CITY OF SAND POINT, ALASKA

Finding 2021-001 Noncompliance and Significant Deficiency in Internal Controls over Compliance - Activities Allowed and Unallowed, Allowable Costs Agency Department of the Treasury Federal Assistance Listing Number 21.019 Program Name Coronavirus Relief Fund Year FY 2021 Pass-Through Agency State of Alaska Department of Commerce, Community and Economic Development Pass-Through Entity Identifying Number 20-CRF-179 Criteria Management is responsible to provide reasonable assurance that the costs paid for by federal funds are allowable and in accordance with the types of activities allowed per the compliance supplement. Condition While the City has in place policies requiring employees have signed and approved pay rates on file, the results of our payroll testing identified 1 payroll disbursements out of a sample of 13 where the actual rate of pay did not match the approved rate of pay. Cause Internal controls did not effectively ensure that all employees are paid at their approved pay rates prior to payment. Effect or Potential Effect Federal funds could be expended for unallowed activities and unallowed costs. Questioned costs None. Context We noted payroll expenditures recorded in the general ledger that were paid at a rate not consistent with signed and approved payrates on file. Costs paid in excess of approved rates are not allowable in accordance with program requirements. Identification as a repeat finding This is not a repeat finding. Recommendation Management should review all personnel files and verify all employees have a current signed and approved pay rate included in their file. We also recommend management adopt a policy requiring all payroll disbursements be reviewed by a separate individual prior to approval for pay to ensure payroll disbursements are made at the appropriate rate for each employee. Views of Responsible Officials Management concurs with the finding and will adhere to the corrective action plan included in this report.

Finding 2019-001 Equipment and Real Property Management ? Material Weakness in Internal Control over Compliance Agency: Environmental Protection Agency Pass-Through Entity: Alaska Native Tribal Health Consortium Pass-Through Entity Identifying Number: AN 13-NZ4 CFDA: 66.458 Program: Capitalization Grants for Clean Water State Revolving Funds Award Year: FY 2013 Criteria: Per the Office of Management and Budget (OMB) Uniform Guidance (UG) Compliance Supplement, recipients of federal financial assistance are required to include all federal financial assistance on the Schedule of Expenditures of Federal Awards (SEFA) in the year in which such assistance is received. Condition: The City has not initially identified donated property of $1,189,787 as eligible financial assistance for inclusion in the calculation of whether the City met the threshold for an audit in accordance with Uniform Guidance. As a result of this omission, the City did not recognize the requirement for a federal single audit performed in accordance with the Uniform Guidance in advance of the auditor?s engagement. Context: The City received a large donation of a capital asset this year, which is unusual. This was not initially identified as an award that would be included in the scope of the Uniform Guidance audit. The auditors received information that the donation was funded with federal monies during the audit fieldwork, and an evaluation determined it was required to be reported on the SEFA. This then triggered an audit in accordance with the Uniform Guidance for the year ended June 30, 2019. Cause: The nature of the donation was unusual, and it was not identified as reportable federal funding at the time the auditor was engaged. Effect: The City did not initially engage the auditor to perform an audit in accordance with the Uniform Guidance. Had the award not been identified for inclusion on the SEFA, the City may not have had an audit in accordance with the Uniform Guidance as required. Questioned costs: None.Recommendation: We recommend controls be established to ensure that in instances where the City receives donated property, procedures are performed to verify whether such property was acquired from a federal source for properly inclusion in the SEFA if required. Views of responsible officials: Management concurs with the finding. See corrective action plan.