City of WalnutLocal Government

2024-002 Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021 Grant Award Number: N/A Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of suspension and debarment. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City was not able to provide supporting documentation indicating that the City had verified that vendors were not suspended or debarred prior to entering into the transaction. Cause: The City did not maintain supporting documentation indicating that the verification of suspension and debarment was performed prior to entering into a contract. Questioned Costs: None Effect: For three (3) of four (4) vendors tested, we were not able to verify that the City followed their internal controls to ensure the vendor was not suspended or debarred prior to entering the transaction. It was noted that the City had performed the suspension and debarment check after the contracts were entered into. Context: A nonstatistical sample of four (4) out of nine (9) vendor contracts were tested. Documentation to support that the City performed the verification of suspension or debarment prior to entering into the contract could not be provided. Repeat Finding from Prior Year(s): Yes. Recommendation: We recommend the City implement procedures to ensure that verification documentation for suspension and debarment is maintained prior to the contract award to support the City’s internal control over compliance. Views of Responsible Officials: See separate corrective action plan.

Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021 Grant Award Number: N/A Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: In accordance with the Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, the City is required to submit an annual Project and Expenditure Report annually. The City is required to appropriately maintain accounting records for compiling and reporting accurate, compliance financial data, in accordance with appropriate accounting standards and principles. Condition: The City’s reporting requirements include submitting an annual Project and Expenditure Report. We noted no evidence of review prior to the submission of the report to the U.S. Treasury’s reporting portal. Cause: Management did not have established policies and procedures in place for the preparation and review of the Project and Expenditure. Questioned Costs: None Effect: The City’s internal control environment is not operating effectively. Context/Sampling: We noted that due to the City’s specific reporting requirements, only one (1) annual report is required to be submitted to the U.S. Treasury. As such, the entire population was tested. Repeat Finding from the Prior Year(s): No. Recommendation: We recommend the City implement formal policies and procedures for the reporting of Coronavirus State and Local Fiscal Recovery Funds. Internal controls should be established to create appropriate segregation of duties over the preparation and approval of reports to ensure the timely and accurate submission of all mandatory program reporting. Views of Responsible Official and Planned Corrective Actions: See separate corrective action plan.

Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Financial Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Award Year: 2021 Grant Award Number: N/A Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of suspension and debarment. The City should have internal controls designed to ensure compliance with those provisions. Condition: The City was not able to provide supporting documentation that the City verified the vendor was not suspended or debarred prior to entering the transaction. Cause: The City did not maintain supporting documentation that the verification of suspension or debarment was performed prior to entering into a contract. Questioned Costs: None Effect: We noted no instances of noncompliance with the provisions of suspension and debarment. However, we were not able to verify that the City followed their internal controls to ensure the vendor was not suspended or debarred prior to entering the transaction. Context: A nonstatistical sample of three (3) out of (13) vendor contracts were tested. Documentation to support that the City performed the verification of suspension or debarment could not be provided. Repeat Finding from Prior Year(s): No. Recommendation: We recommend the City implement procedures to ensure that verification documentation for suspension and debarment is maintained to support the City’s internal control over compliance. Views of Responsible Officials: See separate corrective action plan.