City and Borough of Juneau, AlaskaLocal Government

2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.

2023-003 Significant Deficiency in Internal Controls over Compliance and Compliance – Reporting (Bartlett Regional Hospital enterprise fund) Agency: U.S. Department of Health and Human Services, Health Resources and Services Administration Program(s) and Federal Award Listing Number(s): 93.498 Provider Relief Fund (Covid 19 – American Rescue Plan Rural Payments) New or Repeat: New Criteria: Per 2 CFR 200.303, the nonfederal entity is responsible for maintaining effective internal controls over submissions of financial reports to comply with terms and conditions of the Federal award. Condition: Internal controls were not sufficiently designed and implemented to ensure a key line item “total other Provider Relief Fund (PRF) expenses” in the PRF report for PRF Phase 4 and American Rescue Plan (ARP) expenses for payments received July 1, 2021 to December 31, 2021 was accurate. Context: The total line was reported cumulatively, for the PRF and ARP program rather than specific to the PRF Phase 4 and American Rescue Plan (ARP) funding listed in the report instructions. The line was over reported by $266,448. Effect: Costs, totaling $266,448, were already reported for the previous reporting period and therefore are considered unallowable costs. This error in reporting is considered reportable non-compliance as the amount is above the questioned cost threshold. Questioned costs: Questioned costs are $226,448 of “total other Provider Relief Fund (PRF) expenses” erroneously reported. Cause: Lack of review by an individual independent of preparation process, due to turnover and vacancies in key finance department positions, at Bartlett Regional Hospital, and a misunderstanding of reporting requirements as being cumulative, rather than funding specific. Recommendation: As the report cannot be revised and resubmitted we recommend the City and Borough follow the granting agency’s remedy for non-compliance, which is to indicate a reduction in healthcare related expenses and an increase to the lost revenue expense total that was reported, in management’s corrective action plan. View of responsible officials: Management concurs with this finding, see corrective action plan.

2021-002 Major Program Noncompliance and Significant Deficiency in Internal Controls over Compliance ? Allowable Costs/Cost Principles ? Transaction Support, Bartlett Regional Hospital Enterprise Fund Program: U.S. Department of Treasury, Coronavirus Relief Fund ALN: 20.019 COVID-19 ? Substance Use Disorder Services Expansion ? Crisis Stabilization CARES Funding Awarded to Bartlett Regional Hospital (an enterprise fund of the City and Borough of Juneau, Alaska) - Passed through the Alaska Department of Health and Social Services Pass through award number 602-239-21004 FAIN: SLT-0073 COVID-19 ? Substance Use Disorder Services Expansion ? Youth Psychiatric Stabilization CARES Awarded to Bartlett Regional Hospital (an enterprise fund of the City and Borough of Juneau, Alaska) - Passed through the Alaska Department of Health and Social Services Pass through award number: 602-239-21004 FAIN: SLT-0073 COVID-19 ? Ambulatory Withdrawal Management Awarded to Bartlett Regional Hospital (an enterprise fund of the City and Borough of Juneau, Alaska) - Passed through the Alaska Department of Health and Social Services Pass through award number: 602-239-21010 FAIN: SLT-0073 New or Repeat: New Criteria: Uniform Guidance 2 CFR 200.403(g) states that in order for costs to be allowable under Federal awards, they must be adequately documented. Additionally, per Uniform Guidance 2 CFR 200.303(a), nonfederal entities receiving federal awards are required to establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: As reported in significant deficiency 2021-001, internal controls over purchasing were not sufficiently designed and implemented to ensure costs charged to the award were adequately documented and/or supported for costs incurred and recorded in the Bartlett Regional Hospital enterprise fund. Credit card, employee reimbursements, and travel purchases charged to award number 602-239-21004, COVID-19 ? Substance Use Disorder Services Expansion ? Youth Psychiatric Stabilization CARES award were not adequately supported to confirm that costs charged to the award were allowable. Context: Of the Coronavirus Relief Fund program (assistance listing number 21.019), with total expenditures of $43,146,259, the costs at high risk of being unsupported, due to the condition described above, were isolated to travel and supplies costs incurred at Bartlett Regional Hospital, totaling $94,757. Due to the increased risk, testing included 77% of these costs. Of the $94,757 of travel and supplies charged to the Hospital?s award number 602-239-21004, COVID-19 ? Substance Use Disorder Services Expansion ? Youth Psychiatric Stabilization CARES award, we tested $72,641 of the travel and supply purchases charged to this grant (153 individual checks or credit card charges). Our testing found that $25,279 of the purchases (76 individual checks or credit card charges) were not adequately supported, or did not sufficiently document the purpose of the transaction. Consequently, we were unable to determine the allowability of the costs, and lack of sufficient documentation is considered non-compliance with applicable cost principles. Questioned Costs: Unsupported purchases discovered during testing totaled $25,279, and are considered questioned costs. The total eligible expenditures reported in the schedule of expenditures of federal awards (SEFA) was reduced by the amount of questioned costs. Effect (or potential): An adjustment to the SEFA was required to reduce expenditures by $25,279 in questioned costs for award number 602-239-21004, COVID-19 ? Substance Use Disorder Services Expansion ? Youth Psychiatric Stabilization CARES award. Without sufficient internal controls over compliance for purchasing processes, risk significantly increases for unallowable costs to be charged to the program. Total questioned costs and remaining untested travel and supply costs in the grants administered by the Hospital for this program are not material to the program. Therefore, our opinion is not qualified, but the finding is disclosed as required in accordance with 2 CFR 200.516(a). Cause: Hospital turnover during the past several years has resulted in deferral of updating policies and procedures, as it has not been a top priority. Lack of clear policies and procedures has resulted in weaknesses in the Hospital?s internal controls, providing opportunities for undetected errors or fraud, and a lack of sufficient documentation to support the allowability of transactions. Recommendation: See recommendation to Significant Deficiency 2021-001. In addition, specific to the grants administered by the Hospital, implementation of procedures and training for ensuring documentation retained meets applicable cost principles and provides adequate support for the allowability of costs charged to the program is recommended. View of responsible officials: Management concurs with this finding. See Corrective Action Plan.

2020-001 Major Program Noncompliance and Significant Deficiency in Internal Controls over Compliance ? Allowable Costs Program: U.S. Department of the Treasury, Coronavirus Relief Fund ? CFDA 21.019 Criteria: An allowable expenditure under the ?Uses of Funds? requirements of Section 601(d) under Title VI of the Social Security Act, as amended by Title V of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides that payments from the Fund may only be used to cover costs that: ? are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID?19); ? were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and ? were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. When an organization uses their federal funding to further pass down to another organization through a subrecipient relationship, the federal funds are determined to be expended when the organization becomes obligated to the subrecipient for payment. Generally, that is when the disbursement is made to the subrecipient (per 2 CFR 200.34). Other, non-pass through, costs are reported when direct expenditures are incurred. Condition: Internal controls over compliance were not sufficiently designed and implemented to ensure that transfers, from the CARES Relief Special Revenue Fund to other funds, were not accounted for as subrecipient payments and recognized as eligible expenditures at the time of transfer. Questioned costs: There are no questioned costs associated with this finding due to a $536,272 reduction to eligible expenditures on the Schedule of Expenditures of Federal Awards (SEFA) as of June 30, 2020 for amounts unexpended as of the fiscal year-end. Cause: Internal transfers out of the CARES Relief Special Revenue Fund were treated as subrecipient payments. The receiving funds were to administer a project with a local non-profit organization. Costs incurred for the project in the other funds were not taken into consideration when calculating total eligible costs, on the SEFA, for June 30, 2020. Context and effect: A project and appropriation totaling $550,000 was approved and funds were moved internally from the CARES Relief Special Revenue Fund to other funds. Subsidiary accounts were set up in each receiving fund to track costs for the project. As of year-end, $13,728 of direct costs had been incurred. The SEFA included the amount of the transfer out of the CARES Relief Special Revenue Fund incorrectly, therefore overstating eligible expenditures by $536,272. Recommendation: We recommend management review its procedures for capturing internally funded projects from the CARES Relief Special Revenue Fund to ensure the SEFA reports the receiving funds direct costs, rather than the transfer amount as the eligible costs. View of responsible officials: Management concurs with this finding, see corrective action plan.