City of DavisLocal Government

Finding Reference Number: SA2023-001 Subrecipient Reimbursement Request Documentation AL Number: 20.507, 20.526 Assistance Listing Title: Federal Transit Cluster, Federal Transit - Formula Grants (Urbanized Area Formula Program) Federal Agency: Department of Transportation Federal Award Identification Number: CA-2020-214-01, CA-2023-225-00 Criteria: The City’s subgrant agreements with the Regents of the University of California on behalf of the Unitrans public transportation system include a provision that “All invoices must include the full supporting documentation required by FTA for reimbursement, including payroll documentation tracking hours worked on the Grant project, vendor/contractor invoicing, and documentation of vendor/contractor payment, such as accounts payable check copies.” Condition: We tested two reimbursement requests from Unitrans to the City: $1,700,000 for grant CA-2020-214-01 and $450,000 for grant CA-2023-225-00. Although the reimbursement requests were supported by schedules with totals by expenditure type in the “Analysis of Direct Operating Expenses” worksheet and summarized general ledger data, the full supporting documentation required by the subgrant agreements was not included. In addition, although we did note that the City monitors the activity of Unitrans on a quarterly basis and Unitrans is subject to a single audit, Unitrans is behind on completing its single audit, so a current report was not available. Effect: The City did not ensure its subrecipient complied with the provisions of the subgrant agreement and requested reimbursement from the grantor without having that detailed supporting documentation on file. Cause: We understand the University’s financial system at the time could not generate appropriate reports and City staff did not require the submission of the detailed information noted in the subgrant agreement. Recommendation: The City should develop procedures to ensure that the required documentation is obtained from Unitrans with each reimbursement request as required by the City’s subgrant agreement with the University, and the documentation should be retained in the City’s grant files. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2022-001 Accurate Financial Reporting in the Annual PR26 Report and Quarterly PR29 Reports and Failure to File Quarterly PR29 Reports AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: OMB No. 2506-0077 requires all grantees to submit a PR26 – CDBG Financial Summary Report for the CDBG Entitlement Program within 90 days after the year end of the grantee’s program year. The PR26 – CDBG Financial Summary Report is a report that contains summary information from the Integrated Disbursement Information System (IDIS) for the grantee’s program year. The City is also required to file a C04PR29 Cash on Hand Quarterly Report in the IDIS system within 30 days of the end of each quarter. The report details cash drawdowns and expenditures made during each quarter. Finally, the City is required to file the PR29, CDBG-CV Cash on Hand Quarterly Report within 10 days after the end of each calendar quarter. The report details cash drawdowns and expenditures made during each quarter. Condition: During our review of the Program Year 2021 (fiscal year 2022) PR26 report for the CDBG program, we noted that the data in the PR26 report was inconsistent with the data extracted from IDIS and the Consolidated Annual Performance and Evaluation Report (CAPER) and the City’s general ledger. The exceptions noted were: • Line 01 – Unexpended CDBG funds at end of previous program year was reported as $240,102, but the ending unexpended balance in the Program Year 2020 PR26 report was $365,005, which affected other amounts and calculations reported. • Line 15 – Total expenditures in the PR26 of $422,819 could not be reconciled to the program expenditures on the SEFA of $555,547. For the PR26 report for the CDBG-CV program, we understand that the IDIS program does not generate the report by program year, which means the report includes expenditures to the date the report is generated. However, City staff was unable to reconcile the total expenditures on Line 08 of $725,171 to the fiscal year 2021 and 2022 program expenditures on the SEFAs that totaled $717,651. For the PR29 reports for the CDBG and CDBG-CV programs, we understand the fourth quarter CDBG report was not filed in the IDIS system and the four quarterly reports for the CDBG-CV program for fiscal year 2022 were not filed in the IDIS system. Effect: The City is not in compliance with the performance reporting requirements of the CDBG program. Cause: We understand the errors in reporting and failure to file the reports was due to staff oversight. Identification as a Repeat Finding: Yes, since 2021 Recommendation: The City should develop procedures to ensure that all financial reports are reviewed for accuracy prior to submission. In addition, the City should work with the grantor to determine if the City should submit a corrected Program Year 2021 PR26 report, or if the report can be corrected on a prospective basis during the next reporting period. The City should also work with the grantor to determine if the City should submit the missing fiscal year 2022 Cash on Hand Quarterly Reports for both the CDBG and CDBG-CV programs. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2022-002 Cash Management AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: 24 CFR 570.902 indicates that the Department of Housing and Urban Development will review the performance of each entitlement, HUD-administered small cities, and Insular Areas recipient to determine whether each recipient is carrying out its CDBG-assisted activities in a timely manner. One of the factors in determining timeliness is the timing of the use of entitlement grant funds and the amount of undisbursed entitlement grant funds that remain in the Integrated Disbursement Information System (IDIS). Therefore, the City should submit drawdown requests in the IDIS system throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. Condition: During our testing of CDBG grant drawdown requests during fiscal year 2022, we noted that a drawdown made in September 2022 included December 2021, January 2022 and June 2022 expenditures, a drawdown made in November 2023 included December 2021, January 2022 and June 2022 expenditures, and a drawdown made in February 2022 included September 2021 expenditures. The City submitted the drawdown requests in the IDIS from four to twenty-two months after the program expenditures were incurred. Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of being out of compliance with the provisions of 24 CFR 570.902. Cause: We understand that the drawdowns were delayed due to staff turnover and also due to the extensive time it took for City staff to reconcile program expenditures to determine that all costs had been included on drawdowns. Identification as a Repeat Finding: Yes, since 2021 Recommendation: The City should develop procedures to ensure that drawdown requests are submitted more frequently, at least on a quarterly basis. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2022-003 Federal Funding Accountability and Transparency Act (FFATA) Reporting AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252 that are codified in 2 CFR Part 170, direct recipients of grants are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subawards that are entered into the FSRS System should be maintained so that any amendments to the subawards are also reflected in the system. Condition: We selected three of the City’s subawards for testing of the reporting on the FSRS. The three subawards tested were comprised of two vendor contracts and one subgrant that were all more than $30,000. Although we noted that all three subawards tested were included in the FSRS, one was not reported until January 14, 2024 and two were not reported until July 28, 2025. Effect: The City is not in compliance with the FFATA reporting requirements. Cause: We understand the contracts were not reported timely in the FSRS due to City staff oversight. Identification as a Repeat Finding: Yes, since 2021 Recommendation: Although the City provided documentation that the FSRS was updated subsequent to fiscal year 2022, the City should develop procedures to ensure that FFATA reporting is accurate at all times and reflects any contract amendments and final subaward funding amounts. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2022-004 Duplication of Benefits Compliance Documentation AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: All CDBG-CV grantees are required to establish and maintain adequate procedures to prevent any duplication of benefits for assisted activities (as discussed in Section III.B.9. of the CDBG-CV Notice). To demonstrate that no financial assistance has been received or is available to pay costs charged to a CDBG-CV grant, a grantee may demonstrate that no other funds are available for an activity by maintaining records of compliance with mandatory duplication of benefits requirements described in Section III.B.9. Condition: It appears the City did develop a policy to address duplication of benefits per our review of the City's Duplication of Benefits Policy & Procedures document that includes a certification form to be used for applicable projects. We requested a copy of the certification for the Davis Emergency Shelter project funded by the CDBG-CV funding and City staff was unable to locate the certification. Effect: The City is not in compliance with the duplication of benefits documentation requirements to ensure no financial assistance has been received or is available to pay costs charged to a CDBG-CV grant. Cause: We understand that City staff in charge of the project are no longer with the City, so current City staff are unable to determine whether the duplication of benefits certification required by the City’s policy was completed. Identification as a Repeat Finding: Yes, since 2021 Recommendation: City staff should develop procedures to ensure that CDBG-CV grant-funded projects documentation includes the duplication of benefits certification. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2022-005 Cash Management – Drawdown of Grant Funds In Advance of Disbursement AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: Under 2 CFR 200.305, a CDBG grantee is prohibited from drawing funds down from its line of credit in advance of cash needs, and must minimize the time elapsing between the transfer of funds from its line of credit, and the disbursement of the funds. Advance payment must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the grantee or subrecipient carrying out an eligible activity. The general rule is that CDBG funds must be used within three business days they are drawn down. Condition: We selected thirteen disbursements related to projects, subgrants and administrative expenditures and noted one disbursement on September 30, 2021 was included in a reimbursement request on September 9, 2021 and payment was received from HUD on September 13, 2021, which is seventeen days prior to payment to the vendor. Effect: Drawing down funds in advance and not disbursing the funds in three days or less does not minimize the time elapsing between receipt of funds and expenditures and is not in compliance with the cash management provisions of 2 CFR 200.305 and the CDBG program. Cause: We understand the disbursement was requested prior to payment due to staff oversight. Recommendation: The City should not draw down funds until expenditures have been paid in cash and in the event drawdowns occur prior to disbursement, ensure that the time elapsing between the draw down and the expenditure is minimized. In addition, the City should determine whether the interest earned on the grant funds advanced needs to be returned to the grantor. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2022-006 Equipment Management AL Number: 14.218 Assistance Listing Title: CDBG - Entitlement Grants Cluster – Community Development Block Grants/Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-15-MC-06-0037, B-16-MC-06-0037, B-17-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037, B-21-MC-06-0037 Criteria: 2 CFR 200.313(d)(1) require that property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. In addition, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: During fiscal year 2022, the City purchased equipment in the amount of $97,933, which is reflected in the City’s capital asset records. However, those records do not include an indication that the funding source was a federal grant. The City did not yet perform the physical inventory of the federally funded property, because the purchase occurred during fiscal year 2022. Effect: The City is not in compliance with the property management provisions of 2 CFR 200.313(d)(1). Cause: We understand City staff was not aware of the property records requirement to include the federal funding source. We also understand the capital assets the system has the capability to include such a designation, but it has not been utilized to date. Recommendation: The City should develop procedures to ensure that equipment and other capital assets purchased in whole or in part with federal funds include an identification of the federal funding in compliance with the provisions of 2 CFR 200.313(d)(1). In addition, the City should ensure that procedures are in place meet the physical inventory requirements of 2 CFR section 200.313(d)(2). View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA2022-007 Compliance with Grant Invoicing Requirements AL Number: 20.205 Assistance Listing Title: Highway Planning and Construction Cluster Federal Agency: Department of Transportation Pass Through Entity: California Department of Transportation Federal Award Identification Number: ATPL-5238(068) Criteria: Section D of the grant award supplement requires that invoices be submitted at least once every 6 months and if no invoice is filed during that time, it requires that a “written explanation of the absence of activity along with target billing date and target billing amount” be submitted to the grantor. Condition: During our testing of grant reimbursement requests filed for fiscal year 2022 expenditures, we noted that invoice 1 was filed on September 13, 2021, invoice 2 was filed on July 11, 2022, invoice 3 was filed on February 3, 2023 and invoice 4 was filed on January 25, 2024. The interval of billings was from 7 to 12 months, but City staff could not find documentation that the required communication for the lack of billing within six months had been made to the grantor. Effect: The City is not in compliance with the billing interval or grantor communication requirements of Section D of the grant award agreement. Cause: Due to staff turnover, City staff was unable to determine whether the communication had been made to the grantor. Recommendation: The City should develop procedures to ensure grants passed through from the California Department of Transportation are invoiced every six months or communication is made to the grantor in accordance with the grant requirements. Documentation of the communication should be retained in the City’s grant files. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA2022-008 Suspension and Debarment AL Number: 20.205 Assistance Listing Title: Highway Planning and Construction Cluster Federal Agency: Department of Transportation Pass Through Entity: California Department of Transportation Federal Award Identification Number: ATPL-5238(068) Criteria: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. The non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. We understand the City’s process for contracts under the California Department of Transportation grants is to research the vendor’s license during the bidding process and verify that the vendor is not debarred or suspended. Condition: The City had one construction contract under the ATPL-5238(068) grant award during fiscal year 2022 and we requested documentation that the City had completed the review of whether the vendor was suspended or debarred. City staff was unable to locate documentation that the check had been completed. We did note that as of July 28, 2025, the vendor was not suspended or debarred according to the SAM.gov website. Effect: The City is not in compliance with the suspension and debarment requirements of 2 CFR section 180.995. Cause: Due to staff turnover, City staff was unable to locate documentation of whether the required check of the vendor’s suspension and debarment had been completed. Recommendation: The City should develop procedures to ensure that the required check of a vendor’s suspension and debarment status is completed and the documentation should be retained in the grant files. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA2022-009 Compliance with Program Expenditure Category Requirements and Reporting AL Number: 21.027 Assistance Listing Title: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Federal Agency: Department of the Treasury Pass Through Entity: California State Water Resources Control Board Federal Award Identification Number: CA5710001, 219223, SLFRP3223 Criteria: The Coronavirus State and Local Fiscal Recovery Funds program limits expenditures to four broad categories. If the City makes subgrants under the Revenue Loss category, the grantor does not require that the City treat that vendor as a subrecipient, which would include subrecipient monitoring requirements. Subgrants under any of the other four categories do require compliance with subrecipient monitoring rules and regulations. Condition: When the City provided the program expenditures breakdown for audit, expenditures for the Healthy Davis Together with the University of California Regents for program for COVID-19 testing was listed as a subgrant in under the “address negative economic impacts caused by the public health emergency” expenditure category. We also noted that the vendor was listed as a subrecipient/subgrant in the reports to the grantor. When we requested subrecipient monitoring documentation, we found that City staff had treated the vendor as a service provider and not as a subrecipient. With assistance from the grantor, the City was able to move the fiscal year 2022 expenditures to the Revenue Loss category in July 2025. Effect: The City was not in compliance with the subrecipient monitoring requirements, until the expenditures were moved to the Revenue Loss expenditure category, which does not require subrecipient monitoring. Cause: City staff was not aware of the subrecipient monitoring requirement due to the situation experienced during the COVID-19 pandemic. Recommendation: The City should ensure that expenditure categories are analyzed to understand the various requirements within each category to ensure that all compliance requirements are met at the time of the expenditure. In the event subgrants are made under a category other than Revenue Loss, the City should ensure that subrecipient monitoring procedures are completed and documented. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA2021-001 Triennial Review Deficiencies AL Number: 20.507 and 20.526 Assistance Listing Title: COVID-19 - Federal Transit Cluster Federal Agency: Department of Transportation Federal Award Identification Number: CA-2017-016-01, CA-2016-101-01, CA-2020-242-00, CA-2020-214-00, CA-2019-107-00, CA-2017-126-00, CA-2017-004-00, and CA-2016-101-00 Criteria: The City of Davis went through a triennial review of its Federal Transit Administration Grants by the U.S. Department of Transportation Federal Transit Administration (FTA) during fiscal year 2021 Condition: During the triennial review, the FTA found a several issues and had five findings in the areas of Financial Management and Capacity, Technical Capacity - Program Management and Subrecipient Oversight, Procurement, and Americans with Disabilities Act-General. Although the triennial review is not an audit, it is an assessment of the City’s compliance with federal requirements. Effect: The City is not in compliance with the federal requirements noted above for the FTA grants. Cause: We understand the noncompliance issues were due to staff oversight, staff turnover and the effects of the COVID-19 pandemic on staff resources. Recommendation: The City must implement the required changes to comply with the FTA requirements. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2021-002 Accurate Financial Reporting in the Annual PR26 Report and Quarterly PR29 Reports AL Number: 14.218 Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants (CDBG) Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037 Criteria: OMB No. 2506-0077 requires all grantees to submit a PR26 – CDBG Financial Summary Report for the CDBG entitlement Program within 90 days after the year end of the grantee’s program year. The PR26 – CDBG Financial Summary Report is a report that contains summary information from the Integrated Disbursement Information System (IDIS) for the grantee’s program year. The City is also required to file a C04PR29 Cash on Hand Quarterly Report in the IDIS system within 30 days of the end of each quarter. The report details cash drawdowns and expenditures made during each quarter. Finally, the City is required to file the PR29, CDBG-CV Cash on Hand Quarterly Report within 10 days after the end of each calendar quarter. The report details cash drawdowns and expenditures made during each quarter. Condition: During our review of the Program Year 2020 (fiscal year 2021) PR26 report for fiscal year 2021 for the CDBG program, we noted that the data in the PR26 report was inconsistent with the data extracted from IDIS and the Consolidated Annual Performance and Evaluation Report (CAPER) and the City’s general ledger. The exceptions noted were: • Line 01 - Unexpended CDBG funds at end of previous program year was reported as zero, but the ending unexpended balance in the Program Year 2019 PR26 report was $821,153. • Line 02 - the entitlement grant included in the PR26 report was $743,872, but it should have been $743,986, which affected other amounts and calculations reported. • Line 05 – included program income of $165,537, but the City did not have program income during fiscal year 2021. This amount also affects other amounts and calculations reported. • Line 15 – Total expenditures in the PR26 of $544,405 could not be reconciled to the program expenditures on the SEFA of $485,210. For the PR26 report for the CDBG-CV program, we understand that the IDIS program does not generate the report by program year, which means the report includes expenditures to the date the report is generated. However, City staff was unable to reconcile the total expenditures on Line 08 of $725,171 to the fiscal year 2021 program expenditures on the SEFA of $414,828. During our review of the four C04PR29 Cash on Hand Quarterly Reports for fiscal year 2021, we noted that the City was not able to reconcile the cash disbursed total of $723,288 to the program expenditures reported on the SEFA of $485,210 and was not able to reconcile the ending cash balance in the “Summary for 4 Quarters” of $336,748 to the June 30, 2021 general ledger cash balance of $177,768. It was also unclear why the ending cash balance in the Summary of 4 Quarters total of $336,374 did not agree to the cash balance in the fourth quarter report ending balance of $168,374. In addition, the quarterly reports included current year program income of $168,374, although as noted above the City did not receive any program income during fiscal year 2021. During our review of the PR29, CDBG-CV Cash on Hand Quarterly Reports for fiscal year 2021, City staff was not able to reconcile the cash disbursed total of $254,474 to the program expenditures reported on the SEFA of $414,828. Effect: The City is not in compliance with the performance reporting requirements of the CDBG program. Cause: We understand the errors were due to staff oversight. Recommendation: The City should develop procedures to ensure that all financial reports are reviewed for accuracy prior to submission. In addition, the City should work with the grantor to determine if the City should submit corrected Program Year 2020 PR26 report and fiscal year 2021 Cash on Hand Quarterly Reports, or if the reports can be corrected on a prospective basis during the next reporting period. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2021-003 Cash Management AL Number: 14.218, 14.239 Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants (CDBG) HOME Investment Partnerships Program Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037 M18-MC060237, M19-MC060237, M20-MC060237 Criteria: 24 CFR 570.902 indicates that the Department of Housing and Urban Development will review the performance of each entitlement, HUD-administered small cities, and Insular Areas recipient to determine whether each recipient is carrying out its CDBG-assisted activities in a timely manner. One of the factors in determining timeliness is the timing of the use of entitlement grant funds and the amount of undisbursed entitlement grant funds that remain in the Integrated Disbursement Information System (IDIS). Therefore, the City should submit drawdown requests in the IDIS system throughout the fiscal year as costs are incurred. Those drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. Although the HOME Investment Partnerships Program does not appear to have a timeliness requirement, other than 24 CFR 92.500(d) requirement to commit funds within 24 months of the grant award and the eight-year period of performance, the City should also submit drawdown requests in the IDIS system throughout the fiscal year as costs are incurred. Condition: During our testing of CDBG grant drawdown requests during fiscal year 2021, we noted that a drawdown made in April 2021 was for December 2020 expenditures, the drawdown made in May 2021 was for August 2020 expenditures, the drawdown made in June 2021 was for December 2020 expenditures and the drawdown made in September 2022 was for February 2021 to June 2021 expenditures. The City submitted the drawdown requests in the IDIS well over three months after the program expenditures were incurred. We also noted that the City did not submit drawdowns for fiscal year 2021 program expenditures we tested totaling $710. During our testing of HOME program grant drawdown requests during fiscal year 2021, we noted that two drawdowns made in June 2022 were for November 2020, January 2021, March 2021 and June 2021 expenditures, and one drawdown made in September 2022 was for March, April, May and July 2021 expenditures. Effect: The City is not matching expenditures with associated revenues throughout the fiscal year as expenditures are incurred and is at risk of being out of compliance with the provisions of 24 CFR 570.902. Cause: We understand that the drawdowns were delayed due to staff turnover. Recommendation: The City should develop procedures to ensure that drawdown requests are submitted more frequently, at least on a quarterly basis, and should requests reimbursement for the program expenditures noted above as soon as possible. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2021-004 Federal Funding Accountability and Transparency Act (FFATA) Reporting AL Number: 14.218 Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants (CDBG) Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037 Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252 that are codified in 2 CFR Part 170, direct recipients of grants are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Subawards that are entered into the FSRS System should be maintained so that any amendments to the subawards are also reflected in the system. Condition: We selected three of the City’s subawards for testing of the reporting on the FSRS. The three subawards tested were comprised of two vendor contracts and one subgrant that were all more than $30,000. Although we noted that two of the contracts tested were included in the FSRS, one of the contracts in the amount of $198,760 was not reported in FSRS. We understand the City did not report that contract in the FSRS until March 10, 2024. Effect: The City is not in compliance with the FFATA reporting requirements. Cause: We understand the contract was not included in the FSRS due to City staff oversight. Recommendation: Although the City provided documentation that the FSRS was updated on March 10, 2024 to include the $198,760 contract, the City should develop procedures to ensure that FFATA reporting is accurate at all times and reflects any contract amendments and final subaward funding amounts. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2021-005 Duplication of Benefits Compliance Documentation AL Number: 14.218 Assistance Listing Title: COVID-19 - Community Development Block Grants/Entitlement Grants (CDBG) Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-14-MC-06-0037, B-18-MC-06-0037, B-19-MC-06-0037, B-20-MC-06-0037, B-20-MW-06-0037 Criteria: All CDBG-CV grantees are required to establish and maintain adequate procedures to prevent any duplication of benefits for assisted activities (as discussed in Section III.B.9. of the CDBG-CV Notice). To demonstrate that no financial assistance has been received or is available to pay costs charged to a CDBG-CV grant, a grantee may demonstrate that no other funds are available for an activity by maintaining records of compliance with mandatory duplication of benefits requirements described in Section III.B.9. Condition: It appears the City did develop a policy to address duplication of benefits per our review of the City's Duplication of Benefits Policy & Procedures document that includes a certification form to be used for applicable projects. We requested a copy of the certification for the Davis Emergency Shelter project funded by the CDBG-CV funding and City staff was unable to locate the certification. Effect: The City is not in compliance with the duplication of benefits documentation requirements to ensure no financial assistance has been received or is available to pay costs charged to a CDBG-CV grant. Cause: We understand that City staff in charge of the project are no longer with the City, so current City staff are unable to determine whether the duplication of benefits certification required by the City’s policy was completed. Recommendation: City staff should develop procedures to ensure that CDBG-CV grant-funded projects documentation includes the duplication of benefits certification. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding Reference Number: SA 2021-006 Timely Reporting and Return of Unspent Grant Advance AL Number: 21.019 Assistance Listing Title: COVID-19 – Coronavirus Relief Fund Federal Agency: Department of Treasury Pass Through Entity: Yolo County, California Department of Finance Federal Award Identification Number: Unavailable (Yolo County) and 607 (California Department of Finance) Criteria: Attachment 1 to the City’s CARES Homeless Assistance Grant and Attachment 1 to the City’s CARES Business Assistance Grant with Yolo County both require the City to file a final a statement of cumulative costs incurred, including cost sharing, with the County’s Financial Contact no later than 30 days after the project period end date, or January 29, 2021. We also noted that Attachment 4 to each of the grants indicated a different due date for the final report, which is within 60 days after the end of the period of performance, or February 28, 2021. Finally, Attachment 1 of each grant also indicate that any unspent proceeds associated with the grants of December 30, 2020 was to be returned to the County no later than January 15, 2021. Condition: The City filed the final report for the CARES Homeless Assistance Grant with the County on March 11, 2021 and did not return the unspent grant advance of $27,617 to the County until March 29, 2021. The City filed the final report for the CARES Business Assistance Grant with the County on March 8, 2021 and did not return the unspent grant advance of $222 to the County until January 21, 2021. Effect: The City is not in compliance with the timely reporting and timely return of unspent funds requirements of the grant award agreements. Cause: We understand the delays in filing the reports returning the unspent grant funds timely were due to staff turnover. Recommendation: The City should ensure grant reports are filed timely in accordance with grant agreement reporting deadlines and grant agreements should be reviewed for other compliance requirements, such as deadlines for the return of unexpended grant funds. In addition, City staff should clarify with grantors if there are conflicting reporting deadlines within the grant agreement. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

Finding reference number: SA2019-001: Incompliance of Procurement Policy with Uniform Guidance CFDA number: 20.205 CFDA Title: Highway Planning and Construction Name of Federal Agency: Department of Transportation Federal Award Identification Number and Year: STPL-5238(061) Year of initial award - 2018 Name of pass-through Entity: California Department of Transportation Criteria: According to the Uniform Guidance (UG), the implementation of the procurement standards in 2 CFR sections 200.317 through 200.326 is now required for auditee fiscal years beginning on or after December 26, 2017. 2 CFR section 200.110(a), effective date amended on May 17, 2017, allow non-Federal entities to continue to comply with the procurement standards in OMB Circular A-110 or the A-102 common rule, as applicable, through December 25, 2017, extending the grace period from 2 years to 3 years. The provisions in 2 CFR 200.110 also required non-federal entities to document their decision to choose to use the previous procurement standards during the extension period. Condition: The City?s Procurement Policy, dated July 1, 1997, has not been updated to incorporate all of the elements required by the UG. Effect: The City?s Procurement Policy was not in compliance with the Uniform Guidance in 2 CFR section 200.317 through 200.326. Cause: The City staff were not aware of the Uniform Guidance requirement. Recommendation: The City should ensure that it has reviewed the procurement standards in the Uniform Guidance and update its procurement policy for fiscal year 2020 to be in compliance with Uniform Guidance in 2 CFR sections 200.317 through 200.326. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.

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