City of MendotaLocal Government

Condition: During our audit of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2025, we noted that the SEFA was incomplete and required adjustment because certain federal program expenditures were not accurately reported. Specifically, expenditures for the following program were initially understated and were subsequently corrected by management:  ALN 20.205 – Highway Planning and Construction: understated by $402,822 Criteria: Title 2 CFR 200.302(b)(2) of the Uniform Guidance requires nonfederal entities to maintain records that identify, in their accounts, all federal awards received and expended and to provide accurate, current, and complete disclosure of the financial results of each federal award or program. This includes accurately reporting federal expenditures in the SEFA. Cause: The misstatement resulted from inadequate review and reconciliation procedures during preparation of the SEFA. Specifically, the SEFA was not adequately reconciled to the underlying accounting records and supporting grant documentation prior to submission for audit. Effect: An incomplete or inaccurate SEFA may result in federal expenditures being omitted or misstated, which could affect the identification of major programs and the scope of the Single Audit. As a result, noncompliance with applicable federal requirements may not be identified and reported. In addition, inaccurate SEFA reporting may impair compliance with Single Audit reporting requirements. Recommendation: We recommend that City personnel responsible for preparation of the SEFA strengthen year-end review and reconciliation procedures to ensure that all federal expenditures are accurately identified, supported, and included in the SEFA in accordance with Title 2 CFR 200.302(b)(2) of the Uniform Guidance. This should include reconciliation of the SEFA to the general ledger, grant records, and other supporting documentation prior to submission for audit. Management’s Response: See Corrective Action Plan.

Condition: The City of Mendota does not have written procurement procedures which reflect applicable state, local, and tribal laws and regulations or written standards of conduct that covers conflicts of interest and govern the performance of its employees which also conform to the applicable federal law and standards identified in the Uniform Guidance. Criteria: 2 CFR Part 200, Part D (Uniform Guidance) Section 200.318 requires that a non-federal entity use and maintain its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and standards identified in the Uniform Guidance. Cause: The City of Mendota utilizes its municipal code, public contract code, and grant agreements when undergoing the procurement process. The City does so to ensure compliance with applicable federal procurement standards but was unaware of the requirement to also have their own written procurement procedures. Effect: As a result of our audit, we have determined that the City followed all applicable procurement compliance requirements as it relates to grants under CFDA #20.205 with the exception of maintaining its own written procurement policy and written standards of conduct that covers conflicts of interest. The ultimate lack of documented procurement and conflict of interest standards for the City could increase the risk of goods and services being procured through a method which is not in accordance with applicable state, local, and tribal laws as well as federal regulations including the Uniform Guidance. Recommendation: We recommend that the City create, adopt, and utilize its own written procurement policy and standards of conduct that covers conflicts of interest which reflect applicable state, local, and tribal laws and regulations which are in accordance with applicable federal law and standards identified in 2 CFR 200.318 ? 326 (Uniform Guidance). Management?s Response: See corrective action plan.