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Finding 2025-001: Material Weakness – Lack of Documentation on Sole Source Contracts and Verification of Vendors. Federal grantor: Cal OES Compliance Requirement: Procurement Condition: The Organization contract with a vendor on a sole-source basis and did not document justification for the use of a sole source vendor and did not get prior approval from Cal OES for the vendor selection. Criteria: The Organization is required to follow the procurement standards in the Cal OES subrecipient handbook Part 6, including ensuring that procurement method used for contracts are appropriate based on the dollar amount and conditions specified in Part 6.030 and Part 6.045 non-competitive procurements. The Organization must also comply with Section 2.045 Suspension and Debarment prohibits entities that have been debarred, suspended or voluntarily excluded from participating in Federal procurement. Cause: The Organization’s Procurement Policy allows for a sole source vendor but requires staff to document sole source procurements prior to initial purchase. It appears staff did not follow its policy. The Policy also contains a requirement to verify or receive vendor certification that they are not debarred, suspended, ineligible, or voluntarily excluded from Federal procurements, but this procedure was not followed. Effect: Federal awarding agencies may impose additional conditions on the receipt of subsequent awards. Recommendation: We recommend the Organization review polices with staff to ensure procurement requirements are followed, and that staff are familiar with federal procurement requirements. Management’s Response: Staff that were responsible for this aspect of compliance are no longer with the organization. Current staff are all trained on the federal procurement requirements.

Finding 2025-002: Significant Deficiency – Submission of Performance Reports Federal grantor: Cal OES Compliance Requirement: Reporting Condition: The Organization did not submit its quarterly performance report for grant RC23-43-1055 as of the required due date of one month after the quarter end date. Criteria: Section 9.025 of the Cal OES handbook – Report of Expenditures & Request for Funds – requires that subrecipients must submit a report to Cal OES within 30 calendar days from the end of the billing period, whether or not funds are requested. Cause: The reports were filed after the required due date to Staff missing the deadline. Effect: The Organization could jeopardize federal funding due to non-compliance. Recommendation: The Organization should strengthen its internal control procedures over reporting to ensure that all required reports are prepared and submitted in a timely manner. Multiple staff should be trained to prepare the reports in case of one staff being out or other circumstances. A summary of required reports and required due dates should be prepared using the terms and conditions of each grant to facilitate this process. The Schedule of Expenditures of Federal Awards schedule provided during the audit could be updated to include this information since it already includes program names, funder numbers used in the GL, period of performance and other information for each grant that would be useful to prepare the reports. Management’s Response: Staff that were responsible for this aspect of reporting are no longer with the organization. Currently, organization re-built a team where multiple staff members are trained on and ready to submit reports on time.

Finding 2022-001 Federal Grantor: U.S. Department of Justice Passed-through: California Governor?s Office of Emergency Services Pass-through Grantor?s No: Various Compliance Requirement: Reporting Condition: The Organization submitted its Audited Financial Statements and Single Audit Report to the federal clearinghouse in June 2023, 3 months after it was due. Criteria: The Organization was required to submit its Audited Financial Statements and Single Audit Report to the federal audit clearinghouse no later than March 31, 2023, 9 months after the fiscal year-end (2 Code of Federal Regulations ?200.512). Effect: Federal awarding agencies may deny future federal awards or subject the Organization to additional cash monitoring requirements. This finding was not a result of internal control individual federal programs and, accordingly, did not have a direct and material effect on the reporting requirements over the Town?s major federal programs. Cause: The Organization failed to prepare its Audited Financial Statements and Schedule of Expenditures of Federal Awards in a timely manner due to the number of federal awards tested in the current year compared to prior years. Recommendation: The Organization should work with its external accounting firm so that it can close its books and submit its audited financial statements and single audit to the federal audit clearinghouse no later than the statutory reporting deadline. Management?s Response: Management?s response to the finding is discussed in the attached Corrective Action Plan.

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