City of YakimaLocal Government

2023-002 The City did not have adequate internal controls for ensuring compliance with federal suspension and debarment requirements. Assistance Listing Number and Title: 21.027 – COVID 19 - State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2022-001 Description of Condition The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic’s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected and make necessary investments in water, sewer or broadband infrastructure. In fiscal year 2023, the City spent $5,155,314 to administer the program. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Federal requirements prohibit recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods and services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify that the contractors are not suspended, debarred or otherwise excluded from participating in federal programs. The City may verify this by obtaining a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred or checking for exclusion records in the U.S. General Services Administration’s System for Award Management at SAM.gov. The City must verify this before entering into the contract and must maintain documentation demonstrating compliance with this federal requirement. Our audit found the City did not have adequate controls in place to verify that five contractors it paid more than $25,000 in federal funds were not suspended or debarred from participating in federal programs. We consider this deficiency in internal controls to be a material weakness that led to material noncompliance. Cause of Condition City staff said they were aware of the suspension and debarment requirements. The purchasing department was responsible for checking SAM.gov for the federal purchases. However, the departments that made the federal purchases did not tell the purchasing department that the City was paying these contractors with federal funds so it could verify contractors’ status. Effect of Condition The City did not obtain written certifications from the contractors, insert a clause into the contracts or check for exclusion records at SAM.gov to verify that five contractors it paid $428,912 using federal funds were not suspended or debarred before contracting. Without adequate internal controls, the City cannot ensure the contractors it paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay contractors that have been suspended or debarred would be unallowable, and the awarding agency could potentially recover them. Because we subsequently verified the contractors were not suspended or debarred, we are not questioning costs. Recommendation We recommend the City strengthen internal controls to ensure all contractors it pays $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before contracting with or purchasing from them. City’s Response The City understands the need to comply with federal requirements for suspension and debarment. Due to the departure of the Purchasing Manager, leaving the division shorthanded, all the components of the corrective action plan from last year were not carried out. As such, Staff will move forward on implementing the remaining parts of the corrective action plan, taking additional steps to further strengthen its procedures that govern use of federal funds. Staff will seek to ensure that there is a uniform understanding across multiple departments who may have federal funding resources through training and job aids. Auditor’s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

The City?s internal controls were inadequate for ensuring compliance with federal requirements for suspension and debarment. Assistance Listing Number and Title: 21.027, COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: Washington State Department of Commerce Pass-through Award/Contract Number: 22-96720-207 and 22-51604-035 Known Questioned Cost Amount: $0 Prior Year Audit Finding: Yes, Finding 2021-003 Background The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic?s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2022, the City spent $2,505,730 in program funds for the provision of government services, public health and supporting the tourism industry. Of this, the City spent $1,666,342 of funds received directly from U.S. Department of the Treasury. Federal regulations require recipients to establish and follow internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended, debarred or otherwise excluded. This also applies to all subrecipients who have received federal subawards from the City, regardless of the award amount. The City may accomplish this verification by collecting a written certification from the contractor or subrecipient, adding a clause or condition into the contract that states the contractor or subrecipient is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract or making the subaward, and it must maintain documentation demonstrating compliance with this federal requirement. Description of Condition Our audit found the City?s internal controls were inadequate for ensuring staff verified the suspension and debarment status of contractors for purchases exceeding $25,000, paid all or in part with federal funds. Specifically, the City did not verify that three contractors were not suspended or debarred from participating in federal programs before paying them $130,216 in 2022. We consider this internal control deficiency to be material weaknesses, which led to material noncompliance. Cause of Condition City staff said they were aware of the suspension and debarment requirements. Through September 2022, staff thought that including a condition on purchase orders with the contractors was sufficient. However, since the contractors did not sign the purchase orders, this did not qualify as a certification for suspension and debarment purposes. Additionally, the Purchasing Department was responsible for checking SAM.gov for the federal grant purchases; however, the department that made federal grant purchases did not notify the Purchasing Department. Effect of Condition Without adequate internal controls over suspension and debarment requirements, the City cannot guarantee it is paying federal funds only to eligible contractors. Additionally, the awarding agency could potentially recover any payments the City made to an ineligible party. We subsequently verified the contractors were not suspended and debarred. Therefore, we are not questioning costs. Recommendation We recommend the City strengthen internal controls to ensure all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs.City?s Response The City understands the need to comply with federal requirements for suspension and debarment. As such, Staff is taking additional steps to further strengthen its procedures that govern use of federal funds. Staff will seek to ensure that there is a uniform understanding across multiple departments who may have federal funding resources through training and job aids. Auditor?s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

2021-002 The City had inadequate internal controls for ensuring compliance with federal reporting requirements. CFDA Number and Title: 14.218 ? Community Development Block Grants/Entitlement Grants 14.218, COVID-19 ? Community Development Block Grants/Entitlement Grants Federal Grantor Name: U.S. Department of Housing and Urban Development Federal Award/Contract Number: B-20-MC-53-0008, B-20-MW-53- 0008, B-21-MC-53-0008 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition The primary objective of the Community Development Block Grants/Entitlement Grants (CDBG) is to help provide decent and affordable housing, particularly for people with moderate, low and very low incomes. Funds also help recipients implement strategies for achieving an adequate supply of decent housing and providing suitable living environments and expanded economic opportunities for people with low incomes. The City spent $1,756,476 in CDBG funds during 2021. Of this amount, the City subawarded $555,070 to three subrecipients. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients that make first-tier subawards of $30,000 or more to report them in the FFATA Subaward Reporting System (FSRS). The City has until the end of the month, plus one additional month after the subaward is obligated, to fulfill this reporting requirement. During 2021, the City awarded three subawards totaling $555,070. All three subawards exceeded the $30,000 threshold requiring FFATA reporting. Our audit found the City?s internal controls were inadequate for ensuring FFATA reports were submitted and accurate. Specifically, the City incorrectly submitted one FFATA report using the wrong award number, and did not submit FFATA reports for the other two subawards. We consider these deficiencies in internal controls to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition Management and staff were aware of the FFATA reporting requirements for one of the subawards. However, the City did not complete a secondary review of the FFATA report to ensure that it reported the award under the correct grant. Management and staff said they did not know the City was required to submit FFATA reports for the two subawards it made from its COVID-19-funded award (B-20-MW-53-0008). Effect of Condition Failing to submit the required reports diminishes the federal government?s ability to ensure accountability and transparency of federal spending. "See Schedule of Findings and Questions Costs for chart/table" Recommendation We recommend the City strengthen its internal controls to ensure it submits complete FFATA reports for all required subawards. We also recommend the City establish a secondary review to ensure the reports are accurate before submitting them to the FSRS. City?s Response The City acknowledges that they did incorrectly submitted one FFATA report using the wrong award number and also did not submit FFATA reports for two other subawards for the 2021 program year. The City understands the importance of FFATA reporting and will work on internal controls to ensure FFATA reporting is submitted for all required subawards. Auditor?s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 170, Reporting Subaward and Executive Compensation Information, Uniform Guidance, section 200 Federal Awarding Agency Reporting Requirements, establishes the Federal Funding Accountability and Transparency Act (FFATA) requirements of reporting the subaward information through the FFATA Subaward Reporting System (FSRS). The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.

2021-003 The City?s internal controls were inadequate for ensuring compliance with federal requirements for suspension and debarment and reporting. CFDA Number and Title: 21.027, COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: SLT-0783 Pass-through Entity Name: N/A Pass-through Award/Contract Number: N/A Questioned Cost Amount: $0 Description of Condition The purpose of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is to respond to the COVID-19 pandemic?s negative effects on public health and the economy, provide premium pay to essential workers during the pandemic, provide government services to the extent COVID-19 caused a reduction in revenues collected, and make necessary investments in water, sewer or broadband infrastructure. In 2021, the City spent $3,734,391 in program funds for the provision of government services, public health and supporting the tourism industry. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls. Recipients are also required to retain documentation for auditing purposes. Suspension and Debarment Federal requirements prohibit grant recipients from contracting with or purchasing from parties suspended or debarred from doing business with the federal government. Whenever the City enters into contracts or purchases goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended or debarred or otherwise excluded. The City may accomplish this verification by collecting a written certification from the contractor, adding a clause or condition into the contract that states the contractor is not suspended or debarred, or checking for exclusion records in the U.S. General Services Administration?s System for Award Management at SAM.gov. The City must perform this verification before entering into the contract or paying the contractor more than $25,000, and it must maintain documentation demonstrating compliance with this federal requirement. Our audit found the City?s internal controls were inadequate for ensuring staff verified the suspension and debarment status of contractors for purchases exceeding $25,000, paid all or in part with federal funds. Specifically, the City did not verify that six of its seven contractors were not suspended or debarred from participating in federal programs before paying them $958,110 in 2021. Reporting The City was required to submit a one-time interim report that provided an initial overview of the status and use of its SLFRF assistance. This report disclosed the obligations and expenditures by category and at the summary level from March 3, 2021, to July 31, 2021. The City did not maintain a copy of the report that it submitted. We consider these internal control deficiencies to be material weaknesses, which led to material noncompliance. These issues were not reported as a finding in the prior audit. Cause of Condition Suspension and Debarment City staff said they were aware of the suspension and debarment requirements, and thought that including a condition on purchase orders with the contractors was sufficient. However, the contractors did not sign the purchase orders to attest they were not suspended or debarred. Reporting The City did not retain a copy of the report because staff thought they could reprint it from the online submission portal. Effect of Condition Suspension and Debarment Without adequate internal controls over suspension and debarment requirements, the City cannot guarantee it is paying federal funds only to eligible contractors. Additionally, the awarding agency could potentially recover any payments the City made to an ineligible party. The City subsequently verified the contractors were not suspended and debarred. Therefore, we are not questioning costs. Reporting The U.S. Department of the Treasury uses the interim reports for oversight purposes, and any inaccurate information limits its ability to fulfill transparency and legal obligations. Since it was unable to provide the interim report for audit, the City cannot demonstrate the accuracy of the information reported. Recommendation We recommend the City strengthen internal controls to ensure all contractors it expects to pay $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs. We also recommend the City retain copies of the reports it submits to demonstrate compliance with federal requirements. City?s Response The City understands the need to comply with federal requirements for suspension and debarment. As such, Staff is working on strengthening its procedures that governs use of federal funds. Staff also recognizes that compliance to these guidelines shall be organization wide and will seek to ensure that there is a uniform understanding across multiple departments who may have federal funding resources. Staff accepts full responsibility of providing justification for compliance reporting. The City will also establish its own set of records instead of relying on third party portal to obtain access to compliance reporting in the future. Auditor?s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Debarment and Suspension (Nonprocurement), establishes nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689. Section 603(d) Reporting, of Section VI of the Social Security Act and under Treasury?s Interim Final Rule (IFR), periodic reporting is required. Section VIII of the IFR?s Supplementary Information requires certain recipients to submit a one-time interim report.

2020-002 The City lacked adequate internal controls for ensuring compliance with federal requirements for subrecipient monitoring. CFDA Number and Title: 21.019, COVID-19 Coronavirus Relief Fund Federal Grantor Name: U.S. Department of the Treasury Federal Award/Contract Number: N/A Pass-through Entity Name: WA State Department of Commerce Pass-through Award/Contract Number: 20-6541C-377 Questioned Cost Amount: $0 Description of Condition The purpose of the Coronavirus Relief Fund program is to provide payments to state, territorial, tribal and certain eligible local governments to cover necessary expenditures incurred because of the COVID-19 pandemic. During 2020, the City spent $4,249,800 in relief funds, which included $2,400,000 that it passed through to one subrecipient to provide assistance to small businesses and non-profit organizations. Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. Whenever the City passes on federal funding to a subrecipient, federal regulations require the City to clearly identify the subaward contract as a federal award and include all applicable program requirements. Further, the City must monitor its subrecipient to ensure it complies with the terms and conditions of the federal award. To determine the appropriate level of monitoring, the City must evaluate the subrecipient?s risk of noncompliance with federal requirements. For this award, monitoring would include verifying the subrecipient only provided assistance to participants who met program eligibility requirements. The amount of verification would depend on the subrecipient?s risk of noncompliance. The City did not include all required elements in the subaward, and it did not perform a risk assessment and monitor the subrecipient, as federal regulations require. We consider this deficiency in internal control to be a material weakness that led to material noncompliance. The issue was not reported as a finding in the prior audit. Cause of Condition With the effects of COVID-19, it was urgent for the City to disburse funds to subrecipients quickly in order to assist businesses and non-profit organizations. The City was not aware that the subrecipient agreement required more elements than it included in the contract, and that it was required to monitor whether the subrecipient was only disbursing funds to eligible participants. Key staff members who were responsible for overseeing the grant do not typically oversee other federal programs that require subrecipient monitoring, so they were not aware of federal requirements. Effect of Condition The City did not include all of the required information in the subrecipient contract, such as the subrecipient?s unique entity identifier, federal award identification number, federal awarding agency, CFDA number and program name. Without this information, the subrecipient is at an increased risk of not knowing that the award comes from a federal program. This also increases the risk that the subrecipient would not know that they need to comply with specific program requirements, which could potentially lead to spending funds for unallowable purposes. Because the City did not perform a risk assessment or monitor the subrecipient, we statistically sampled 23 participants and verified that they were eligible to receive program assistance. Therefore, we are not questioning costs. Recommendations We recommend the City clearly identify subaward contracts as federal awards and include all required elements in its subrecipient agreements. We also recommend the City assess subrecipients? risk and monitor them accordingly to verify they are complying with the terms and conditions of the award and only providing funds to eligible participants. City?s Response The City of Yakima takes financial reporting seriously and the Finance Department takes very seriously its responsibility to ensure compliance with federal requirements for subrecipient monitoring of federal funds. The Coronavirus Relief funds necessitated a quick response in utilization of the funds. As a result, the City recognized the need to assist its business community to mitigate the negative economic impacts of the pandemic. Staff then coordinated efforts with its Legal Department and a non-profit agency to determine criteria for eligibility of funding assistance. The urgent nature of disbursing the Coronavirus relief funds contributed to gaps in the monitoring, internal controls and compliance of federal requirements. Staff will work towards obtaining a more thorough understanding of federal program requirements including clear identification of when a subaward contract is a federal award. The City of Yakima appreciates the work of the State Auditor?s Office and for bringing this oversight to our attention. Auditor?s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. Title 2 CFR Part 200, Uniform Guidance, section 332, Requirements for pass-through entities, establishes subrecipient monitoring and management requirements for pass through entities. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.

The City of Yakima did not have adequate internal controls to ensure compliance with federal suspension and debarment requirements. CFDA Number and Title: 20.507, Federal Transit Formula Grants 20.526, Buses and Bus Facilities Formula, Competitive, and Low or No Emissions Programs Federal Grantor Name: U.S. Department of Transportation Federal Award/Contract Number: 1750-2019-1 Pass-through Entity Name: U.S. Department of Transportation Pass-through Award/Contract Number: FTA G-25 Questioned Cost Amount: $0 Description of Condition The objective of the Federal Transit Formula Grant is to help finance the planning, acquisition, construction, preventive maintenance, and improvement of facilities and equipment in public transportation services. The City spent $2,486,457 for this program to provide fixed-route bus service. Federal requirements prohibit grant recipients from contracting with parties suspended or debarred from doing business with the federal government. Whenever the City contracts for goods or services that it expects to equal or exceed $25,000, paid all or in part with federal funds, it must verify the contractors have not been suspended or debarred or otherwise excluded. This verification may be accomplished by (1) collecting a written certification from the contractor (2) adding a clause or condition into the contract where the contractor states it is not suspended or debarred, or (3) checking the federal Excluded Parties List System (EPLS) maintained by the U.S. General Service Administration. The City must meet one of these requirements before awarding the contract and must maintain documentation to demonstrate compliance. The City had internal controls in place to verify contracts exceeding $25,000 were checked for suspension and debarment. However, the City did not have a process in place to check the suspension and debarment status for contractors that are frequently used through the year for small purchases, when they expect the total paid during the year to exceed $25,000. We consider this deficiency in internal controls to be a material weakness. The issue was reported as a finding in the prior audit as finding 2018-002. Cause of Condition The City knew of the suspension and debarment requirement but did not know that staff must verify contractors with multiple small purchases that exceed $25,000 in one year were not suspended and debarred. The City updated its process in August 2019 after becoming aware of the weakness from the prior audit finding. Effect of Condition The City did not obtain a written certification, insert a clause into a contract or review EPLS before entering into the contract or purchase agreement to verify three out of ten contractors were not suspended and debarred from participating in federal programs. The City paid these contractors $124,521 during fiscal year 2019. Without adequate internal controls over suspension and debarment requirements, the City cannot guarantee federal funds are paid only to eligible contractors. Any payments made to an ineligible party would be subject to recovery by the funding agency. The City subsequently verified the contractors were not suspended and debarred. Therefore we are not questioning costs. Recommendation We recommend the City strengthen internal controls over small purchases charged to federal programs to verify, before entering into purchases agreements, that all contractors it expects to pay $25,000 or more of federal funds during the year are not suspended or debarred from participating in federal programs. City?s Response The City understands the State Auditor?s Office concern and appreciates the SAO bringing the matter to our attention. We concur that strengthening internal controls is appropriate, and have taken immediate corrective actions to ensure compliance with verification of federal suspension and debarment status. We understand that this issue represents a fairly simple procedural oversight that requires training and educating multiple staff positions that 1) may conduct federal debarment verification and 2) provide the check-and-balance control that review and authorization provide. The City believes that adequate controls and procedures are in place and that training and education are the appropriate corrective steps. Existing procedure utilizes a routing form requiring a city department?s director, finance director and city attorney to review and approve prior to city manager signature. This form specifically has several checklist items including a notation to verify that the vendor is not tax-delinquent and hasn?t been debarred. In addition, Purchasing obtains a list of vendors from Transit and Equipment Rental and checks for debarment every few months to ensure there are no vendors with an annual cumulative spend over 25K going through undetected. Taking a long-term perspective, and acknowledging turnover and vacancies, this issue, and the corrective steps required, has been communicated to City personnel in an overly-broad manner to operational and administrative departments to further ensure effective dissemination of corrective action steps. Auditor?s Remarks We thank the City for its cooperation and assistance during the audit and acknowledge its commitment to improving the condition described. We will review the status of this issue during our next audit. Applicable Laws and Regulations The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303 Internal controls, establishes requirements for management of Federal awards to non-Federal entities. Title 2 CFR Part 180, OMB Guidelines to Agencies on Government wide Department and Suspension (Nonprocurement) establishes non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689.

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