City of Kotzebue, AlaskaLocal Government

Finding 2022-002 Procurement and Suspension and Disbarment - Noncompliance and Significant Deficiency in Internal Controls Over Compliance Agency U.S. Environmental Protection Agency ALN 66.202 Program Name Sanitation Facilities Improvements Congressionally Mandated Projects Award Year FY 2018 Pass-Through Agency Alaska Native Tribal Health Consortium Pass-Through Entity Identifying Number(s) AN18-RO2 Criteria In accordance with 2 CFR 200, the City?s procurement policy must conform to the Uniform Guidance standards. This requires the City to establish a policy for small purchase procedures that covers transactions that exceed micropurchase amount ($10,000) but do not exceed the simplified acquisition threshold ($250,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Condition The City executed several small purchase transactions without obtaining price or rate quotations from an adequate number of qualified sources. Cause The City did not establish a policy for small purchase to satisfy the requirements of 2 CFR 200 of Uniform Guidance. Effect or potential effect The City was not in compliance with the procurement requirement for the program. Questioned costs $156,025 Context In our testwork for procurement requirements, we noted that 2 of the 4 samples selected did not have the documentation that conformed with the Uniform Guidance procurement requirements. Identification as a repeat finding No Recommendation We recommend that the City establish a policy in regard to small purchase procedures and ensure the management is following its procurement policy and meeting the Uniform Guidance compliance requirements. Views of responsible officials Management agrees with the finding. The City is implementing new policy covering the Uniform Guidance thresholds that are established for federal programs.

Finding 2022-003 Procurement and Suspension and Disbarment - Noncompliance and Significant Deficiency in Internal Controls Over Compliance Agency U.S. Environmental Protection Agency ALN 66.202 Program Name Sanitation Facilities Improvements Congressionally Mandated Projects Award Year FY 2018 Through Agency Alaska Native Tribal Health Consortium Pass-Through Entity Identifying Number(s) AN18-RO2 Criteria Internal control policies should be established to provide reasonable assurance that an entity with which the City plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded for covered transactions under Uniform Guidance. Condition Documentation that vendors are not debarred, suspended or otherwise excluded were not retained in the City?s procurement files and thus, auditors were not able to test that the relevant internal controls were operating effectively. Cause The procurement procedures for the City did not require retention of the verification for documentation purposes, and none was evident in the file. Effect or potential effect Lack of documentation might make it harder for the City?s management to monitor compliance with the requirement. Questioned costs None noted Context Auditors were not able to verify internal controls over sampled procurements, since no documentation was retained. Identification as a repeat finding No Recommendation We recommend that management retain evidence of review that prospective vendors and suppliers are not on the suspension and debarment list for covered transactions under Uniform Guidance. Views of responsible officials Management concurs with the finding. Management is updating the internal procurement policies, procedures, and award checklists to ensure that evidence of the search, and results of the search, for suspension and debarment is being completed and filed prior to the award of any procurement activities.

Finding 2020-001 Cash Management - Significant Deficiency in Internal Control Over Compliance Identification of the federal program CFDA 66.202 Congressionally Mandated Projects Agencies U.S. Environmental Protection Agency Award Numbers AN 17-RN4 and AN 18-R02 Year 2020 Criteria or Specific Requirement Internal control policies should be established to provide reasonable assurance to minimize the time elapsed between federal funds requests and disbursements. Condition Cash drawdown requests for the grants were not reconciled and approved in accordance with the City?s cash management policy in the first quarter of the year. Cause The City did not follow the internal controls policy to ensure reimbursement requests that have to be submitted to granting agencies are prepared, reviewed and requested timely. Effect or Potential Effect: Failure to review reimbursement requests makes the City out of compliance with grant requirements. Questioned Costs None noted Context Two out of seven reimbursement requests selected for testwork were not reviewed and approved by the designated reviewer before submission in accordance with the City?s policy. Identification as a Repeat Finding Yes, prior year finding 2019-004 Recommendation We recommend the City establish calendar reminders for due dates for reimbursement requests that have to be submitted to granting agency to comply with its own cash management review policy. Views of Responsible Officials: Management concurs with the finding. See corrective action plan.

Finding 2019-004 Cash Management - Significant Deficiency in Internal Control Over Compliance Identification of the federal program CFDA 93.210 Tribal Self Governance Program ? IHS Compacts/Funding Agreements and CFDA 66.202 Congressionally Mandated Projects Agencies U.S. Environmental Protection Agency and U.S. Department of Health and Human Services Award Numbers AN 17-RN4, AN 17-N6H and AN 19-N5Q Year 2019 Criteria or specific requirement Auditee is required to submit quarterly financial reports within 30 days after each quarter-end. Condition Cash drawdown requests from ANTHC were not reconciled and approved. Cause The City did not have internal controls in place to ensure reimbursement requests that have to be submitted to granting agencies are prepared, reviewed and requested timely. Effect or potential effect Failure to review reimbursement requests makes the City out of compliance with grant requirements. Questioned Costs None noted Context Reimbursement requests were not available for review. Identification as a repeat finding No Recommendation We recommend the City establish a review process and calendar reminders for due dates for reimbursement requests that have to be submitted to granting agency. Views of Responsible Officials and Planned Corrective Actions: Management concurs with the finding. See corrective action plan.