County of NevadaLocal Government

Reference Number 2024-002 – Delays in Financial Reporting Evaluation of Finding Material Weakness and Noncompliance Criteria Management is responsible for providing timely and accurate financial information. Because the County has expended over $750,000 in federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), requires non-federal entities to submit their financial statements and single audit reports to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition The County did not submit its financial statements and single audit reports to the FAC within the required timeframe for the fiscal year ended June 30, 2024. The financial statements and single audit reports were submitted after the deadline of March 31, 2025. Cause of Condition The County has experienced delays during their Annual Comprehensive Financial Report (ACFR) preparation. Updating financial records necessitates comprehensive data reconciliation and validation exercise. Ensuring that all financial data is accurate and up-to-date is critical, but this process is labor-intensive and prone to unexpected complications, further extending the preparation timeline to implement any required changes. Effect or Potential Effect of Condition The late submission of the financial statements and single audit reports impairs the ability of the federal awarding agencies and pass-through entities to monitor the County’s compliance with federal requirements and to make informed decisions regarding the continuation or modification of federal awards. The late submission also results in noncompliance with the Uniform Guidance, and increases the risk of fraud, waste, and abuse of federal funds. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Context The County’s financial statements and single audit reports are used by the federal awarding agencies and pass-through entities to assess the non-federal entity's financial condition, internal controls, and compliance with federal requirements. Questioned Costs No questioned costs noted. Repeat Finding This is not a repeat finding. Recommendation The County should look at increasing the amount of experienced finance staff to help facilitate year-end closing procedures and the preparation of its basic financial statements. Because the basic financial statements are the responsibility of the County, it is in its best interest to closely monitor the accounting process to ensure that financial position and operating results are accurately and timely reported. Views of Responsible Officials The County concurs with this finding and cause of condition. The Auditor-Controller's office is currently in the process of providing additional training to its staff to further develop their technical knowledge, and to assess internal processes over year-end closing processes and the preparation of financial statements in order to accurately update financial records and in a timely manner.

Criteria or specific requirement: According to § 200.302 Financial management of 2 CFR Part 200, the financial management system of each nonfederal entity must provide for written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the federal award. According to § 200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to § 200.403 Factors affecting allowability of costs of 2 CFR Part 200, except where otherwise authorized by statute, costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the nonfederal entity in order to be allowable under federal awards. According to § 200.430 Compensation—personal services of 2 CFR Part 200, costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the nonfederal entity consistently applied to both federal and nonfederal activities; (2) Follows an appointment made in accordance with a nonfederal entity's laws and/or rules or written policies and meets the requirements of federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, when applicable. According to § 200.431 Compensation-fringe benefits of 2 CFR Part 200, except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, nonfederal entity-employee agreement, or an established policy of the nonfederal entity. Condition: The County does not have written procedures for determining the allowability of costs nor an established written policy for compensation-personal services and fringe benefits. Questioned costs: None Context: During our testing, we noted the County charged various types of salaries and benefits to the grants. The County does not have written procedures for determining the allowability of costs. Specific to compensation-personal services and fringe benefits, there is not an established written policy for us to test that personnel costs charged to grants conform to, follows an appointment in accordance with, and are required by an established policy of the County. Cause: Management oversight. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential unallowable costs charged to grants. Repeat Finding: This audit finding was reported in the prior year in finding 2022-002. Recommendation: We recommend the County establish written procedures for determining the allowability of costs to include a written policy regarding the charging of personnel costs to grants. Views of responsible officials: There is no disagreement from responsible officials.

Criteria or specific requirement: According to § 200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to § 200.318 General procurement standards of 2 CFR Part 200, the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to § 200.320 Methods of procurement to be followed of 2 CFR Part 200, when the value of the procurement for property or services under a federal financial assistance award exceeds the SAT, or a lower threshold established by a nonfederal entity, formal procurement methods are required. According to § 180.300 of Subpart C - Responsibilities of Participants Regarding Transactions Doing Business With Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. According to Section 3.4 Formal Solicitations of the County's Purchasing Policy, Purchases of goods and services with an estimated cost of $25,000 or more (including tax, installation, and freight), shall be made as the result of a Formal Solicitation process including but not limited to Invitations for Bids, Requests for Proposals, Requests for Qualifications, Requests for Information and any other formal solicitation method that can be completed within a timeframe that allows for the solicitation, evaluation and approval in accordance with this Section. Formal solicitations may be solicited through Purchasing’s web based system or as otherwise directed by the Purchasing Agent. According to Section 3.5 Exceptions to Competitive Solicitation of the County's Purchasing Policy, in certain circumstances competitive solicitations may not be the most cost-effective approach for procurement. The Board of Supervisors, County Executive, or Purchasing may waive requirements for competitive solicitations in accordance with the grounds permitted by law. Key exemption categories are identified in the Purchasing Policy. Exceptions are not intended to circumvent the competitive process and related County policies and does not eliminate the need to ensure purchases are competitively priced and the terms and conditions of the purchase are in the best interests of the County. A written determination of the basis for the exception to competitive solicitation and the reason for the selection of the particular source shall be included in Purchasing’s records. According to the County's suspension and debarment verification process, prior to entering into an applicable contract or subrecipient agreement, department will verify on SAM.gov if an entity is listed as suspended or debarred. Condition: The County did not follow federal procurement and suspension and debarment regulation nor its purchasing policy and suspension and debarment verification procedures. Questioned costs: None Context: During our testing, we noted the following matters related to procurement and suspension and debarment. Assistance Listing Number 21.027 • For one of eleven procurements, there is no written justification, documentary support, nor evidence of approval of the emergency procurement in the procurement file. Assistance Listing Number 93.323 • For one of two procurements, the County did not maintain evidence of the suspension and debarment check before entering into the covered transaction or evidence of the review and approval of the verification check. Cause: Management oversight. Effect: The auditor noted instances of noncompliance. Noncompliance results in procurement transactions for the acquisition of property or services required under a federal award not conducted in a manner providing full and open competition and other general procurement standards, as applicable. Also, noncompliance results in procurement transactions with potentially suspended or debarred entities. Repeat Finding: This audit finding was reported in the prior year in finding 2022-004. Recommendation: We recommend the County design controls to ensure compliance with federal procurement and suspension and debarment regulation and its purchasing policy and suspension and debarment verification procedures. We recommend the County develop standard justification forms with approval of the noncompetitive procurement documented on the forms and the forms maintained in the procurement file. Also, we recommend the County update its purchasing policy to ensure clear, concise, and detailed suspension and debarment verification procedures. Views of responsible officials: There is no disagreement from responsible officials

Criteria or specific requirement: According to § 200.302 Financial management of 2 CFR Part 200, the non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Further, the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements. According to § 200.303 Internal controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The County did not have sufficient controls in place to ensure that the required reports were submitted. Questioned costs: None Context: During our testing, we noted that the quarterly reported SF-425 reports were not submitted. Cause: Management oversight. Effect: The auditor noted that the required forms were not submitted. Repeat Finding: This audit finding was reported in the prior year in finding 2022-005. Recommendation: We recommend the County design controls to ensure compliance with federal reporting requirements to ensure that the submitted reports are complete and accurate. Views of responsible officials: There is no disagreement from responsible officials.

2022 ? 003 Allowable Activities and Costs - Payroll Disbursements Federal Agency: U.S. Department of Treasury Centers for Disease Control and Prevention U.S. Department of Health & Human Services Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Child Support Enforcement Assistance Listing Number: 21.027 93.323 93.563 Federal Award Identification Number and Year: 1505-0271 - 2021 6NU50CK000539-01-08 DHHS-CDC - 2020 Pass-Through Agency: California Department of Public Health Heluna Health California Department of Child Support Services Pass-Through Number(s): COVID-19ELC29 and COVID-19ELC87 0187.3380 21-06 Award Period: May 26, 2021 - December 31, 2026 May 18, 2020 - November 17, 2022 and January 15, 2021 - July 31, 2023 May 1, 2020 - March 31, 2022 July 1, 2021 - June 30, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: According to the Assistance Listing Description for CSLFRF and ELC, Subpart D, Post Federal; Award Requirements and Subpart E, Cost Principles apply to the assistance listing. According to the LCSA Fiscal and Administrative Policy Manual Revised 2021, costs allowable for reimbursement under the Child Support IV-D award are governed by federal regulations. Title 2, ?200.403, ?200.404, and Title 45, Part 304 provide general guidelines for determining cost allowability. According to ? 200.302 Financial management of 2 CFR Part 200, the financial management system of each nonfederal entity must provide for written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the federal award. According to ? 200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to ? 200.403 Factors affecting allowability of costs of 2 CFR Part 200, except where otherwise authorized by statute, costs must be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the nonfederal entity in order to be allowable under federal awards. According to ? 200.430 Compensation?personal services of 2 CFR Part 200, costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: 1. Is reasonable for the services rendered and conforms to the established written policy of the nonfederal entity consistently applied to both federal and nonfederal activities; 2. Follows an appointment made in accordance with a nonfederal entity's laws and/or rules or written policies and meets the requirements of federal statute, where applicable; and 3. Is determined and supported as provided in paragraph (i) of this section, when applicable. According to ? 200.431 Compensation-fringe benefits of 2 CFR Part 200, except as provided elsewhere in these principles, the costs of fringe benefits are allowable provided that the benefits are reasonable and are required by law, nonfederal entity-employee agreement, or an established policy of the nonfederal entity. Condition: The County does not have written procedures for determining the allowability of costs nor an established written policy for compensation-personal services and fringe benefits. Questioned costs: Unknown Context: During our testing, we noted the County charged various types of salaries and benefits to the grants. The County does not have written procedures for determining the allowability of costs. Specific to compensation-personal services and fringe benefits, there is not an established written policy for us to test that personnel costs charged to grants conform to, follows an appointment in accordance with, and are required by an established policy of the County. Cause: Management oversight. Effect: The auditor noted instances of noncompliance. Noncompliance results in potential unallowable costs charged to grants. Recommendation: We recommend the County establish written procedures for determining the allowability of costs to include a written policy regarding the charging of personnel costs to grants. Views of responsible officials: There is no disagreement from responsible officials.

2022 ? 004 Procurement and Suspension and Debarment Federal Agency: U.S. Department of Treasury Centers for Disease Control and Prevention Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Assistance Listing Number: 21.027 93.323 Federal Award Identification Number and Year: 1505-0271 - 2021 Pass-Through Agency: California Department of Public Health Pass-Through Number(s): COVID-19ELC29 and COVID-19ELC87 Award Period: May 26, 2021 - December 31, 2026 May 18, 2020 - November 17, 2022 and January 15, 2021 - July 31, 2023 Type of Finding: ? Material Weakness in Internal Control over Compliance ? Other Matters Criteria or specific requirement: According to ? 200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. According to ? 200.318 General procurement standards of 2 CFR Part 200, the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. According to ? 200.320 Methods of procurement to be followed of 2 CFR Part 200, when the value of the procurement for property or services under a federal financial assistance award exceeds the SAT, or a lower threshold established by a nonfederal entity, formal procurement methods are required. According to ? 180.300 of Subpart C - Responsibilities of Participants Regarding Transactions Doing Business With Other Persons of 2 CFR Part 180, when you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Criteria or specific requirement (Continued): According to Section 3.4 Formal Solicitations of the County's Purchasing Policy, Purchases of goods and services with an estimated cost of $25,000 or more (including tax, installation, and freight), shall be made as the result of a Formal Solicitation process including but not limited to Invitations for Bids, Requests for Proposals, Requests for Qualifications, Requests for Information and any other formal solicitation method that can be completed within a timeframe that allows for the solicitation, evaluation and approval in accordance with this Section. Formal solicitations may be solicited through Purchasing?s web based system or as otherwise directed by the Purchasing Agent. According to Section 3.5 Exceptions to Competitive Solicitation of the County's Purchasing Policy, in certain circumstances competitive solicitations may not be the most cost-effective approach for procurement. The Board of Supervisors, County Executive, or Purchasing may waive requirements for competitive solicitations in accordance with the grounds permitted by law. Key exemption categories are identified in the Purchasing Policy. Exceptions are not intended to circumvent the competitive process and related County policies and does not eliminate the need to ensure purchases are competitively priced and the terms and conditions of the purchase are in the best interests of the County. A written determination of the basis for the exception to competitive solicitation and the reason for the selection of the particular source shall be included in Purchasing?s records. According to the County's suspension and debarment verification process, prior to entering into an applicable contract or subrecipient agreement, department will verify on SAM.gov if an entity is listed as suspended or debarred. Condition: The County did not follow federal procurement and suspension and debarment regulation nor its purchasing policy and suspension and debarment verification procedures. Questioned costs: Unknown Context: During our testing, we noted the following matters related to procurement and suspension and debarment. Assistance Listing Number 21.027 ? For one of five procurements, the written justification does not contain how the Department knows that there is only one source for the item/service nor the basis upon which the price/cost was determined to be fair and reasonable. Also, no evidence of approval of the sole source procurement in the procurement file. Context (Continued): Assistance Listing Number 21.027 (Continued) ? For three of five procurements, there is no written justification, documentary support, nor evidence of approval of the emergency procurement in the procurement file. ? For two of two procurements, the County did not maintain evidence of the suspension and debarment check before entering into the covered transaction nor evidence of the review and approval of the verification check. ? For one of five procurements, formal procurements are required. However, the County did not use a formal procurement method. Also, no amendment to revise original agreement terms for this contract which reads as a subrecipient relationship rather than a contractor relationship. Assistance Listing Number 93.323 ? For three of five procurements, there is no written justification, documentary support, nor evidence of approval of the sole source procurement in the procurement file. ? For one of five procurements, there is no written justification, documentary support, nor evidence of approval of the emergency procurement in the procurement file. ? For one of five procurements, formal procurements are required. However, the County did not use a formal procurement method rather the County used a personnel recruitment process led by a contracted recruiting firm. ? For five of five procurements, the County did not maintain evidence of the suspension and debarment check before entering into the covered transaction nor evidence of the review and approval of the verification check. Cause: Management oversight. Effect: The auditor noted instances of noncompliance. Noncompliance results in procurement transactions for the acquisition of property or services required under a federal award not conducted in a manner providing full and open competition and other general procurement standards, as applicable. Also, noncompliance results in procurement transactions with potentially suspended or debarred entities. Recommendation: We recommend the County design controls to ensure compliance with federal procurement and suspension and debarment regulation and its purchasing policy and suspension and debarment verification procedures. We recommend the County develop standard justification forms with approval of the noncompetitive procurement documented on the forms and the forms maintained in the procurement file. Also, we recommend the County update its purchasing policy to ensure clear, concise, and detailed suspension and debarment verification procedures. Views of responsible officials: There is no disagreement from responsible officials.

2022 ? 005 Reporting Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 1505-0271 - 2021 Award Period: May 26, 2021 - December 31, 2026 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Other Matters Criteria or specific requirement: According to ? 200.302 Financial management of 2 CFR Part 200, the nonfederal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. Further, the financial management system of each nonfederal entity must provide accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements. According to ? 200.303 Internal controls of 2 CFR Part 200, the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing, it was noted that the County did not have effective internal controls in place to ensure accurate and complete reporting. Questioned costs: None Context: During our testing, we noted the following matters related to reporting. ? For the interim report, no evidence of review and approval of the report. ? For the Project and Expenditure Report 1, total obligations reported of approximately $907,400. However, the documentation used to prepare the report has an obligated amount of approximately $3,600,000. Thus, a variance of approximately $2,700,000. ? For the Project and Expenditure Report 2, total obligations reported of approximately $3,500,000. However, the documentation used to prepare the report has an obligated amount of approximately $2,800,000. Thus, a variance of approximately $711.900. ? For the Project and Expenditure Report 1 and 2, Subaward No: SBC_01 Period of Performance Start of August 13, 2021. However, the professional services contract has a contract start date of July 13, 2021. Cause: Management oversight. Effect: The auditor noted instances of noncompliance. Noncompliance results in inaccurate reporting. Recommendation: We recommend the County design controls to ensure review and approval of reports are maintained in the County's grant files. Also, we recommend the County design controls to ensure reports agree to the documentation used to prepare them. Views of responsible officials: There is no disagreement from responsible officials.

2019 ? 001 Federal agency: U.S. Department of Health and Human Services Federal program title: Medical Assistance Program CFDA Number: 93.778 Pass-Through Agency: California Department of Health Care Services Award Period: July 1, 2018 ? June 30, 2019 Type of Finding: ? Material Weakness in Internal Control over Compliance ? Other Noncompliance Criteria or specific requirement: The compliance supplement notes in section E part 1 that the agency is required to determine client eligibility in accordance with eligibility requirements defined in the approved State plan. Annual redeterminations are required as part of these eligibility requirements. Condition: During eligibility compliance testing, 2 of 40 case files selected did not document a current eligibility determination during the fiscal year and appear to be overdue without suspension of benefits. Questioned costs: None noted. Context: We randomly selected 40 casefiles to test eligibility compliance for Medical Assistance program. Sampling was a statistically valid sample. We noted 2 of the 40 casefiles were not in compliance as cases did not have current renewals performed or were performed well past the annual due date. Cause: The cause of the noted finding is related to the renewal backlog in the department. Effect: Participants in the program who are not having eligibility renewals completed could be receiving benefits that they may no longer be eligible for. Repeat Finding: A repeat finding from prior year. Recommendation: CLA recommends that the County establish a plan to perform redeterminations on casefiles with due and overdue redeterminations to reduce backlog and become current with renewals. Corrective Action: The Department recognizes the importance of processing redeterminations in a timely manner. During FY 18/19, the Department reduced the Medi-Cal renewal backlog by 45% utilizing tools put into practice during the fiscal year. We have enlisted other departments, including Adult Services and Child Welfare Services, to assist in processing backlogs and setting up telephone appointments. These efficiencies and extra workers assigned to the process have helped us continue to decrease the redetermination case backlog. Furthermore, the backlog caseload is monitored weekly by management. The Department Head is committed to having the backlogs cleared by the end of next fiscal year and is providing the resources to make this achievable.

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