City of Palmer, AlaskaLocal Government

Finding 2024-001 Subrecipient Monitoring – Material Weakness in Internal Control over Compliance and Material Noncompliance Agency Department of Justice Assistance Listing Number (ALN) 16.838 Program Name Comprehensive Opioid, Stimulant, and Substance Use Program Award Year 2024 Criteria In accordance with 2CFR Part 200 Subpart D, the City was required to clearly identify a subaward to the recipient with federal award identification information and requirements for compliance with Federal statutes, regulations and the terms and conditions of the Federal award. The City was further required to communicate to its subrecipients the relevant requirements to determine suitability of certain individuals interacting with minors and have written procedures in place to respond in the event of an actual or imminent breach of personal identifiable information. Condition Subrecipient agreements were not issued with required Federal award information. Further, relevant compliance requirements were not communicated to the subrecipients. Cause The program was new for the City and was managed by a department that was not familiar with subrecipient disclosure requirements. Effect or potential effect Sub awardees and the Federal government did not receive complete award information and were not informed of relevant grant-specific compliance requirements. Context There were three subrecipients under the program. In 2024, subrecipient expenditures totaled $196,880. Identification as a repeat finding N/A Recommendation The City should implement internal control procedures to evaluate applicability of grant requirements, especially when funding sources or nature of grant awards change. Subrecipients should receive correct Federal award information and be reported as required under FFATA. Views of Responsible Official and Planned Corrective Action Management agrees with the finding. Subaward agreements will be issued to organizations that received COSSUP funding during the terms of the grant over $30,000. Future internal controls will include review by the Finance Director and the Controller to evaluate grant requirements.

Finding 2024-002 Reporting – Material Weakness in Internal Control over Compliance and Material Noncompliance Agency Department of Justice Assistance Listing Number (ALN) 16.838 Program Name Comprehensive Opioid, Stimulant, and Substance Use Program Award Year 2024 Criteria In accordance with 2 CFR part 170, the City was required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) no later than the end of the month following the month in which the obligation was made. Condition The required reports were not submitted during the year. Controls were not in place to evaluate the applicability of the reporting requirement and ensure the reports were submitted timely. Cause The City was not aware that this subaward reporting requirement was applicable for funds received under the program. Effect or potential effect The City was not in compliance with subrecipient reporting requirements Context The auditor requested the reports for the City’s subawards that were required under FSRS. The City was unable to provide the requested supports as they had not been filed. Identification as a repeat finding N/A Recommendation The City should implement internal control procedures to evaluate applicability of grant reporting requirements, especially when funding sources or nature of grant awards change. Views of Responsible Official and Planned Corrective Action Management agrees with the finding. The City will take corrective action for the audit finding. New controls are being put into place to ensure that all subawards over $30,000 are properly and timely reported.

Finding 2022-001 Significant Deficiency in Internal Control Over Compliance, Noncompliance - Reporting Agency Department of the Treasury ALN 21.027 Program Name Coronavirus State and Local Fiscal Recovery Funds Award Year Reporting period was for March 03, 2021 ? March 30, 2022 Pass-Through Agency State of Alaska Department of Commerce, Community, and Economic Development Pass-Through Entity Identifying Number NEU AK0100 Criteria Recipients of federal awards must establish verifiable controls over reports that are prepared and submitted. Condition Report submitted within the year had significant errors, including the improper reporting of contract agreements as subrecipient awards and reporting the incorrect total expenditures that occurred within the reporting period. In addition, there were insufficient controls in place to prevent the identified reporting errors. Cause The City?s internal controls over reporting were not designed appropriately to ensure timely and accurate reporting. Effect or Potential Effect Information submitted to the granting agency might be incomplete or inaccurate. Questioned costs None Context A sample of one annual report was tested specific to the major program. This report included significant errors in the initial submission and no amended report had been filed within FY 2022. Identification as a repeat finding No Recommendation Review process should also be established to ensure accurate reporting. A policy should be established and enforced to ensure that grant reports contain accurate data prior to submission, and to ensure evidence of controls performed over applicable compliance requirements is maintained. Views of Responsible Officials Management agrees with this finding. All grant reporting is to be reviewed for accuracy by the Finance Director or the Controller prior to submittal.