County of San JoaquinLocal Government

2025-003-Suspension and Disbarment Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 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. Condition: The County did not follow suspension and debarment regulation and suspension and debarment verification procedures. Questioned Costs: None Context: We selected a sample of 7 items as part of our testing over Suspension and Disbarment. Of the 7 items selected, the County was unable to provide proof of suspension and disbarment checks for 6 of the items. Cause: The County has policies that require that the departments verify vendors through Sam.gov prior to entering transactions. However, the policy does not include documentation of these checks. Effect: Without checking debarment before engaging in services, the County could have entered into an agreement with a vendor that was disbarred from receiving federal funding. Repeat Finding: Yes Recommendation: We recommend that the County should implement procedures to ensure that federal guidance is followed relating to suspension and disbarment and providing training on these procedures, which should include maintaining documentation of the review performed by the County. View of Responsible Officials: There is no disagreement with the audit finding.

2025-004-Subrecipient Monitoring Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria: Per 2 CFR sections 200.332(d) through (f), a pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves the performance goals. Per 2 CFR section 200.502(a), the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs which is generally expenditure/expense transactions associated with awards. Condition: During our testing over subrecipient monitoring, the County was unable to provide subrecipient monitoring support. Questioned Costs: None Context: We selected a sample of 7 subrecipients as part of our testing over Subrecipient Monitoring. Of the 7 subrecipients selected, the County was unable to provide adequate support for the subrecipients selected. Cause: The County has policies that require departments to conduct subrecipient monitoring to ensure compliance with grant requirements. However, the policy does not include documentation of these monitoring activities, such as site visits, financial reviews, or performance evaluations. This lack of documentation results in an inability to verify that subrecipient monitoring is being performed effectively and consistently. Effect: Without proper oversight, subrecipients may fail to achieve program goals and objectives, leading to poor performance and outcomes for the funded programs. Repeat Finding: Yes Recommendation: We recommend that the County implement procedures to ensure that federal guidance is followed related to subrecipient monitoring and provide training on these procedures, including maintaining documentation of the review performed by the County. View of Responsible Officials: There is no disagreement with the audit finding.

2025-005-Suspension and Disbarment Federal Agency: U.S. Department of Agriculture Federal Program Name: Supplemental Nutrition Assistance Program (SNAP) Assistance Listing Number: 10.561 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 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. Condition: The County did not follow suspension and debarment regulation and suspension and debarment verification procedures. Questioned Costs: None Context: We selected a sample of 8 items as part of our testing over Suspension and Disbarment. Of the 8 items selected, the County was unable to provide proof of suspension and disbarment checks for 6 of the items. Cause: The County has policies that require that the departments verify vendors through Sam.gov prior to entering transactions. However, the policy does not include documentation of these checks. Effect: Without checking debarment before engaging in services, the County could have entered into an agreement with a vendor that was disbarred from receiving federal funding. Repeat Finding: No Recommendation: We recommend that the County should implement procedures to ensure that federal guidance is followed relating to suspension and disbarment and providing training on these procedures, which should include maintaining documentation of the review performed by the County. View of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 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. Condition: The County did not follow suspension and debarment regulation and suspension and debarment verification procedures. Questioned Costs: None Context: We selected 8 samples as part of our testing over Suspension and Disbarment. Of the 8 samples selected, the County was unable to provide proof of suspension and disbarment checks. Cause: The County has policies that require that the departments verify vendors through Sam.gov prior to entering transactions. However, the policy does not include documentation of these checks. Effect: Without checking debarment before engaging in services, the County could have entered into an agreement with a vendor that was disbarred from receiving federal funding. Repeat Finding: No Recommendation: We recommend that the County should implement procedures to ensure that federal guidance is followed relating to suspension and disbarment and to provide training on these procedures, which should include maintaining documentation of the review performed by the County. View of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance (Modified Opinion) Criteria: Per 2 CFR sections 200.332(d) through (f), a pass-through entity must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves the performance goals. Per 2 CFR section 200.502(a), the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs which is generally expenditure/expense transactions associated with awards. Condition: During our testing over subrecipient monitoring, the County was unable to provide subrecipient monitoring support. Questioned Costs: None Context: We selected 8 samples as part of our testing over Subrecipient Monitoring. Of the 8 samples selected, the County was unable to provide adequate support for the subrecipients selected. Cause: The County has policies that require departments to conduct subrecipient monitoring to ensure compliance with grant requirements. However, the policy does not include documentation of these monitoring activities, such as site visits, financial reviews, or performance evaluations. This lack of documentation results in an inability to verify that subrecipient monitoring is being performed effectively and consistently. Effect: Without proper oversight, subrecipients may fail to achieve program goals and objectives, leading to poor performance and outcomes for the funded programs. Repeat Finding: No Recommendation: We recommend that the County implement procedures to ensure that federal guidance is followed related to subrecipient monitoring and provide trainings on these procedures, including maintaining documentation of the review performed by the County. View of Responsible Officials: There is no disagreement with the audit finding.

Program: Adoption Assistance Federal Financial Assistance Listing No.: 93.659 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Social Services Award Year: 2021-2022 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Eligibility Grant Award Number: Applies to all awards with findings and no specific grant award. Type of Finding: Material Noncompliance, Material Weakness in Internal Control over Compliance Criteria: The 2022 OMB Compliance Supplement requires that the County determine eligibility in accordance with the specific eligibility requirements defined in the approved State plan. These requirements include the maintenance of documentation necessary to support eligibility determinations and re-determinations. The Adoption Assistance Program (AAP) provides benefits to adoptive parents to enable them to meet the needs of AAP-eligible children who are available for adoption. The AAP benefit is a negotiated amount based on the needs of the child and the circumstances of the family determined through discussion between the responsible public agency and the adoptive parents. The maximum AAP benefit for which a child may qualify is based on what the child would have received in a licensed foster family home if he or she had remained in foster care. Condition Found: As a result of our audit procedures, we noted the following: ? 12 case files where the eligibility redetermination documents including the AAP3 form were sent out; however, were not signed by the adoptive parent and/or the eligibility worker as necessary and returned. ? 2 case files where the necessary documents for either a criminal registry check or child abuse registry check, having been performed prior to the placement, were missing. Cause: The condition is caused by the County not following its policies and procedures to ensure the eligibility case files contain documentation to support eligibility. Effect: Case data may not accurately reflect the eligibility status of Adoption Assistance recipients; thus, increasing the risk of noncompliance with the requirements of the State plan. Questioned Costs: We noted known questioned costs of $18,059. Context/Sampling: A nonstatistical sample of 60 case files out of 1,871 case files were selected totaling $67,921 out of $14,706,670 of federal program expenditures. Repeat Finding from Prior Year(s): Yes, prior year finding 2021-005. Recommendation: We recommend that County implement policies and procedures to ensure that documentation required to support eligibility is properly maintained in the files. We also recommend that County ensure eligibility files include all required documentation to support the federal eligibility determination. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: Medicaid Cluster Federal Financial Assistance Listing No.: 93.778 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Health Care Services Award Year: 2021-2022 Compliance Requirement: Eligibility Grant Award Number: In-Home Supportive Services (IHSS) Type of Finding: Material Noncompliance, Material Weakness in Internal Control over Compliance Criteria: Per the 2022 OMB Compliance Supplement, agencies are required to maintain documentation to support the agency?s eligibility determination, and to redetermine eligibility at least every 12 months to determine if individuals continue to be eligible in accordance with the compliance requirements of the program. Condition Found: Of the 60 case files sampled, In-Home Supportive Services (IHSS), we noted 44 cases where the recipient eligibility redetermination was missing from the files, not performed timely, and exceeded the 12-month requirement. Cause: The County did not ensure that the eligibility redeterminations were performed on a timely basis and that the eligibility case files contained documentation to support eligibility. Effect: Lack of timely eligibility redeterminations and proper support documentation in the case file was missing resulted in noncompliance with the requirements of the federal program. Questioned Costs: None reported. Context/Sampling: Medicaid Cluster ? In-Home Supportive Services (IHSS)- A nonstatistical sample of 60 case files out of 5,056 case files were selected for eligibility testing. Repeat Finding from Prior Year(s): Yes, prior year finding 2021-006. Recommendation: We recommend that County implement policies and procedures to ensure eligibility redeterminations are performed on a timely basis and that proper documentations be retained and maintained in case files. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases, (ELC) Federal Financial Assistance Listing No.: 93.323 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award Year: 2021-2022 Compliance Requirement: Procurement and Suspension and Debarment Grant Award Number: COVID-19 ELC39 and COVID-19 ELC97 Type of Finding: Material Noncompliance, Material Weakness in Internal Control over Compliance Criteria: Procurement: Per 2 CFR part 200, subpart D, section 200.303, 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 is compliance with federal statues, regulations, and the terms and conditions of the federal award. Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-federal entity must: ? Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. ? Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. ? Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements [Davis-Bacon Act]). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). ? For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). ? Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(b)). ? Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR Part 200, ?Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.? Suspension and Debarment: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, 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. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov/Home, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition Found: As a result of our audit procedures, we noted the following: Procurement: ? 4 out of 8 transactions tested did not have documentation that full and open competition, price analysis, or rationale to limit competition in those cases where competition was limited. ? 2 out of 8 transactions tested did not have documentation of the rationale for the method of procurement, selection of contract type, basis for contractor selection and the basis for the contract price in accordance with the Uniform Guidance, section 318(i) and 48 CFR part 44 and section 52.244-2. ? 8 out of 8 did not include the applicable provisions required by Appendix II to 2 CFR Part 200. Suspension and Debarment: ? 6 out of 8 covered transactions tested did not have evidence that management checked for suspension and debarment during the scope of this audit; by management either not verifying the SAM?s.gov website, not obtaining a certification, or not adding a clause or condition to the covered transaction. Cause: Not following the County?s own official policies and procedures over procurement and suspension and debarment. Effect: Not following the County?s procurement policies and procedures that are in place and required by the Uniform Guidance resulted in noncompliance with the requirements of the program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 8 vendor contracts from a population of 38 were tested totaling $1,670,639 out of $9,5334,251 of federal program expenditures. Repeat Finding from Prior Year(s): Yes, prior year finding 2021-009. Recommendation: We recommend that the County enforce its official policies and procedures over procurement and suspension and debarment. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds, (CSLFRF) Federal Financial Assistance Listing No.: 21.027 Federal Agency: U.S. Department of the Treasury Pass-through: N/A Award Year: 2021-2022 Compliance Requirement: Procurement and Suspension and Debarment Grant Award Number: Applies to all awards with findings and no specific grant award Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Suspension and Debarment: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, 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. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov/Home, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition Found: As a result of our audit procedures, we noted the following: Suspension and Debarment: ? 7 out of 7 covered transactions tested did not have evidence that management checked for suspension and debarment; management did not verify the entity?s status via the SAM?s.gov website, did not obtain a certification, or did not add a clause or condition to the covered transaction. Cause: Not following the County?s own official policies and procedures over procurement and suspension and debarment. Not documenting that suspension and debarment was checked and/or not documenting with a date/time stamp that suspension and debarment was checked within the scope of this audit. Effect: Not following the County?s procurement policies and procedures that are in place and required by the Uniform Guidance resulted in noncompliance with the requirements of the program. Questioned Costs: None reported. Context/Sampling: The population was 7 covered transactions for CSLFRF. All 7 covered transactions had a lack of evidence that suspension and debarment had been checked within the scope of this audit through one of the three acceptable verification methods; (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov/Home, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the County enforce its official policies and procedures over procurement and suspension and debarment. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds, (CSLFRF) Federal Financial Assistance Listing No.: 21.027 Federal Agency: U.S. Department of the Treasury Pass-through: N/A Award Year: 2021-2022 Compliance Requirement: Reporting Grant Award Number: N/A Type of Finding: Material Weakness in Internal Control over Compliance Criteria: The Uniform Guidance, Section 200.303 Internal Controls, requires the non-Federal entity must establish and maintain effective internal controls over Federal awards that provide reasonable assurance that awards are being managed in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition Found: As a result of our audit, we noted there was a lack of documentation or evidence of a formal review and approval process for the reporting and tracking of expenditures claimed on the County?s special reports by an individual other than the preparer. Cause: The County did not have internal controls in place to ensure a formal review and approval process was documented for the tracking of expenditures claimed on the special reports by someone other than the preparer. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: The population was 5 special reports for CSLFRF. All 5 reports had a lack of evidence of a formal review by someone other than the preparer. The special reports included a Recovery Plan Performance Report, an interim report, and 3 quarterly CSLFRF special compliance reports. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the County enhance internal control policies to ensure that formal documentation of review and approval of federal reporting is obtained and retained. View of responsible official and planned corrective action: Management agrees. See separate corrective action plan.

Program: Community Development Block Grants (CDBG)/Entitlement Grants Cluster Federal Financial Assistance Listing No.: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2021-2022 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Grant Award Number: All Type of Finding: Material Weakness in Internal Control over Compliance Criteria: The Uniform Guidance, Section 200.303 Internal Controls, requires the non-Federal entity must establish and maintain effective internal controls over Federal awards that provide reasonable assurance that awards are being managed in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition Found: As a result of our audit, we noted there was a lack of evidence of a formal review and approval process of federal expenditures that the County claimed for the program by an individual outside of the preparer. Cause: The County did not have internal controls in place to ensure a formal review and approval process was documented for the federal program expenditures claimed by someone other than the preparer. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: A non-statistical sample of 60 expenditure transactions were selected for testing out of population of 405 non-payroll expenditure transactions and 260 payroll transactions. Of the 60, 50 transactions tested were non-payroll related. Of the 50 non-payroll transactions tested, 7 transactions totaling $252,594 had exceptions noted for having no evidence of a formal review by management. Total program expenditures were $3,992,519. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend the County implement policies and procedures to ensure all program expenditure transactions are properly reviewed and approved. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: Community Development Block Grants (CDBG)/Entitlement Grants Cluster Federal Financial Assistance Listing No.: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2021-2022 Compliance Requirement: Reporting Grant Award Number: All Type of Finding: Instances of Noncompliance, Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients of certain Federal awards to report subaward information by the end of the month following the month in which the prime awardee obligates a subaward equal to or greater than $30,000. Condition Found: As a result of our audit procedures, we noted that 3 out of 5 first tier sub-awards tested were not reported in the FFATA Subaward Reporting System (FSRS), totaling $966,768 in exceptions noted to sub-awardees. Cause: The County did not have internal controls to ensure sub-award information was submitted in accordance with FFATA. In addition, the County did not have proper segregation of duties over the preparation and review of program related performance reports. Effect: The lack of adequate policies governing report preparation and submission resulted in FFATA special reports not being filed as required by the program. Questioned Costs: None reported. Context/Sampling: For the FFATA reports, a nonstatistical sample of 5 subawards out of 30 sub-awards were tested. Exceptions were taken for 3 out of the 5 subawards for not having been submitted in accordance with FFATA. The quantity and subaward obligation errors were noted as follows: Subawards Obligations Total Tested 5 $2,268,972 Not Reported 2 $888,941 Not Timely 3 $966,768 Obligation Incorrect 2 $888,941 Missing Key Elements 2 $888,941 Repeat Finding from Prior Year(s): Yes, prior year finding 2021-012. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s special FFATA reporting requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: Airport Improvement Program Federal Financial Assistance Listing No.: 20.106 Federal Agency: U.S. Department of Transportation Pass-through: N/A Award Year: 2021-2022 Compliance Requirement: Special Tests & Provisions ? Wage Rate Requirements Grant Award Number: Applies to all awards with findings and no specific grant award Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance Criteria: In accordance with the 2022 OMB Compliance Supplement, all laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Condition Found: As a result of our audit procedures, we noted 13 out of 60 certified payroll reports selected for testing were not submitted timely (weekly). The total population subject to this requirement was 359 certified payroll reports. Cause: The condition is caused by the County not having policies and procedures in place to comply with the wage rate requirements. Effect: The County does not have an effective internal control in place to ensure contractors and subcontractors are submitting certified payroll reports on a timely basis; thus, increasing the risk of the County?s noncompliance with the special test and provision wage rate requirements. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 certified payroll reports were selected from a population of 359. Of the 60 certified payroll reports tested, a total of 13 were not submitted timely (weekly). Repeat Finding from Prior Year(s): Yes, prior year finding 2021-014. Recommendation: We recommend that Airport implement policies and procedures to review certified payroll reports submitted by contractors and subcontractors to ensure they are prepared properly and submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Program: COVID-19 ? Emergency Rental Assistance Program, (ERAP) Federal Financial Assistance Listing No.: 21.023 Federal Agency: U.S. Department of the Treasury Pass-through: N/A Award Year: 2021-2022 Compliance Requirement: Reporting Grant Award Number: All Type of Finding: Instance of Noncompliance, Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients of certain Federal awards to report subaward information by the end of the month following the month in which the prime awardee obligates a subaward equal to or greater than $30,000. Condition Found: As a result of our audit procedures, we noted that one first tier sub-awardee tested was not reported in the FFATA Subaward Reporting System (FSRS), totaling $1,312,036 in exceptions noted to sub-awardees. Cause: The County did not have internal controls to ensure sub-award information was submitted in accordance with FFATA. Effect: The lack of adequate policies governing report preparation and submission resulted in FFATA special reports not being filed as required by the program. Questioned Costs: None reported. Context/Sampling: For the FFATA reports, there was one applicable subaward in the amount of $1,312,036. Therefore, that one sub-award was tested. Exception was noted, because the subaward was not submitted to FFATA. Repeat Finding from Prior Year(s): No. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s special FFATA reporting requirement. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-005 Program: Adoption Assistance Federal Financial Assistance Listing No.: 93.659 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Social Services Award Year: 2020-2021 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Eligibility Grant Award Number: N/A Type of Finding: Material Instance of Noncompliance and Material Weakness in Internal Control over Compliance Criteria: The 2021 OMB Compliance Supplement requires that the County determine eligibility in accordance with the specific eligibility requirements defined in the approved State plan. These requirements include the maintenance of documentation necessary to support eligibility determinations and re-determinations. The Adoption Assistance Program (AAP) provides benefits to adoptive parents to enable them to meet the needs of AAP-eligible children who are available for adoption. The AAP benefit is a negotiated amount based on the needs of the child and the circumstances of the family determined through discussion between the responsible public agency and the adoptive parents. The maximum AAP benefit for which a child may qualify is based on what the child would have received in a licensed foster family home if he or she had remained in foster care. Condition Found: As a result of our audit procedures, we noted the following: ? 2 case files were missing the AAP1 form, and thus the County could not document if the child was determined to be a child with special needs by the eligibility worker. ? 1 case file was missing the AAP4 form and thus the County could not document if the child was determined to eligible for the program, not to be returned to the home of their parent, or if the County made reasonable efforts to place the child without a subsidy or that the child meets the exception of significant emotional ties with adoptive parents while in Foster Care. ? 3 case files where the AD4320 were not signed prior to the adoption decree. ? 9 case files were missing FC8 form and eligibility workers approval, and thus the County could not document if the child was determined to eligible for the program. ? 6 case files were missing the FC10 form. ? 1 case file where the AAP4 form did not evidence that the child is either in the care of public or private agency by voluntary placement or judicial determination, meets the requirements of SSI, residing with a minor parent. ? 3 case files were missing documentation of the Criminal Registry Check and the Child Abuse Registry Check being performed prior to the placement and that no prohibited felonies were listed. ? 17 case files where the eligibility determination documents including the AAP1, AAP2, AAP3, AAP4, AD4320, FC8 and FC10 were not signed by the adoptive parent and/or the eligibility worker as necessary. Cause: The condition is caused by the County not following its policies and procedures to ensure the eligibility case files contain documentation to support eligibility. Effect: Case data may not accurately reflect the eligibility status of Adoption Assistance recipients; thus, increasing the risk of noncompliance with the requirements of the State plan. Questioned Costs: We noted known questioned costs of $97,274. Context/Sampling: A nonstatistical sample of 60 case files out of 1,888 case files were selected totaling $160,288 out of $14,496,049 of federal program expenditures. Repeat Finding from Prior Year(s): Yes, prior year finding 2020-014. Recommendation: We recommend that County implement policies and procedures to ensure that documentation required to support eligibility is properly maintained in the files. We also recommend that County ensure eligibility files include all required documentation to support the federal eligibility determination. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-006 Program: Medicaid Cluster ? In-Home Supportive Services (IHSS) Federal Financial Assistance Listing No.: 93.778 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Health Care Services Award Year: 2020-2021 Compliance Requirement: Eligibility Grant Award Number: N/A Type of Finding: Material Instance of Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Per the 2021 OMB Compliance Supplement, agencies are required to maintain documentation to support the agency?s eligibility determination, and to redetermine eligibility at least every 12 months to determine if individuals continue to be eligible in accordance with the compliance requirements of the program. In addition, the State of California Department of Social Services (CDSS) regulations also state that County?s social services staff are to have a face-to-face contact at least once every 12 months, except as provided in MPP section 30-761.215 through 30-761.217, to adequately determine that the recipient continues to reside safely in their home with the IHSS services provided (MPP Section 30-761.13). Condition Found: Of the 60 case files sampled, In-Home Supportive Services (IHSS), we noted 30 cases where the recipient eligibility redetermination was not performed timely and exceeded the 12-month requirement. Cause: The County did not ensure that the eligibility redeterminations were performed on a timely basis and that the eligibility case files contained documentation to support eligibility. Effect: Lack of timely eligibility redeterminations and proper support documentation in case file resulted in noncompliance with the requirements of the federal program. Questioned Costs: None reported. Context/Sampling: Medicaid Cluster ? In-Home Supportive Services (IHSS)- A nonstatistical sample of 60 case files out of 8,506 case files were selected for eligibility testing. Repeat Finding from Prior Year(s): Yes, prior year finding 2020-013. Recommendation: We recommend that County implement policies and procedures to ensure eligibility redeterminations are performed on a timely basis and that proper documentations are maintained in case files. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-007 Program: Medicaid Cluster Federal Financial Assistance Listing No.: 93.778 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Health Care Services Award Year: 2020-2021 Compliance Requirement: Reporting Grant Award Number: N/A Type of Finding: Instance of Noncompliance and Significant Deficiency in Internal Control over Compliance Criteria: Per the 2021 OMB Compliance Supplement and criteria contained in the State of California Children?s Medical Services Plan and Fiscal Guidelines, the County is required to submit a CCS Quarterly Administrative Expenditure Invoice on a quarterly basis, and within 60 days after the end of the quarter. Condition Found: As a result of our audit procedures, we noted that one of four quarterly CCS Administrative Expenditure invoices submitted to the State used time study data from the previous quarter. The third quarter invoices used the second quarter?s time study data to generate the non-enhanced percentage and enhanced percentage on the report. It is also noted the report was not properly reviewed and approved prior to submittal. Cause: The incorrect quarterly time study was used; furthermore, the report was not properly reviewed and approved prior to submittal. Effect: One out of the four quarterly CCS administrative expenditure invoice reports was improperly completed. Questioned Costs: None reported. Context/Sampling: All four quarterly administrative expenditure invoice reports were tested. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that County implement policies and procedures to ensure the correct quarterly time studies are used for the quarterly CCS administrative expenditure invoice and that the report is properly reviewed and approved prior to submittal. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-008 Program: COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases, (ELC) Federal Financial Assistance Listing No.: 93.323 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award Year: 2020-2021 Compliance Requirement: Cash Management Grant Award Number: COVID-19 ELC39 and COVID-19 ELC97 Type of Finding: Material Instance of Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR 200.302(b)(6), non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 ? Federal payment. Specifically, non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity (State) and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition Found: We noted during the year ended June 30, 2021, the County was awarded a total of $40,055,203 through the COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases Program (ELC). Under the terms of the grant award, the County received advance funding of $1,885,162 and $8,170,697 through two separate grant awards, award number COVID-19ELC39 and award number COVID-19ELC97, respectively. The advance funding represented 25% of each grant award. As a result of our audit procedures over cash management, we noted the County did not minimize the time elapsing between the transfer of funds from the State of California (State) and the disbursement for qualifying expenditures. We noted 18 out of a sample of 99 transactions where the County incurred expenditures and applied the expenditures to the COVID-19ELC39 and the COVID-19ELC97 advance grant funding beyond a reasonable period of time; in some instances, between 3 months to 6 months after the receipt of the advanced funds. Thus, the County did not expend the funds in a timely manner to reduce the time elapsed between the advance receipt of the grant funds and the expenditure of the funds incurred expenditures. County has not established written procedures to implement the cash management requirements of 2 CFR 200.305 (Payment) for the ELC program. As a result, we noted the County did not have controls in place to minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. Cause: The County also did not have controls in place to minimize the time elapsing between the transfer of funds from the State and the disbursement of funds. The County also did not ensure the required written procedures were developed and implemented in accordance with Uniform Guidance. Effect: The County received advance funding of $1,885,162 and $8,170,697 through two separate grant awards, award number COVID-19ELC39 and award number COVID-19ELC97, respectively. Expenditures applied to the advance funding were between 3 months to 6 months after the receipt of the advanced funds. The County did not have written procedures over cash management as required by Uniform Guidance, thus increasing the risk of noncompliance with the requirements of the program. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 99 expenditures were selected totaling $2,041,082 out of $5,206,511 of federal program expenditures. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the County implement written policies and procedures to comply with the requirements of CFR 200.302(b)(6). Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-009 Program: COVID-19 ? Epidemiology and Laboratory Capacity for Infectious Diseases, (ELC) Federal Financial Assistance Listing No.: 93.323 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award Year: 2020-2021 Compliance Requirement: Procurement and Suspension and Debarment Grant Award Number: COVID-19 ELC39 and COVID-19 ELC97 Type of Finding: Material Instance of Noncompliance and Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR part 200, subpart D, section 200.303, 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 is compliance with federal statues, regulations, and the terms and conditions of the federal award. Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. A non-federal entity must: ? Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors? performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. ? Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. ? Use the micro-purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro-purchase method, the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements [Davis-Bacon Act]). Small purchase procedures are used for purchases that exceed the micro-purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable (2 CFR section 200.320(a)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR section 200.320(b)). ? For acquisitions exceeding the simplified acquisition threshold, the non-federal entity must use one of the following procurement methods: the sealed bid method if the acquisition meets the criteria in 2 CFR section 200.320(b); the competitive proposals method under the conditions specified in 2 CFR section 200.320((b) (2); or the noncompetitive proposals method (i.e., solicit a proposal from only one source) but only when one or more of four circumstances are met, in accordance with 2 CFR section 200.320(c)). ? Perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold, including contract modifications (2 CFR section 200.323(a)). The cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used (2 CFR section 200.323(b)). ? Ensure that every purchase order or other contract includes applicable provisions required by 2 CFR section 200.326. These provisions are described in Appendix II to 2 CFR Part 200, ?Contract Provisions for Non-Federal Entity Contracts Under Federal Awards.? Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-federal entity enters into a covered transaction with an entity at a lower tier, 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. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.beta.sam.gov/ (click on Search Record, then click on Advanced Search-Exclusions) (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition Found: As a result of our audit procedures, we noted the following: ? 6 out of 8 transactions tested did not have documentation of the history of the procurement, selection of contract type, basis for contractor selection, the basis for the contract price, provide for full and open competition, price analysis, rationale to limit competition in those cases where competition was limited, and did not include the applicable provisions required by Appendix II to 2 CFR Part 200. ? 8 out of 8 transactions tested did not have documentation of the rationale for the method of procurement. ? 6 out of 8 transactions tested did not have evidence that management performed a verification of tested covered transactions by checking the EPLS and management did not obtain a certification or added a clause or condition to the covered transaction. Cause: Not following the County?s own official policies and procedures over procurement and suspension and debarment. Effect: Not following the County?s procurement policies and procedures that are in place and required by the Uniform Guidance resulted in noncompliance with the requirements of the program. Questioned Costs: We noted known questioned costs of $1,787,379. Context/Sampling: A nonstatistical sample of 8 vendor contracts from a population of 24 were tested totaling $1,787,379 out of $5,206,511 of federal program expenditures. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the County enforce its official policies and procedures over procurement and suspension and debarment. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-010 Program: COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Financial Assistance Listing No.: 93.498 Federal Agency: U.S. Department of Health and Human Services Pass-through: N/A Award Year: 2020-2021 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Grant Award Number or Identifying Number: TIN #946000531 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition Found: As a result of our audit, we noted there was a lack of evidence of formal review and approval over tracking of federal expenditures that were claimed for the program by the San Joaquin General Hospital (Hospital). In addition, evidence that the Hospital?s Period 1 Department of Health and Human Services special report was reviewed and approved by an individual outside of the preparer was not documented. Cause: The Hospital did not have internal controls in place to ensure the review and approval of the tracking of expenditures claimed or the Period 1 Department of Health and Human Services special report was documented. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 1 Period 1 Department of Health and Human Services special report was selected from a population of 1. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the Hospital enhance internal control policies to ensure that formal documentation of review and approval of federal reporting is obtained and retained. View of responsible official and planned corrective action: Management agrees. See separate corrective action plan.

2021-011 Program: COVID-19 ? Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Financial Assistance Listing No.: 93.498 Federal Agency: U.S. Department of Health and Human Services Pass-through: N/A Award Year: 2020-2021 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Grant Award Number or Identifying Number: TIN #946000531 Type of Findings: Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Material Weakness in Internal Control Over Compliance; Reporting - Material Instance of Noncompliance and Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition Found: The San Joaquin General Hospital (Hospital) claimed lost revenues on the Period 1 Department of Health and Human Services special report that were incorrectly calculated or not supported. These were improperly included within the report and caused the report to be inaccurate. Cause: There was turnover of key financial personnel during 2021. The Hospital was unable to prepare and facilitate a timely preparation of the financial statements which led to a delayed audit and use of unaudited amounts to be submitted. The Hospital?s lost revenue calculation did not reflect the effects of organizational changes from the separation of the Federally Qualify Health Clinics in 2019, prior period adjustments, and audit adjustments made to net patient service revenue for the year?s ended June 30, 2019; June 30, 2020; and June 30, 2021. The Hospital submitted their Period 1 Department of Health and Human Services special report in November 2021. The audit for fiscal year 2021 was completed after the Period 1 Department of Health and Human Services special report was submitted; thus the report did not include the effects of the audit. Effect: The lack of adequate policies governing report preparation and submission increases the risk that the report could be filed incorrectly. The lost revenue reported within the special report submitted to the Department of Health and Human Services for fiscal year 2020 was $27,136,998 and $0 for fiscal year 2021. Had the Hospital entered the 2019, 2020, and 2021 net patient service revenues correctly, the lost revenue would have been $18,498,778 for fiscal year 2020 and $12,045,856 for fiscal year 2021. The corrected lost revenue calculation exceeded funds received (lost revenue of $30,544,634 compared to amounts received of $8,485,207). Questioned Costs: None reported. Context/Sampling: The lost revenue calculation for all applicable quarters was tested. Key line items were tested on the Period 1 Department of Health and Human Services special reports. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the Hospital enhance internal control policies to ensure that financial preparation and audit fieldwork can commence timely and that the special report is reviewed and approved prior to payment to ensure that all key line items are necessary, correct, meet the requirements of the federal program, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-012 Program: Community Development Block Grants (CDBG)/Entitlement Grants Cluster Federal Financial Assistance Listing No.: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2020-2021 Compliance Requirement: Reporting Grant Award Number: All Type of Finding: Material Instance of Noncompliance and Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. The Federal Funding Accountability and Transparency Act (FFATA) requires direct recipients of certain Federal awards to report subaward information by the end of the month following the month in which the prime awardee obligates a subaward equal to or greater than $30,000. Condition Found: As a result of our audit procedures, we noted the following: ? 4 out of 4 first tier sub-awards tested were not reported in the FFATA Subaward Reporting System (FSRS). ? 1 out of 1 Section 3 report tested did not have evidence of management review and approval prior to submission. ? We also noted a lack of segregation of duties in the preparation and review of the annual Section 3 performance report. Cause: The County did not have internal controls to ensure sub-award information was submitted in accordance with FFATA. In addition, the County did not have proper segregation of duties over the preparation and review of program related performance reports. Effect: The lack of adequate policies governing report preparation and submission resulted in FFATA special reports not being filed as required by the program. The lack of segregation of duties related to the annual Section 3 report filing and the lack of management review of expenditure reports related to reimbursement requests increases the risk of noncompliance with the program. Questioned Costs: None reported. Context/ Sampling: For the FFATA reports, a nonstatistical sample of 4 sub-awards out of 10 sub-awards were tested. The quantity and subaward obligation errors were noted as follows: Subawards Obligations Total Tested 4 $1,689,117 Not Reported 4 $1,689,117 Not Timely 4 $1,689,117 Obligation Incorrect 4 $1,689,117 Missing Key Elements 4 $1,689,117 In addition, we audited 1 annual Section 3 report. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s special FFATA reporting requirement. We also recommend separation of duties between report preparers and reviewers. Finally, we recommend that evidence be documented and retained proving that management properly reviewed expenditure reports related to program reimbursement requests. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-013 Program: Community Development Block Grants (CDBG)/Entitlement Grants Cluster Federal Financial Assistance Listing No.: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2020-2021 Compliance Requirement: Program Income Grant Award Number: All Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Uniform Guidance, Section 200.303 Internal Controls, requires the non-Federal entity must establish and maintain effective internal controls over Federal awards that provide reasonable assurance that awards are being managed in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition Found: During our testing of program income transactions, we noted 1 out of 18 transactions did not have evidence of review and approval. Cause: The County?s internal controls over compliance are not properly designed to ensure program income transactions are reviewed and approved prior to deposit. Effect: Failure to document the review and approval of program income deposits may result in misuse or errors with recording of program income. Questioned Costs: None reported. Context/Sampling: A non-statistical sample of 18 transactions were selected for testing, totaling $255,299 out of $384,370 of federal program income. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend the County implement policies and procedures to ensure all program income transactions and properly reviewed and approved. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2021-014 Program: Airport Improvement Program Federal Financial Assistance Listing No.: 20.106 Federal Agency: U.S. Department of Transportation Pass-through: N/A Award Year: 2020-2021 Compliance Requirement: Special Tests & Provisions ? Wage Rate Requirements Grant Award Number: Various Type of Finding: Material Instance of Noncompliance and Material Weakness in Internal Control over Compliance Criteria: In accordance with the 2021 OMB Compliance Supplement, all laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147). Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); (2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Condition Found: As a result of our audit procedures, we noted certified payroll reports for 19 out of 41 contracts selected for testing were not submitted timely (weekly), ranging from 19 to 195 days past the required due date. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 41 certified payroll reports were selected from a population of 197. Repeat Finding from Prior Year(s): Yes, prior year finding 2020-016. Effect: The County does not have an effective internal control in place to ensure contractors and subcontractors are submitting certified payroll reports on a timely basis; thus, increasing the risk of the County?s noncompliance with the special test and provision wage rate requirements. Cause: The condition is caused by the County not having policies and procedures in place to comply with the wage rate requirements. Recommendation: We recommend that Airport implement policies and procedures to review certified payroll reports submitted by contractors and subcontractors to ensure they are prepared properly and submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

2020-013 Program: Medicaid Cluster ? In-Home Supportive Services (IHSS) CFDA No.: 93.778 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Health Care Services Award Year: 2019-2020 Compliance Requirement: Eligibility Grant Award Number: N/A Criteria: Per the 2020 OMB Compliance Supplement, agencies are required to maintain documentation to support the agency?s eligibility determination, and to redetermine eligibility at least every 12 months to determine if individuals continue to be eligible in accordance with the compliance requirements of the program. In addition, the State of California Department of Social Services (CDSS) regulations also state that County?s social services staff are to have a face-to-face contact at least once every 12 months, except as provided in MPP section 30-761.215 through 30-761.217, to adequately determine that the recipient continues to reside safely in their home with the IHSS services provided (MPP Section 30-761.13). Condition Found: Material Weakness, Material Instance of Non-Compliance ? Of the 60 case files sampled for each of the Medicaid Cluster Programs, we noted the following: Medicaid Cluster ? In-Home Supportive Services (IHSS) ? 22 of 60 cases where the recipient eligibility redetermination was not performed timely (Exceeded the 12-month requirement). ? 1 of 60 cases where the initial application was not signed by the social worker. ? 1 of 60 cases where the health care certification form was not in the case file. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Medicaid Cluster ? In-Home Supportive Services (IHSS) A nonstatistical sample of 60 case files out of 8,542 case files were selected for eligibility testing. Through testwork of specific requirements related to eligibility, it was noted that redeterminations were not performed on a timely basis and files were not properly maintained in the case file. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-015. Effect: Lack of timely eligibility redeterminations and proper support documentation in case file resulted in noncompliance with the requirements of the federal program. Cause: The County did not ensure that the eligibility redeterminations were performed on a timely basis and that the eligibility case files contained documentation to support eligibility. Recommendation: We recommend that County implement policies and procedures to ensure eligibility redeterminations are performed on a timely basis and that proper documentations are maintained in case files. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Medical Cluster ? In-Home Supportive Services (IHSS) The County has recently implemented a new ?floater? position to assist in maintaining compliance when social workers are out on extended medical leaves. Overtime is currently being used to improve redetermination backlog and seven additional Social Worker positions are requested in the 2021-2022 budget. The County may also utilize part time Social Workers to ensure compliance with the 12-month requirement. Name of Responsible Person: Medical Cluster ? In-Home Supportive Services (IHSS): Renee Smith, IHSS Program Manager Name of Department Contact: Medical Cluster ? In-Home Supportive Services (IHSS): Renee Smith, IHSS Program Manager Projected Implementation Date: Medical Cluster ? In-Home Supportive Services (IHSS): Continue floater position/Hiring Additional Social Workers ? August 2021

2020-014 Program: Adoption Assistance CFDA No.: 93.659 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Social Services Award Year: 2019-2020 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Eligibility Grant Award Number: N/A Criteria: The 2020 OMB Compliance Supplement requires that the County determine eligibility in accordance with the specific eligibility requirements defined in the approved State plan. These requirements include the maintenance of documentation necessary to support eligibility determinations and re-determinations. Condition Found: Material Weakness, Material Instances of Non-Compliance ? During our eligibility testing of 60 Adoption Assistance case files, we noted that: ? 12 case files were missing the FC8 form that documents federal eligibility. This primarily pertains to case files that predate FY 2014. ? 2 case files received federal assistance payments for the entire fiscal year 2019/2020 but were deemed ineligible. Questioned Costs: We noted known question costs of $17,988. Context/Sampling: A nonstatistical sample of 60 case files out of 1,979 case files were selected for eligibility testing. Through testwork of specific requirements related to eligibility, it was noted that the Adoption Assistance program?s files were not properly maintained in accordance with the OMB Compliance Supplement. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-016. Effect: Case data may not accurately reflect the eligibility status of Adoption Assistance recipients thus increasing the risk of noncompliance with the requirements of the State plan. Cause: The condition is caused by the County not following its policies and procedures to ensure the eligibility case files contain documentation to support eligibility. Recommendation: We recommend that County implement policies and procedures to ensure that documentation required to support eligibility is properly maintained in the files. We also recommend that County ensure eligibility files that predate FY 2014 to include all required documentation to support the federal eligibility determination. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Beginning in 2014, all new Adoption Assistance (AAP) cases are reviewed to ensure the FC8 is included in the case record. Beginning late 2018, all AAP cases are reviewed at reassessment to ensure the FC8 is included in the case record. Additionally, the Eligibility Supervisor assigned to the Foster Care (FC)/AAP unit will begin reviewing 10% (approximately 330) of the active AAP cases when the annual Cost of Living Adjustment (COLA) is processed to ensure accuracy. AAP COLAs are currently processed manually ? with the implementation of CalSAWS, this process will be automated and thus greatly reducing potential errors regarding COLAs and claiming codes. Name of Responsible Person: Frank Hernandez, FC and AAP Eligibility Supervisor Name of Department Contact: Frank Hernandez, FC and AAP Eligibility Supervisor Projected Implementation Date: Reviewing for FC8 at reassessment was implemented in late 2018 and has continued. FC/AAP unit will continue the 10% review process.

2020-015 Program: Highway Planning and Construction Cluster CFDA No.: 20.205 Federal Agency: U.S. Department of Transportation Passed-through: California Department of Transportation Award Year: 2018-2019 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Costs Principles Grant Award Number: Various Criteria: Per the 2020 OMB Compliance Supplement and criteria contained in 2 CFR part 200, costs must not consist of improper payments including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. Condition Found: Significant Deficiency, Instance of Non-Compliance ? As a result of our audit procedures, we noted that one employee had an incorrect hourly rate applied to their project labor charges. Questioned Costs: We noted known questioned costs of $657. Context/Sampling: A nonstatistical sample of 40 timecards, out of 2,397 total timecards, were selected for testing. During our testing of program payroll costs, we identified an instance in which an employee?s hourly rate was being erroneously charged to the program at an additional $2 per hour over the course of four pay periods. The error resulted in a total of 298.5 hours being charged at the incorrect rate of $67.59 instead of $65.39 per hour. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-019. Effect: There is an increased risk of non-compliance as the wrong hourly rates were charged to the program. Cause: The review process in place did not ensure the correct hourly rates were charged to the program. Recommendation: We recommend that County implement policies and procedures to ensure the correct hourly rates are being used for labor charges for each employee. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Once applied rates are entered, a report will be run displaying applied rates for each employee creating an easy matching entry with the calculated applied rates spreadsheet in excel. Every adjustment to the employee?s file for rate adjustment will be followed up with an applied rate check and balance once payroll is posted. The Department Payroll processor will track these changes. Once posting for the adjusted period is made, the accountant will run a report and check that the rate is calculating in the system correctly. In the event there is a difference, the rates will be researched. Name of Responsible Person: Dionna Pancoast, Accounting Manager Name of Department Contact: Melissa Mullin, Policies & Procedures Staff Analyst Projected Implementation Date: April 2021

2020-016 Program: Airport Improvement Program CFDA No.: 20.106 Federal Agency: U.S. Department of Transportation Passed-through: N/A Award Year: 2019-2020 Compliance Requirement: Special Tests & Provisions ? Wage Rate Requirements Grant Award Number: Various Criteria: The 2020 OMB Compliance Supplement requires that the Airport notify contractors and subcontractors of the requirements to comply with the Wage Rate Requirements and obtain copies of certified payrolls. Condition Found: Material Weakness, Instance of Non-Compliance ? As a result of our audit procedures, we noted the following: ? The certified payroll reports for 3 of 3 contracts tested did not have evidence of review by the Airport to ensure they are prepared properly and submitted timely. ? The certified payroll reports for 1 of 3 contracts tested were not submitted timely as the reports for May and June 2020 were submitted in March 2021. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 3 of 3 construction contracts were selected for certified payroll report testing. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-022. Effect: Contractors and subcontractors may not submit certified payroll properly or timely thus increasing the risk of Airport?s noncompliance with the special test and provision wage rate requirements. Cause: The condition is caused by the Airport not having policies and procedures in place to comply with the wage rate requirements. Recommendation: We recommend that Airport implement policies and procedures to review certified payroll reports submitted by contractors and subcontractors to ensure they are prepared properly and submitted timely. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Stockton Metropolitan Airport will establish a procedure to ensure contractors are reporting their wage rate requirements properly. Name of Responsible Person: Russel Stark, Airport Director Name of Department Contact: Jefferson Marcia, Accountant II Projected Implementation Date: June 2021

2020-017 Program: Airport Improvement Program CFDA No.: 20.106 Federal Agency: U.S. Department of Transportation Passed-through: N/A Award Year: 2019-2020 Compliance Requirement: Reporting Grant Award Number: Various Criteria: Per 2 CFR Section 200.62 ? Internal control over compliance requirements for Federal awards, internal controls should be established by the grantee to ensure compliance with the applicable federal compliance requirements. Condition Found: Significant Deficiency, Instance of Non-Compliance ? As a result of our audit procedures, we noted that the annual reports submitted to cognizant agency did not have evidence of review by the Airport. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 7 of 16 total report submissions were selected for testing, and we noted that the annual reports, Form 5100-126 and 5100-127, were prepared and submitted by the accounting manager while the other required reports were prepared by the accounting manager and reviewed by the airport director prior to submission. Repeat Finding from Prior Year(s): No Effect: The required reports may not be prepared properly, thus increasing the risk of Airport?s noncompliance with the special test and provision wage rate requirements. Cause: The condition is caused by the Airport not having policies and procedures in place to review the annual reports prior to submission. Recommendation: We recommend that Airport implement policies and procedures to review the annual reports to ensure they are prepared properly prior to submission. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Stockton Metropolitan Airport will establish a procedure to ensure that the annual reports are reviewed prior to submission. Name of Responsible Person: Russel Stark, Airport Director Name of Department Contact: Jefferson Marcia, Accountant II Projected Implementation Date: June 2021

2020-018 Program: Continuum of Care CFDA No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2019-2020 Compliance Requirement: Matching, Earmarking Grant Award Number: Various Criteria: Per 2 CFR Section 200.303(a), Internal Controls, 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. Per the 2020 OMB Compliance Supplement, the recipient or subrecipient must match all grant funds with no less than 25 percent of cash or in-kind contributions from other sources, except for leasing funds. Per 2020 OMB Compliance Supplement, no more than 10 percent of any grant awarded may be used for paying the costs of administering the assistance. Administrative costs include the costs associated with general management, oversight, and coordination, training on the program requirements, and environmental review. Condition Found: Material Weakness, Material Instance of Noncompliance ? As a result of our audit procedures, we noted the following: - Matching Compliance Requirement: ? The County did not have policies and procedures in place to ensure compliance with the requirement that the recipient or subrecipient must match all grant funds with no less than 25 percent of cash or in-kind contributions from other sources, except for leasing funds. - Earmarking Compliance Requirement: ? The County did not have policies and procedures in place to ensure compliance with the requirement that no more than 10 percent of any grant awarded may be used for paying the costs of administering the assistance. - Subrecipient?s claims: ? The County did not have policies and procedures in place to ensure the claims submitted by the subrecipients were properly supported by supporting documentation (i.e. invoices, check copies, etc.). Questioned Costs: We noted known questioned costs of $2,554,522. Context/ Sampling: A nonstatistical sample of 30 reimbursements out of 138 total reimbursements were selected for testing, which accounted for $2,554,522 of the $4,776,144 of federal program expenditures. We noted that $4,560,296 of total program expenditures of $4,776,144 passed-through to one of the two subrecipients were not properly verified as the underlying support provided by the subrecipient were excel spreadsheets from the subrecipient's system ledger. As a result, the County did not have the information necessary to ensure compliance with the matching compliance requirement. In addition, we noted 26 of 30 drawdowns tested in which the County did not obtain sufficient underlying documentation from the subrecipient to ensure compliance with the earmarking compliance requirement. We also noted 3 of the 30 drawdowns tested had administrative costs that were erroneously categorized as operating costs during the claims process. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-023 Effect: As the appropriate underlying documentations of program expenditures were not obtained or available, the program expenditures could not be verified, and thus may result in noncompliance with program requirements. Cause: The County did not implement policies and procedures to ensure compliance with program requirements. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s matching and earmarking requirements. We also recommend that the County implement policies and procedures to ensure proper supporting documentations are obtained from its subrecipients and that the claims are critically reviewed for accuracy and reasonableness. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Matching Compliance Requirement The County has taken action and implemented an invoice form on July 1, 2019, to be used by the subrecipients when submitting an invoice. This invoice tracks matching funds required by the subrecipients. The County has updated the current written policies and procedures to ensure matching compliance requirements and to ensure proper supporting documentation is obtained from the subrecipients. The County was not aware that we were not in compliance during the 2019/2020 fiscal year since we did not receive our 2018/2019 fiscal year audit findings until March 10, 2020. Earmarking Compliance Requirement The County does review the subrecipient?s invoices to determine that no more than ten percent of any grant awarded is used for paying the costs of administering the assistance. The County utilizes a spreadsheet in conjunction with available administrative funds indicated in the Electronic Line of Credit Control System (eLOCCS) to ensure compliance. The County acknowledges that while HUD has not questioned the County?s earmarking of activities during prior monitorings, the determination made during the audit that certain costs need to be categorized as Administrative activities instead of Operating activities has been addressed. The County has improved the current written policies and procedures to ensure earmarking compliance requirements. Subrecipient?s Claims The County does require the invoices submitted by the subrecipients to provide supporting documentation. In the case of Central Valley Low Income Housing Corporation (CVLIHC), because of the large number of clients that are continuing from month to month, the County has accepted a QuickBooks ledger to track previously vetted clients and allow CVLIHC to submit checks for verification of new clients only. The County, with HUD?s approval, has monitored the subrecipients on an annual basis to ensure that all claims submitted have supportive documentation. The County has updated the current written policies and procedures to ensure proper supporting documentation is obtained from its subrecipients and that the claims are critically reviewed for accuracy and reasonableness. Name of Responsible Person: Chris Becerra, Management Analyst III Name of Department Contact: Chris Becerra, Management Analyst III Projected Implementation Date: June 2021

2020-019 Program: Continuum of Care CFDA No.: 14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2019-2020 Compliance Requirement: Special Tests and Provisions ? Reasonable Rental Rates Grant Award Number: Various Criteria: Per the 2020 OMB Compliance Supplement, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month?s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition Found: Material Weakness, Material Instance of Non-Compliance ? As a result of our procedures performed, we noted that the County did not have policies and procedures in place to ensure compliance with the Special Tests and Provisions ? Reasonable Rental Rates requirement. Also, the County did not have policies and procedures in place to ensure the claims submitted by the subrecipients were properly supported by supporting documentation. Questioned Costs: We noted known questioned costs of $2,107,735 Context/ Sampling: A nonstatistical sample of 30 reimbursements out of 138 total reimbursements were selected for testing, which accounted for $2,554,522 of the $4,776,144 of federal program expenditures. Through inquiry and testing, we noted that the County did not have policies and procedures in place to ensure its subrecipients establish reasonableness of rents being charged. The County did not review rental records to ensure contract rents being paid are comparable with those paid for unassisted units, no more than one month?s rent is paid for tenant damages and that the portion of rents paid with grant funds do not exceed fair market rents. In addition, the claims submitted by the subrecipients did not contain proper underlying documentation to support any of the rent amounts being paid. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-024 Effect: Program expenditures related to rents paid may be reported and claimed in inaccurate amount which could result in noncompliance with the program?s requirement. Cause: The County did not implement policies and procedures to ensure compliance with program requirements. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s Special Tests and Provisions ? Reasonable Rental Rates requirement. We also recommend that the County implement policies and procedures to ensure proper supporting documentations are obtained from its subrecipients. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Special Tests and Provisions ? Reasonable Rental Rates requirement The subrecipients perform a Reasonable Rent Rate Calculation as part of each client?s file. The Reasonable Rental Rate Calculation documentation has typically been verified as part of the County?s annual monitoring process. The County has updated the current written policies and procedures to ensure compliance with the program?s Reasonable Rental Rate requirements. The County will also ensure that with every new client entering into the program, Reasonable Rental Rate documentation will be required with their rental agreement. The County was not aware that we were not in compliance during the 2019/2020 fiscal year since we did not receive our 2018/2019 fiscal year audit findings until March 10, 2020. Name of Responsible Person: Chris Becerra, Management Analyst III Name of Department Contact: Chris Becerra, Management Analyst III Projected Implementation Date: June 2021

2020-020 Program: COVID-19 - Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response CFDA No.: 93.354 Federal Agency: U.S. Department of Health and Human Services Pass-through: California Department of Health Care Services Award Year: 2019-2020 Compliance Requirement: Cash Management Grant Award Number: COVID-19-39 SJC Criteria: Per 2 CFR 200.302(b)(6), non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 ? Federal payment. Condition Found: Significant Deficiency, Instance of Non-Compliance ? As a result of our audit procedures over cash management, we noted the County has not established written procedures to implement the cash management requirements of 2 CFR 200.305 (Payment). Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: The condition noted above was identified during our testing over cash management. Repeat Finding from Prior Year(s): No Effect: The County did not have written procedures over cash management as required by Uniform Guidance, thus increasing the risk of noncompliance with the requirements of the program. Cause: The County did not ensure the required written procedures were developed and implemented in accordance with uniform guidance. Recommendation: We recommend that the County implement written policies and procedures to comply with the requirements of CFR 200.302(b)(6). Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Although federal funds received by Public Health Services are handled consistent with requirements of 2 CFR section 200.305, no written policy and procedure was developed as required. Management agrees with the Auditor?s recommendation and has developed a written Cash Management Policy which documents current procedure and will continue to utilize this policy moving forward. Name of Responsible Person: Bruce Cosby, Management Analyst III Name of Department Contact: Bruce Cosby, Management Analyst III Projected Implementation Date: May 2021

2020-021 Program: Help America Vote Act Requirements Payments CFDA No.: 90.401 Federal Agency: U.S. Election Assistance Commission Pass-through: California Department of Community Services and Development Award Year: 2019-2020 Compliance Requirement: Cash Management Grant Award Number: 16G30119, 18G26139, 18G27139 Criteria: Per 2 CFR 200.302(b)(6), non-federal entities must establish written procedures to implement the requirements of 2 CFR section 200.305 ? Federal payment. Condition Found: Significant Deficiency, Instance of Non-Compliance ? As a result of our audit procedures over cash management, we noted the County has not established written procedures to implement the cash management requirements of 2 CFR 200.305 (Payment). Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: The condition noted above was identified during our testing over cash management. Repeat Finding from Prior Year(s): No Effect: The County did not have written procedures over cash management as required by Uniform Guidance, thus increasing the risk of noncompliance with the requirements of the program. Cause: The County did not ensure the required written procedures were developed and implemented in accordance with uniform guidance. Recommendation: We recommend that the County implement written policies and procedures to comply with the requirements of CFR 200.302(b)(6). Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. Though the processes utilized by the Registrar of Voters Office to deposit federal funds meet the standards of 2 CFR section 200.305, no written policies and procedures are in place to document these processes and ensure ongoing compliance with federal cash management requirements. Management agrees with Auditor?s recommendation and will develop and implement a written Policy and Procedure for Cash Management by the end of May 2021. Name of Responsible Person: David Newaj, Information Systems Assistant Director Name of Department Contact: Dennis Manzo, Information Systems - Admin Projected Implementation Date: May 2021

2020-022 Program: Supplemental Nutrition Assistance Program (SNAP) Cluster CFDA No.: 10.561 Federal Agency: U.S. Department of Agriculture Pass-through: California Department of Social Services Award Year: 2019-2020 Compliance Requirement: Subrecipient Monitoring Grant Award Number: Various Criteria: The 2020 OMB Compliance Supplement and 2 CFR Section 200.331(a) states that the pass-through entity must identify the award and applicable requirements to the subrecipient with certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. Additionally, 2 CFR 200.331(b) requires a pass-through entity (PTE) to evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. This may include consideration of the following factors: ? Subrecipient?s prior experience with the same or similar subawards; ? Results of previous audits including whether the subrecipient receives a Single audit in accordance with the Uniform Guidance; ? New personnel or system changes; ? Extent of Federal awarding agency monitoring. 2 CFR Section 200.331(f) requires that the pass-through entity verify that every subrecipient is audited as required by Subpart F ? Audit Requirements when the subrecipient?s Federal awards are expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 ? Audit Requirements. Condition Found: Significant Deficiency, Instance of Non-Compliance ? We noted 2 instances out of 3 where the County did not identify all of the required elements of the subaward in accordance with 2 CFR 200.331(a). In addition, we noted that the County did not perform a risk assessment on the program?s subrecipients in accordance with 2 CFR 200.331(b). Questioned Costs: No questioned costs were identified as a result of our procedures. Context/ Sampling: A nonstatistical sample of 2 subrecipients out of 3 subrecipients were selected for testing, which accounted for $9,343 of $314,738 of federal program expenditures. The condition noted above was identified during our testing over subrecipient monitoring requirements of the program. We noted that the County implemented subrecipient monitoring policies and procedures effective October 2018; however, the subrecipients selected for testing entered into a contract with the County prior to October 2018, therefore, the required risk assessment or monitoring procedures were not performed. The amount passed-through to the subrecipients subject to testing was $9,343. Repeat Finding from Prior Year(s): Yes, prior year finding 2019-017 Effect: The County did not identify the required elements of the subaward to the subrecipient nor did the County perform a risk assessment on the subrecipient, increasing the likelihood of noncompliance in relation to the program. Cause: The County did not have policies and procedures in place to ensure that the subawards contain the required elements pursuant to 2 CFR 200.331(a) for the period prior to October 2018. Additionally, the County?s procedures did not ensure the required risk assessment activities were performed in accordance with the Uniform Guidance. The County?s procedures did not ensure that the subrecipients underwent a Single Audit during the appropriate periods. Recommendation: We recommend that the County prepare subaward agreements that contain all of the required elements as specified in 2 CFR 200.331(a)(1) and document the risk assessment associated with each subrecipient in accordance with 2 CFR 200.331(b). Additionally, it is recommended that the County develop monitoring procedures to verify whether the subrecipient is required to have a Single Audit, and if so, whether or not the subrecipient had one completed. Views of Responsible Officials and Planned Corrective Actions: Management?s or Department?s Responses: Management agrees. See separate corrective action plan. The contracts for the two found instances were issued prior to completion of the Sub-recipient Monitoring Procedures. Monitoring was in place for new sub-recipient awards procured after October 1, 2018. The procedures include both pre and post award requirements for sub recipients, program staff and administrative-finance staff. The pre-award process includes determination if a single audit is required from the potential awardee, and, if completed, presented to Public Health Services prior to awarding. If the funding will put the entity into a position to require a single audit, PHS staff will inform the sub-recipient prior to awarding. Another of the requirements is an exhibit that is attached to the contract that includes all elements required by 2 CFR 200.331(a). Additionally, the procedures also detail a comprehensive risk assessment of potential sub-recipients that includes review by both program and administrative-finance staff. Name of Responsible Person: Bruce Cosby, Management Analyst III Name of Department Contact: Bruce Cosby, Management Analyst III Projected Implementation Date: June 2021

Finding 2019-015 Program: Medicaid Cluster ? Medical Assistance Program, Medical Cluster ? In-Home Supportive Services (IHSS) CFDA No.: 93.778 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Health Care Services Award Year: 2018-2019 Compliance Requirement: Eligibility Criteria: Per the 2019 OMB Compliance Supplement, agencies are required to maintain documentation to support the agency?s eligibility determination, and to redetermine eligibility at least every 12 months to determine if individuals continue to be eligible in accordance with the compliance requirements of the program. In addition, the State of California Department of Social Services (CDSS) regulations also state that County?s social services staff are to have a face-to-face contact at least once every 12 months, except as provided in MPP section 30-761.215 through 30-761.217, to adequately determine that the recipient continues to reside safely in their home with the IHSS services provided (MPP Section 30-761.13). Condition Found: Material Weakness, Material Instance of Non-Compliance ? Of the 60 case files sampled for each of the Medicaid Cluster Programs, we noted the following: Medicaid Cluster ? Medical Assistance Program ? 1 of 60 cases where the recipient eligibility redetermination was not performed timely (Exceeded the 12-month requirement). Medicaid Cluster ? In-Home Supportive Services (IHSS) ? 19 of 60 cases where the recipient eligibility redetermination was not performed timely (Exceeded the 12-month requirement). Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: Medicaid Cluster ? Medical Assistance Program A nonstatistical sample of 60 case files out of approximately 3 million case files were selected for eligibility testing. Medicaid Cluster ? In-Home Supportive Services (IHSS) A nonstatistical sample of 60 case files out of 7728 case files were selected for eligibility testing. Through testwork of specific requirements related to eligibility, it was noted that redeterminations were not performed on a timely basis. Repeat Finding from Prior Year(s): Yes, prior year finding 2018-011. Effect: Lack of timely eligibility redeterminations resulted in noncompliance with the requirements of the federal program. Cause: The County did not ensure that the eligibility redeterminations were performed on a timely basis. Recommendation: We recommend the County implement policies and procedures to ensure eligibility redeterminations are performed on a timely basis. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-016 Program: Adoption Assistance CFDA No.: 93.659 Federal Agency: U.S. Department of Health and Human Services Passed-through: California Department of Social Services Award Year: 2018-2019 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Eligibility Criteria: The 2019 OMB Compliance Supplement requires that the County determine eligibility in accordance with the specific eligibility requirements defined in the approved State plan. These requirements include the maintenance of documentation necessary to support eligibility determinations and re-determinations. Condition Found: Material Weakness, Material Instances of Non-Compliance ? During our eligibility testing of 60 Adoption Assistance case files, we noted that: ? 8 case files were missing the FC8 form that documents federal eligibility. This primarily pertains to case files that predate FY 2014. ? 2 case files that received Federal Assistance payments for the entire fiscal year 2018/2019 but were deemed ineligible. Questioned Costs: We noted known question costs of $96,712. Context/Sampling: A nonstatistical sample of 60 case files out of 2013 case files were selected for eligibility testing. Through testwork of specific requirements related to eligibility, it was noted that the Adoption Assistance program?s files were not properly maintained in accordance with the OMB Compliance Supplement. Repeat Finding from Prior Year(s): Yes, prior year finding 2018-015. Effect: Case data may not accurately reflect the eligibility status of Adoption Assistance recipients thus increasing the risk of noncompliance with the requirements of the State plan. Cause: The condition is caused by the County not following its policies and procedures to ensure the eligibility case files contain documentation to support eligibility. Recommendation: We recommend that the County implement policies and procedures to ensure that documentation required to support eligibility is properly maintained in the files. We also recommend the County ensure eligibility files that predate FY 2014 to include all required documentation to support the federal eligibility determination. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-017 Program: Supplemental Nutrition Assistance Program (SNAP) CFDA No.: 10.561 Federal Agency: U.S. Department of Agriculture Passed-through: California Department of Social Services Award Year: 2018-2019 Compliance Requirement: Special Tests and Provisions ? Automated Data Processing (ADP) Systems for SNAP Criteria: The 2019 OMB Compliance Supplement requires that the County determine eligibility in accordance with the specific special tests and provisions requirements defined in the approved State plan. These requirements include accurately and completely processing and storing all case file information for eligibility determination and re-determinations. Condition Found: Significant Deficiency, Instances of Non-Compliance ? During our eligibility testing of 40 SNAP case files, we noted that: ? 1 case file did not have a recertification completed timely and benefits were not discontinued ? 1 case file did not include documented evidence of required semi-annual report within document imaging system Questioned Costs: We noted known question costs of $831. Context/Sampling: A nonstatistical sample of 40 case files out of 60,000 case files were selected for eligibility testing. Through test-work of specific requirements related to special tests and provisions, it was noted that the SNAP program files were not properly maintained, and recertification not performed timely in accordance with the OMB Compliance Supplement. Repeat Finding from Prior Year(s): No Effect: Case data may not accurately reflect the eligibility status of SNAP recipients thus increasing the risk of noncompliance with the special tests and provisions requirements of the State plan. Cause: The condition is caused by the County not following its policies and procedures to ensure the eligibility case files contain documentation to support the special tests and provisions requirements for the eligibility of the recipients. Recommendation: We recommend that the County implement policies and procedures to ensure that redeterminations are completed timely and that the documentation required to support the special tests and provisions requirements for the eligibility of the recipient is properly maintained in the case file. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-018 Program: Supplemental Nutrition Assistance Program (SNAP) CFDA No.: 10.561 Federal Agency: U.S. Department of Agriculture Passed-through: California Department of Social Services Award Year: 2018-2019 Compliance Requirement: Subrecipient Monitoring Criteria: The 2019 Compliance Supplement and Title 2 CFR Section 200.331(a) of the Uniform Guidance states that the pass-through entity must identify the award and applicable requirements to the subrecipient with certain information as well as all the requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations, and the terms and conditions of the award. Additionally, Title 2 CFR 200.331(b) of the Uniform Guidance requires a pass-through entity (PTE) to evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward. This may include consideration of the following factors: ? Subrecipient?s prior experience with the same or similar subawards; ? Results of previous audits including whether the subrecipient receives a Single audit in accordance with the Uniform Guidance; ? New personnel or system changes; ? Extent of Federal awarding agency monitoring. Title 2 CFR Section 200.331(f) requires that the pass-through entity verify that every subrecipient is audited as required by Subpart F ? Audit Requirements when the subrecipient?s Federal awards are expended during the respective fiscal year equaled or exceeded the threshold set forth in Section 200.501 ? Audit Requirements. Condition Found: Material Weakness, Instances of Non-Compliance ? We noted 1 instance out of 2 where the County did not identify all of the required elements of the subaward in accordance with 2 CFR 200.331(a) of the Uniform Grant Guidance. In addition, we noted that the County did not perform a risk assessment on the program?s subrecipients in accordance with 2 CFR 200.331(b) of the Uniform Guidance. Questioned Costs: We identified no questioned costs in our tests of compliance with this requirement. Context/Sampling: A nonstatistical sample of 2 subrecipients out of 4 subrecipients were selected for testing, which accounted for $211,871 of $484,311 of federal program expenditures. The condition noted above was identified during our testing over subrecipient monitoring requirements of the program. We noted that the County implemented subrecipient monitoring policies and procedures effective October 2018; however, the subrecipient selected for testing entered into a contract with the County prior to October 2018, therefore, the required monitoring procedures were not performed. The amount passed-through to the subrecipients subject to testing was $211,871. Repeat Finding from Prior Year(s): No Effect: The County did not identify the required elements of the subaward to the subrecipient nor did the County perform a risk assessment on the subrecipients, increasing the likelihood of noncompliance in relation to the program. Cause: The County did not have policies and procedures in place to ensure that the subawards contain the required elements pursuant to 2 CFR 200.331(a) for the period prior to October 2018. Additionally, the County?s procedures did not ensure the required risk assessment activities were performed in accordance with the Uniform Guidance. The County?s procedures did not ensure that the subrecipients underwent a Single Audit during the appropriate periods. Recommendation: It is recommended that the County prepare subaward agreements that contain all of the required elements as specified in 2 CFR 200.331(a)(1) and document the risk assessment associated with each subrecipient in accordance with 2 CFR 200.331(b). Additionally, it is recommended that the County develop monitoring procedures to verify whether the subrecipient is required to have a Single Audit, and if so, whether or not the subrecipient had one completed. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-019 Program: Highway, Planning and Construction Cluster CFDA No.: 20.205 Federal Agency: U.S. Department of Transportation Passed-through: California Department of Transportation Award Year: 2018-2019 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Costs Principles Criteria: Per the 2019 OMB Compliance Supplement and criteria contained in 2 CFR part 200, costs must not consist of improper payments including payments that should not have been made or that were made in incorrect amounts (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. Condition Found: Significant Deficiency, Instance of Non-Compliance ? Based on testing of 40 payroll selections, we noted that one employee had an incorrect hourly rate applied to their project labor charges. Questioned Costs: We noted known questioned costs of $657. Context/Sampling: A nonstatistical sample of 40 timecards out of 2397 total timecards were selected for testing. During our testing of program payroll costs, we identified an instance in which an employee?s hourly rate was being erroneously charged to the program at an additional $2 per hour over the course of four pay periods. The error resulted in a total of 298.5 hours being charged at the incorrect rate of $67.59 instead of $65.39 per hour. Repeat Finding from Prior Year(s): No Effect: There is an increased risk of non-compliance as the wrong hourly rates were charged to the program. Cause: The review process in place did not ensure the correct hourly rates were charged to the program. Recommendation: We recommend the County implement policies and procedures to ensure the correct hourly rates are being used for labor charges for each employee. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-020 Program: Airport Improvement Program (AIP) CFDA No.: 20.106 Federal Agency: U.S. Department of Transportation Passed-through: N/A Award Year: 2018-2019 Compliance Requirement: Cash Management Criteria: Title 2 CFR Section 200.302(b)(6) and (7) of the Uniform Guidance requires all non-Federal entities to establish written procedures to implement the requirements of 2 CFR section 200.305 (Payment). Condition Found: Instance of Noncompliance ? The Airport has not established written procedures to implement the cash management requirements of 2 CFR Section 200.305. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: The condition noted above was identified during our procedures related to cash management for the AIP which is subject to the Uniform Guidance. Repeat Finding from Prior Year(s): No Effect: The Airport did not comply with the specific requirements for written procedures over cash management as described in the Uniform Guidance. Cause: The Airport did not ensure the required written procedures were developed and implemented in accordance with the Uniform Guidance. Recommendation: We recommend the Airport formalize written procedures to comply with cash management requirements of 2 CFR Section 200.305. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan

Finding 2019-021 Program: Airport Improvement Program (AIP) CFDA No.: 20.106 Federal Agency: U.S. Department of Transportation Passed-through: N/A Award Year: 2018-2019 Compliance Requirement: Special Tests and Provisions ? Revenue Diversion Criteria: The 2019 Compliance Supplement establishes that the basic requirement for use of airport revenues is that all revenues generated by a public airport must be expended for the capital or operating costs of the airport, the local airport system, or other local facilities which are owned or operated by the owner or operator of the airport and are directly and substantially related to the actual air transportation of passengers or property. Therefore, internal controls should be established by the Airport to ascertain the completeness of all airport-generated revenue. Condition Found: Significant Deficiency, Instance of Noncompliance ? As part of the audit procedures, we obtained an understanding of the airport?s revenue generating activities and revenue collection process and noted that the Airport did not have proper segregation of duties over the revenue collection process which could result in material misstatements of the airport?s revenues as revenues could be prone to error or fraud. As a result, we were unable to ascertain the completeness of all airport-generated revenue. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: During our observation of the internal controls over the Airport?s cash receipt process, we identified that Airport Management has the ability to change rates (i.e. land and hanger fees, tie-down fees, etc.), void or make changes to payment transactions within Excel which is used for tracking and maintaining Airport revenue and billing. We also noted that Airport Management has access to cash, enters cash receipt entries and performs the revenue reconciliation. Repeat Finding from Prior Year(s): No Effect: Revenues collected by the Airport may not be accurate or fully accounted for thus increasing the risk of noncompliance with the requirements of the program. Cause: The Airport did not have policies and procedures in place to ensure the changes made to the system are regularly reviewed and properly authorized as Airport Management could process rate changes or void transactions without being detected. Also, key functions of the cash receipt process were not properly segregated. Recommendation: We recommend that the Airport implement policies and procedures to ensure changes made to the system are regularly reviewed and properly authorized as anyone within Airport Management could process rate changes or void transactions without being detected. Also, we recommend that the receiving, recording and reconciling functions of the revenue collection process be properly segregated. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-022 Program: Airport Improvement Program (AIP) CFDA No.: 20.106 Federal Agency: U.S. Department of Transportation Passed-through: N/A Award Year: 2018-2019 Compliance Requirement: Special Tests and Provisions ? Wage Rate Requirements Criteria: The 2019 OMB Compliance Supplement requires that the Airport notify contractors and subcontractors of the requirements to comply with the Wage Rate Requirements and obtain copies of certified payrolls. Condition Found: Material Weakness, Instances of Non-Compliance ? As a result of our audit procedures over special tests and provisions ? wage rate requirements, we noted the following: ? 2 of 2 contracts did not include provisions regarding wage rate requirements/prevailing wages. ? 1 of 7 certified payroll submissions had certified payroll submission dated 1/7/2020 for work performed the week of 7/28/2018. ? 7 of 7 certified payroll submissions did not have evidence of review by the Airport to ensure that it was properly submitted. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of 2 contracts out of 2 total contracts were selected for the prevailing wage clause testing. A nonstatistical sample of 7 certified payroll submissions out of 41 total certified payroll submissions were selected for prevailing wages testing. As part of the audit procedures performed, we obtained an understanding of the airport?s internal control and compliance with wage rate requirements and noted that the Airport did not have a process of review over submitted certified payroll reports and that the contractors and subcontractors were not notified of the requirements to comply with the wage rate requirements. Repeat Finding from Prior Year(s): No Effect: Contractors and subcontractors may not be aware of the certified payroll submission requirements or may not submit the certified payroll timely, thus increasing the risk of Airport?s noncompliance with the special test and provision wage rate requirements. Cause: The conditions are caused by the Airport not notifying contractors and subcontractors of the requirements to comply with the Wage Rate requirements. Recommendation: We recommend that the Airport include provisions regarding Wage Rate requirements into their contracts and require their contractors do the same for their subcontractors. We also recommend that the Airport implement policies and procedures to ensure that contractors and subcontractors are submitting certified payroll timely and appropriately. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-023 Program: Continuum of Care CFDA No. 14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2018-2019 Compliance Requirement: Matching, Earmarking Criteria: Per 2 CFR section 200.303(a), Internal Controls, 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. Per the 2019 OMB Compliance Supplement, the recipient or subrecipient must match all grant funds with no less than 25 percent of cash or in-kind contributions from other sources, except for leasing funds. Per 2019 OMB Compliance Supplement, no more than 10 percent of any grant awarded may be used for paying the costs of administering the assistance. Administrative costs include the costs associated with general management, oversight, and coordination, training on the program requirements, and environmental review. Condition Found: Material Weakness, Material Instance of Noncompliance ? As a result of our audit procedures, we noted the following: - Matching Compliance Requirement: o The County did not have policies and procedures in place to ensure compliance with the requirement that the recipient or subrecipient must match all grant funds with no less than 25 percent of cash or in-kind contributions from other sources, except for leasing funds. - Earmarking Compliance Requirement: o The County did not have policies and procedures in place to ensure compliance with the requirement that no more than 10 percent of any grant awarded may be used for paying the costs of administering the assistance. - Subrecipient?s claims: o The County did not have policies and procedures in place to ensure the claims submitted by the subrecipients were properly supported by supporting documentation (i.e. invoices, check copies, etc.). Questioned Costs: We noted known questioned costs of $1,506,878. Context/ Sampling: A nonstatistical sample of 22 reimbursements out of 139 total reimbursements were selected for testing, which accounted for $1,506,878 of the $4,283,905 of federal program expenditures. We noted that $3,851,667 of total program expenditures of $4,283,905 passed-through to one of the two subrecipients were not properly verified as the underlying support provided by the subrecipient were excel spreadsheets from the subrecipient's system ledger. As a result, the County did not have the information necessary to ensure compliance with the matching compliance requirement. In addition, we noted 17 of 22 drawdowns tested in which the County did not obtain sufficient underlying documentation from the subrecipient to ensure compliance with the earmarking compliance requirement. We also noted 4 of the 22 drawdowns tested had administrative costs that were erroneously categorized as operating costs during the claims process. Repeat Finding from Prior Year(s): No Effect: As the appropriate underlying documentations of program expenditures were not obtained or available, the program expenditures could not be verified, and thus may result in noncompliance with program requirements. Cause: The County did not implement policies and procedures to ensure compliance with program requirements. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s matching and earmarking requirements. We also recommend that the County implement policies and procedures to ensure proper supporting documentations are obtained from its subrecipients and that the claims are critically reviewed for accuracy and reasonableness. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

Finding 2019-024 Program: Continuum of Care CFDA No. 14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: N/A Award Year: 2018-2019 Compliance Requirement: Special Tests and Provisions ? Reasonable Rental Rates Criteria: Per 2019 OMB Compliance Supplement, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month?s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). Condition Found: Material Weakness, Material Instance of Non-Compliance ? As a result of our procedures performed, we noted that the County did not have policies and procedures in place to ensure compliance with the Special Tests and Provisions ? Reasonable Rental Rates requirement. Also, the County did not have policies and procedures in place to ensure the claims submitted by the subrecipients were properly supported by supporting documentation. Questioned Costs: We noted known questioned costs of $1,040,572 Context/ Sampling: A nonstatistical sample of 22 reimbursements out of 139 total reimbursements were selected for testing, which accounted for $1,506,878 of the $4,283,905 of federal program expenditures. Through inquiry and testing, we noted that the County did not have policies and procedures in place to ensure its subrecipients establish reasonableness of rents being charged. The County did not review rental records to ensure contract rents being paid are comparable with those paid for unassisted units, no more than one month?s rent is paid for tenant damages and that the portion of rents paid with grant funds do not exceed fair market rents. In addition, the claims submitted by the subrecipients did not contain proper underlying documentation to support any of the rent amounts being paid. Repeat Finding from Prior Year(s): No Effect: Program expenditures related to rents paid may be reported and claimed in inaccurate amount which could result in noncompliance with the program?s requirement. Cause: The County did not implement policies and procedures to ensure compliance with program requirements. Recommendation: We recommend that the County implement policies and procedures to ensure compliance with the program?s Special Tests and Provisions ? Reasonable Rental Rates requirement. We also recommend that the County implement policies and procedures to ensure proper supporting documentations are obtained from its subrecipients. Views of Responsible Officials and Planned Corrective Actions: Management agrees. See separate corrective action plan.

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