately $17.1 million based on a reconciliation provided to us by the City. Thus, a variance of approximately $4 million. o The City incorrectly reported cumulative obligations to date of approximately $23.7 million. The amount reported should have been approximately $23.6 million based on a reconciliation provided to us by the City. Thus, a variance of approximately $151K. Cause: The City lacks effective internal controls and procedures over financial grant management to ensure submitted reports are complete and agree to supporting documentation. Effect: The auditor noted instances of noncompliance. Noncompliance results in inaccurate reporting. Recommendation: We recommend the City design controls to ensure compliance with federal financial management regulation. Management Response: The City agrees with the finding. The City will implement controls to ensure compliance with federal financial management regulations. The City recognizes that it needs to improve its procedures for preparing quarterly report for Treasury funds. Going forward, the Family and Community Services Department will work with the Grants Section to develop and implement standardized procedures for identifying and documenting expenditures, and for reviewing quarterly reports prior to submission. Timeline and Responsible Position: June 2023 ? City Controller/DFAS Deputy Director and Director of Family & Community Services

2022 ? 009 Special Tests and Provisions ? Housing Quality Standards (Significant Deficiency and Noncompliance) Federal Agency: U.S. Department of Housing Federal Program Name: HOME Investment Partnerships Program Assistance Listing Number: 14.239 Federal Award Identification Number and Year: Various Award Period: Various Type of Finding: ? Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: According to 24 CFR 92.504(d)(1)(ii)(D), inspections must be based on a statistically valid sample of units appropriate for the size of the HOME-assisted project, as set forth by HUD through notice. For projects with one-to-four HOME-assisted units, participating jurisdiction must inspect 100 percent of the HOME-assisted units and the inspectable items (site, building exterior, building systems, and common areas) for each building housing HOME-assisted units. According to Ch 8 HOME Monitoring, the Comprehensive Review requires that 20% of HOME-assisted unit tenant files be reviewed for content, as well as conduct HQS inspections on 20% of the HOME-assisted units, utilizing the HQS inspection form (Form HUD-52580). For projects with one-to-four (1 ? 4) HOME-assisted units, the City inspects 100 % of the HOME-assisted units and the inspectable items (site, building exterior, building systems, and common areas) for each building housing HOME-assisted units. Upon completion of the Comprehensive Monitoring Review, Program Specialists are responsible for preparing a monitoring report letter and monitoring report. The cover letter, monitoring report and complete monitoring packet ? includes monitoring routing form, all required monitoring forms used as well as any additional information/documents used in and received during the monitoring ? are submitted to the Program Specialists? supervisor for review and approval within 2 weeks of the completion of the monitoring visit. Upon supervisor approval, Program Specialist will forward the entire packet for review, approval and signature by the Community Development Division Manager and Fiscal Manager. Condition: During our testing, it was noted that the City did not perform the required percent of inspections. Also, the City lacked evidence of approval of the monitoring. Questioned costs: None Context: During our testing, we noted the following exceptions over housing quality standards requirements: ? For 1 of 5 projects, the City performed 17% of the required inspections rather than 20%. The one unit not inspected due to COVID-19 was not scheduled for reinspection. HUD did have a waiver in place for HQS Inspections from April 2020 until December 31, 2021. The inspection, however, was scheduled for March 24, 2022 which is subsequent to the extended waiver. ? For 1 of 5 projects, the City performed 33% of the required inspections rather than 100%. The City inspected one unit versus all three units. ? For 2 of 5 projects, the cover letter signed by the Community Development Division Manager and Fiscal Manager was not provided to us. 2022 ? 009 Special Tests and Provisions ? Housing Quality Standards (Significant Deficiency and Noncompliance) (Continued) Cause: The City failed to follow federal housing quality standards regulation nor its HOME policies and procedures. Effect: The auditor noted instances of noncompliance. Noncompliance results in failure to identify those units on which housing quality inspections are due and perform inspections of units and that any needed repairs are completed timely. Recommendation: We recommend the City design controls to ensure compliance with federal housing quality standards regulation and its HOME policies and procedures. Management Response: The City concurs with the finding. The City did complete 20% of the program files however one unit was not inspected due to the client testing positive for COVID -19. In the future if a home in not able to be inspected, another tenant will be notified and a HQS inspection will occur at another residence at a later date. This action will be corrected by updating the Monitoring Checklist to ensure that staff knows the proper of units to be inspected. This will be reviewed with supervisor prior to monitoring. The City was not aware of the requirement that, in the case of HOME projects with between one and four units, all units needed to be inspected; the City typically looks at the project as a whole and inspects 10% or 20% depending on the Risk Assessment. This will be corrected in the future by updating the Monitoring Checklist to ensure staff knows the proper number of HOME units that need to be inspected. Timeline and Responsible Position: June 2023 ? Director of Family & Community Services

2021-002 Allowable Costs, Significant Deficiency in Internal Control over Compliance and Instance of NoncomplianceCriteria: Section 601(d) of the Social Security Act, as added by section 5001 of the CARES Act and as amended by section 1001 of Division N of the Consolidated Appropriations Act, requires that States, Tribal governments, or units of local government use the funds received to cover only those costs that (1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); (2) were not accounted for in the budget most recently approved as of March 27, 2020, for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2021.Condition/Context: One transaction selected for testwork was a reimbursement to a vendor for 33 invoices totaling $377,892 incurred by the vendor on behalf of the City. Based on review of the invoices, the expenditures related to routine operating costs of the Albuquerque Convention Center and therefore did not appear to be necessary expenditures incurred due to the public health emergency. Additionally, of these 33 invoices, we noted nine invoices totaling $255,065 that were dated between August 2018 and February 2020, prior to the period of allowability. The expense was removed from the SEFA after bringing it to management's attention.Cause: Management intended to use the Convention Center as a public vaccination site. The City did not complete asecond review of the invoices prior to charging the costs to CARES to ensure the dates were within the period ofavailability.Effect: Noncompliance with allowable cost principals.Recommendation: We recommend the City establish a control system to ensure federal funds are used only for allowable expenditures in accordance with the federal requirements.Management's Response: Management has established strong internal controls over CARES Act funding. The Convention Center was closed during the COVID-19 pandemic in compliance with State of New Mexico public health orders starting in March 2020 and ending January 2021. In January 2021, the Convention Center was approved by the State of New Mexico Health Department to re-open to serve as a public vaccination site. The costs related to re-opening the Convention Center were approved as FEMA eligible and reimbursable. The State of New Mexico did not proceed to use the Convention Center as a vaccination center. The City removed the expenses from the FEMA reimbursement request and changed the funding source to the CARES Act. After further review, the amounts were charged to the general fund. The amount was removed from the SEFA and the CARES Act report will be amended to reflect that correction. The Grants Manager will continue to improve our review process of federal funds.

2021-003 Subrecipient Monitoring, Material Weakness in Internal Control over Compliance and Instance of NoncomplianceCriteria: 2 CFR 200.332 requires pass-through entities follow certain requirements with respect to subrecipients. A summary of the requirements include (a) subawards include certain required information, (b) the pass-through entity performs a risk assessment over each subrecipient, (c) imposing specific subaward conditions upon a subrecipient if appropriate, (d) monitor the activities of the subrecipient, (e) perform additional monitoring if necessary based on the risk assessment, (f) verify each subrecipient is audited if the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the single audit threshold, (g) consider the results of the subrecipient's audits, on-site reviews, or other monitoring, and (h) take enforcement action against noncompliant subrecipients if necessary.Condition/Context: Of the six subrecipients selected for testing, we noted the following:a) All six subawards did not contain the required information set forth in subpart (a)b) A risk assessment was not performed on five subrecipientsc) Monitoring activities were not performed on two subrecipientsd) For one subrecipient, an audit report was not obtained and a determination that the subrecipient was notsubject to audit was not made.e) For one subrecipient, an audit report was obtained, however no there was no documentation to support thatthe city evaluated audit results.Cause: One department lacked the understanding of managing subrecipients. Five of the contracts were originallyestablished of using non-federal funds; the contracts were executed and expenditures incurred prior to the availabilityof Coronavirus Relief Funds.Effect: The City is not in compliance with Federal requirement as outlined in 2 CFR 200 Section 200.332.Recommendation: We recommend internal controls be reviewed and updated to ensure that the City is in compliancewith the Title 2 U.S. Code of Federal Regulation requirements.Management's Response: The City Controller in FY22 will require the Grants Section in Accounting to review Citydepartment compliance with 2 CFR200 for sub-awards, risk assessments, monitoring reports and audit reports. TheGrants Section will report monthly to the City Controller on all the items to ensure Departments are in compliance.

2021-009 Reporting, Other NoncomplianceCriteria: Per U.S. Department of Transportation, Federal Aviation Administration Advisory Circular 150/5100-19D Guide for Airport Financial Reports Field by Airport Sponsors, form 5100-126 is due within 120 days of the end of the airport's fiscal year. A sponsor may request an automatic 60-day extension.Condition/Context: The 5100-126 report for fiscal year 2020 was not filed within the 180-day requirement.Cause: The department failed to obtain a written extension for the submission of the required FAA report.Effect: Noncompliance with federal grant reporting requirements.Recommendation: We recommend the City establish a control system to ensure all reports are prepared and submittedin accordance with the federal requirements.Management's Response: Aviation agrees with the finding and recommendation, and adds that Aviation was unableto file the report within 180 days because audited financials were delayed due to CARES Act considerations. Aviationhas communicated with the FAA about this situation, and the FAA advised it would not issue a notice of noncompliancebecause the report is filed within 30 days of the extended due date. Aviation's Fiscal Manager hasestablished written policies and procedures specific to FAA year end reporting requirements that include proceduresto follow in the event audited financials are not complete by the filing deadline.

2021-010 Reporting of Expenditures on the SEFA, Other MatterCriteria: Per 2 CFR 200.502(a), the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs.Condition/Context: Expenditures reported on the preliminary Schedule of Expenditures of Federal Awards (SEFA) for Coronavirus Relief Fund included two expenditures that were related to fiscal year 2020 and were previously reported in the fiscal year 2020 SEFA, resulting in an audit adjustment of $211,950.Cause: Evolving CRF guidance resulted in a substantial number of prior period adjustments, two of which were incorrectly included as current year expenditures.Effect: The preliminary SEFA was misstated by an immaterial amount.Recommendation: We recommend that the City perform regular reconciliation between the general ledger and theSEFA to ensure accurate reporting on the SEFA.Management's Response: Management agrees with the finding. Starting in FY2022 quarter 2, the City Controllerwill require the Grants Section to prepare a quarterly SEFA for management review. Doing so will better ensure thatSEFA transaction are fully reviewed and verified by management prior to the end of the fiscal year and ahead of theannual financial audit.

2021-011 Employee Time and Effort, Other MatterCriteria: Per 2 CFR 200.430 (a)(3), it is required that total compensation for individual employees is determined and supported by Standards for Documentation of Personnel Expenses as provided in section 200.430(i).Condition/Context: We selected a sample of 25 payroll expenditures from the entire population of payroll expenditures charged to the program. During our testing, we noted one payroll expenditure in the amount of $1,166 was not supported by approved time sheets.Cause: The City's policies and procedures in place to certify that amounts paid and charged to the grant are accurate are not operating effectively.Effect: The City could not certify that salary expenditures were allowable under the grant.Recommendation: The City should develop and implement policies and procedures to ensure that timecards arecompleted and approved, and payroll expenses being charged to the grants are allocated properly based on total activityfor the employee.Management's Response: The City agrees with the finding. The City has developed written policies and proceduresto ensure that timecards are completed and approved in a timely manner. The Aviation Department's Fiscal Managerwill further develop written procedures to address grant compliance by June 30, 2022.

2021-012 Procurement and Suspension and Debarment, Significant Deficiency in Internal Control over Compliance and Instance of NoncomplianceCriteria: Per 2 CFR 200.318, non-Federal entities must have and use documented procurement procedures, consistentwith State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property orservices required under a Federal award or subaward. The non-Federal entity's documented procurement proceduresmust conform to the procurement standards identified in ?? 200.317 through 200.327.Condition/Context: Of the four procurements selected for testing, we noted the following:a) One sample tested in the amount of $53,185 did not have a check for suspension/debarment. Additionally,no cost/price analysis was performed.b) One sample tested in the amount of $47,430 did not have a contract file including procurement history,independent cost estimate, cost price analysis, and a check for suspension/ debarment.c) One sample tested in the amount of $489,309 did not have a contract file including a contract and cost/priceanalysisCause: The City failed to follow their policy and procedures for federal procurement.Effect: The City's procurement policies and procedures for federally funded programs are not operating effectively.Recommendation: We recommend the City follow its policies and procedures to ensure compliance with federalprocurement guidelines.Management's Response: The City concurs with the finding. Whenever the Family and Community ServicesDepartment uses existing city contracts, the Fiscal Manager, Division Manager and attorney will check for all requiredclauses as well as ensure documentation of the suspension and debarment check, cost/price analysis, independent costestimate and a complete procurement file.

Criteria: 24 CFR 85.32 and 49 CFR 18.32(1) state a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Condition/Context: We selected a sample of two assets from the entire population of assets purchased under the Early Head Start program. Of the two selected, both assets tested were not properly tagged with the asset number. Management?s Progress from prior year: The Division of Child and Family Development continues to work with FCS Fiscal division to ensure that the replacement asset tags are requested and that the tags will be attached physically to the asset or be retained in the file with the location of the asset identified. The Family and Community Services department (FCS) continues to perform annual inventories of all assets. Cause: The City failed to implement a proper tracking system that complies with federal requirements. Effect: The City was not maintaining proper records of federally funded property as required by statute. Auditor?s Recommendation: We recommend the City follow their established policies and procedures for maintaining federally funded property records in order to comply with requirements of 24 CFR 85.32. Management?s Response: The City concurs with the finding. The department will request new tags to ensure assets are properly tagged or put the tags in the file identifying the location of the asset. Addressing this concern remains a top priority of FCS. FCS is committed to developing a well-defined process for the entire department. The Division Manager of Child and Family Development continues to work with the FCS Fiscal Manager and the DFAS Financial Reporting Division to ensure that the replacement asset tags are requested. Where an asset tag cannot be attached physically, one will be retained in a file with location of asset in compliance with federal requirements and the City?s policies and procedures. This process will be implemented in FY21. In addition to the action plan outlined by FCS, the DFAS Grants Section will conduct an internal review of FCS? grant funded assets to ensure compliance with City, department and federal asset tracking requirements. The City expects this finding to be resolved in FY21.

Criteria: The Head Start agency must make available to the public a report published at least once in each fiscal year that discloses for the most recently concluded fiscal year (a) the total amount of public and private funds received and the amount from each source; (b) an explanation of budgetary expenditures and proposed budget for the fiscal year; and (c) the financial audit in accordance with 42 United States Code (USC) 9839(a)(2)(A), (B), and (D). Condition/Context: The City did not make available to the public the required annual financial report for the Early Head Start programs. Management?s Progress from prior year: As a result of the interruption of business operations due to the COVID-19 pandemic, the report was not issued in FY20. However, the Division of Child and Family Development has developed a Report Due Dates/Deadlines Schedule to ensure that there is a system in place to meet the reporting requirement even in the event of future unforeseen events or changes in management. Effect: The City failed to comply with the program governance requirements which puts the City and the Early Head Start programs they administer at risk. Cause: There was a change in staffing in the department that administers the Early Head Start program resulting in lack of follow-up on the required governance requirements by management of the program. Auditor?s Recommendation: We recommend that the City implement policies and procedures to ensure all required compliance requirements are being met regardless of staffing changes. Management?s Response: The City concurs with the finding. Due to continued changes and turnover in management, as well as changes to business operations as a result of COVID-19, the report was not issued. The Division of Child and Family Development has developed a Report Due Dates/Deadlines Schedule to ensure that there is a system in place that does not impede the division?s ability to meet this requirement in the unforeseen event that there are further changes in management. Furthermore, the Division of Child and Family Development has hired a Division Manager and EHS Program Manager. In the event there are changes or vacancies in management, the responsibility for the report is assigned to alternate members of management. The City expects this finding to be resolved in FY21.

Criteria: Per 2 CFR 180.300, prior to entering into a covered transaction, an entity must verify that the other party is not excluded or disqualified by checking the System for Award Management (SAM), having the other party provide a certification or adding a clause or condition to the covered transaction with the party. Condition/Context: During our test work of procurement, four out of five contracts selected from the entire population of contracts were not checked for suspension and debarment. Effect: The program may inappropriately enter into contracts with vendors that are excluded or disqualified without checking SAM before entering into the contract. Cause: The City failed to follow their policy and procedures for verifying if the primary vendor was excluded or disqualified prior to signing a contract. Auditor?s Recommendation: We recommend the City develop and implement policies and procedures to ensure that all vendors are verified prior to entering into a contract. Management?s Response: The City concurs with the finding. The SAC administrator is responsible for checking for suspension and debarment, and it is the responsibility of the CIP Official to ensure that the SAC Administrator adheres to the requirements. The DMD SAC Administrator has begun checking for suspension or debarment prior to award, and we expect this finding to be resolved in FY21.

Criteria: Section 601(d) of the Social Security Act, as added by section 5001 of the CARES Act, provides that payments from the Fund may only be used to cover costs that were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Condition/Context: We selected a sample of 60 payroll expenditures from the entire population of payroll expenditures charged to the Fund. During our test work, we noted one expenditure included retroactive pay related to periods prior to March 1, 2020. Upon further investigation, we noted an additional instance of unallowable retroactive pay which were charged to the Fund. The total unallowable retroactive pay was $8,623. Cause: The City did not exclude pay codes related to retroactive pay when allocating expenditures to the Fund. Effect: The City charged unallowable payroll expenditures to the Fund. Auditor?s Recommendation: We recommend that the City implement policies and procedures to ensure only allowable expenditures are charged to the Fund. Management?s Response: The City concurs with the finding. For future manual payroll reclassification entries, the associated pay codes will be reviewed prior to the reclassification being entered. Additionally, at least annually and prior to fiscal year end, the Grant Administrator will review all retroactive payroll entries to ensure no charges have been made to an unallowable funding source. The City expects this finding to be resolved in FY21.

Criteria: Per 2 CFR 200.430 (a)(3), it is required that total compensation for individual employees is determined and supported by Standards for Documentation of Personnel Expenses as provided in section 200.430(i). Condition/Context: We selected a sample of 60 payroll expenditures from the entire population of payroll expenditures charged to the Fund. During our testing, we noted two expenditures of our sample of 60 items were not supported by approved time sheets. Additionally, one expenditure totaling $67 of our sample of 60 items did not have payroll charged to the grant that was based on total activity for the employee. Cause: The City?s policies and procedures in place to certify that amounts paid and charged to the grant are accurate are not operating effectively. Effect: The City could not certify that salary expenditures were allowable under the grant and did not allocate salary expenditures based on certified payrolls for the fiscal year. Auditor?s Recommendation: The City should develop and implement policies and procedures to ensure that timecards are completed and approved, and payroll expenses being charged to the grants are allocated properly based on total activity for the employee. Management?s Response: Management agrees. The City Controller will develop and implement policies and procedures to ensure all timecards are completed and approved by June 2021. However, the payroll being charged to Coronavirus Relief Fund were reviewed on a weekly basis to ensure allowability and compliance with requirements of the grant.

See Schedule of Findings and Questioned Costs for table: 93.600 U.S. Department of Health and Human Services Administration for Children and Families - Head Start Criteria: The head start agency must make available to the public a report published at least once in each fiscal year that discloses for the most recently concluded fiscal year (a) the total amount of public and private funds received and the amount from each source; (b) an explanation of budgetary expenditures and proposed budget for the fiscal year; and (c) the financial audit in accordance with 42 United States Code (USC) 9839(a)(2)(A), (B), and (D). Condition/Context: The City did not make available to the public the required annual financial report for the Early Head Start programs. Effect: The City failed to comply with the program governance requirements which puts the City and the Early Head Start programs they administer at risk. Cause: There was a change in staffing in the department that administers the Early Head Start program resulting in lack of follow-up on the required governance requirements by management of the program. Auditor?s Recommendation: We recommend that the City implement policies and procedures to ensure all required compliance requirements are being met regardless of staffing changes. Management?s Response: The City concurs with the finding. Due to a change in management, the report was not issued. The Division of Child and Family Development has created policies and procedures which provide a timeline for the drafting and release of the report as required. Should there be changes or vacancies in management, the responsibility for the report is assigned to alternate members of management. The City expects this finding to be resolved in FY20.

See Schedule of Findings and Questioned Costs for table: 10.559 U.S. Department of Agriculture Food and Nutrition Service ? Summer Food Service Program for Children-Child Nutrition Cluster Criteria: Per 2 CFR 200.430 (a)(3), it is required that total compensation for individual employees is determined and supported by Standards for Documentation of Personnel Expenses as provided in section 200.430 (i). The City?s process is to collect Time and Effort Certifications and personnel activity reports at least semiannually to support personnel charges to federal award programs. Condition/Context: Two out of twenty-six samples selected did not have payroll charged to the grant that was based on total activity for the employee. Effect: The programs did not allocate salary expenditures based on certified payrolls for the fiscal year. Cause: The Family and Community Services Department does not have policies and procedures in place for properly allocating payroll expenses charged to the grants in accordance with time and effort certifications. Auditor?s Recommendation: The City should develop and implement policies and procedures to ensure that time and effort certifications are completed and maintained and payroll expenses being charged to the grants are allocated properly based on total activity for the employee. Management?s Response: The City concurs with the finding. Early FY19 was part of the transition period into a federally compliant time tracking process; during the transition, manual corrections were sometime necessary, and the manual overrides resulted in paid time off being misallocated. Since the new time tracking process has been fully implemented, the FCS Fiscal Manager and City Grant Administrator expect this finding to be resolved in FY20.

See Schedule of Findings and Questioned Costs for table: Original finding number 2014-006 (added 2019-005 for current year number and 2018-006 for prior year number due to restraint of the system) 14.218 U.S. Department of Housing and Urban Development? Community Development Block Grants/Entitlement 93.600 U.S. Department of Health and Human Services Administration for Children and Families ? Head Start Criteria: 24 CFR 85.32 and 49 CFR 18.32(1) state a control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Condition/Context: For Community Development Block Grants (CDBG), one out of the two assets tested could not be located at the site designated. In addition, five playground assets did not have asset tags in the file. The asset tags have been requested but were not received for the file. For Early Head Start, two of the three assets tested were not properly tagged with the asset number. Management?s Progress from prior year: The Division of Community Development continues to work with FCS Fiscal division to ensure that the replacement asset tags are requested and that the tags will be attached physically to the asset or be retained in the file with the location of the asset identified. The Family and Community Services department (FCS) continues to perform annual inventories of all assets. Cause: The City failed to implement a proper tracking system that complied with federal requirements. Effect: The City was not maintaining proper record of federally funded property as required by statute. Auditor?s Recommendation: We recommend the City follow their established policies and procedures for maintaining federally funded property records in order to comply with requirements of 24 CFR 85.32. Management?s Response: The City concurs with the finding. The department requested the tags but failed to properly attach the tags to the asset or put the tags in the file identifying the location of the asset. Addressing this concern remains a top priority of FCS. FCS is committed to developing a well-defined process for the entire department. The Division Manager of Community Development continues to work with the FCS Fiscal Manager and the DFAS Financial Reporting Division to ensure that the replacement asset tags are requested. Where an asset tag cannot be attached physically, one will be retained in a file with location of asset in compliance with federal requirements and the City?s policies and procedures. This process will be implemented in FY20.

See Schedule of Findings and Questioned Costs for table: Original finding number is 2015-014 (added 2019-006 for current year number and 2018-014 as a prior year finding number due to restraint of the system) 93.044/93.045 93.053 U.S. Department of Health and Human Services Administration for Community Living. Aging Cluster Criteria: Per contract ID# 19-624-4000-0110 Attachment 1 ? Scope of Work, the City communicated in its action plan minimum performance measures to be performed by type of service for a specified number of units and persons to be served. The contract was also revised once adjusting the Scope of Work for Fiscal 2019. Condition/Context: The City did not meet the minimum performance measures as provided in the contract and subsequent amendment to the contract for multiple services. Out of twenty performance measures tested, sixteen did not meet the minimum performance measures for either the units of service or the minimum of unduplicated persons, or both. Management?s progress of this repeat finding: Following notice of the finding in December 2015, the City evaluated projections with providers prior to submitting the four-year Area Plan for services (Fiscal 2017-2020) in March 2016. The original FY19 Scope of Work reflected improved projections as community needs and funding continue to change. However, an additional $1,564,827.17 in federal funding was allocated to the City late in the fiscal year and the contract was not executed until May leaving little time in the fiscal year to meet the measures. Effect: The City is not adequately estimating the services it intends to provide in its action plan to the State which ultimately gets used in the Scope of Work requirement with the City. Cause: Prior to notice of the finding in December 2015, the City understood the Scope of Work to be a projection rather than a requirement to meet all unit estimates set forth in the Scope of Work. Auditor?s Recommendation: We recommend that the City implement a more reasonable projection of goals based on historical factors and its plans to increase the number of consumers and unduplicated consumers. Management?s Response: The City concurs with the finding. The AAA division of FCS continues to improve forecasting of services for seniors based on historical utilization and population trends with a goal of meeting all earmarks in Fiscal 2019. The AAA Program Manager is also working with the State to adjust the State?s contract language in the Scope of Work to clarify that final approved service units at the completion of the contract are acceptable and any variations do not constitute noncompliance with earmarks. The State has updated language in FY20 contract to clarify, ?The service units and consumers detailed in Attachment 3 are estimates,? in acknowledgement that the unit and persons served goals are not intended to be requirements.

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