City of PalmdaleLocal Government

U.S. Treasury Department, California Department of Finance Federal Financial Assistance Listing/CFDA Number 21.019 COVID-19 Coronavirus Relief Funds Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control and Instance of Noncompliance Criteria: Per the Federal Register dated January 15, 2021, expenditures charged to the Coronavirus Relief Fund (CRF) must meet the following criteria: ? Costs were not accounted for in the budget most recently approved as of March 27, 2020 ? Costs were incurred during the period that begins on March 1, 2020 and ended on December 31, 2021 ? Were necessary expenditures incurred due to the public health emergency Condition: During our testing of the City?s compliance with the Activities Allowed or Unallowed, and Allowable Costs/Cost Principles compliance requirements, we noted the following from our sample of 60 payroll transactions: ? Documentation for hours charged to the CRF program did not agree to actual expenditures charged for 11 employees tested. ? A sample of 4 employees tested lacked documentation for a COVID-related purpose. ? One employee tested was charged an incorrect payrate. Cause: The City lacked an internal control process to maintain the documentation for changes to amounts initially charged to the program. Effect: Failure to follow the Activities Allowed or Unallowed & Allowable Costs/Cost Principles compliance requirements results in non-compliance with federal regulations. Questioned Costs: None reported as less than $25,000 Context/Sampling: A nonstatistical sample of 60 transactions were selected from the payroll program expenditures, which accounted for $249,387 of the total payroll population of $603,217. Repeat Finding from Prior Year: No Recommendation: We recommend the City modify and strengthen its policies and procedures to ensure that grant expenditures are in accordance with grant terms and conditions. Views of Responsible Official: The City agrees with the above finding. See separately issued Corrective Action Plan.

U.S. Treasury Department, California Department of Finance Federal Financial Assistance Listing/CFDA Number 21.019 COVID-19 Coronavirus Relief Funds Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control and Instance of Noncompliance Criteria: Per the Federal Register dated January 15, 2021, expenditures charged to the Coronavirus Relief Fund (CRF) must meet the following criteria: ? Costs were not accounted for in the budget most recently approved as of March 27, 2020 ? Costs were incurred during the period that begins on March 1, 2020 and ended on December 31, 2021 ? Were necessary expenditures incurred due to the public health emergency Condition: Public safety expenditures were charged to the CRF program prior to the allowed March 1, 2020 timeframe. Cause: The City lacked an internal control process to verify payroll expenditures were charged to the grant based on date incurred, rather than date paid. Effect: Failure to follow the Period of Performance compliance requirement results in non-compliance with federal regulations. Questioned Costs: None reported as less than $25,000 Context/Sampling: A nonstatistical sample of 60 transactions were selected from the payroll program expenditures, which accounted for $249,387 of the total payroll population of $603,217. Repeat Finding from Prior Year: No Recommendation: We recommend the City modify and strengthen its policies and procedures to ensure that grant expenditures are in accordance with grant terms and conditions. Views of Responsible Official: The City agrees with the above finding. See separately issued Corrective Action Plan.

U.S. Treasury Department, California Department of Finance Federal Financial Assistance Listing/CFDA Number 21.019 COVID-19 Coronavirus Relief Funds Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control and Instance of Noncompliance Criteria: Uniform Guidance section 200.512 requires the data collection form reporting package be submitted within the earlier of 30 calendar days after receipt of the auditor?s report or nine months after the year-end of the audit period. For fiscal year 2021, that deadline was extended to September 30, 2022 for June 30th year-end entities by the federal government. Condition: The data collection form reporting package was filed after the September 30, 2022 deadline. Cause: The audit process was delayed to allow for assembly of information needed to complete the Single Audit, including clarification of certain program requirements with granting agencies. Effect: The City did not comply with the reporting deadline. Questioned Costs: None reported Repeat Finding from Prior Year: No Recommendation: We recommend the City modify and strengthen its procedures to ensure the data collection for reporting package is filed in accordance with federal deadlines. Views of Responsible Official: The City agrees with the above finding. See separately issued Corrective Action Plan.

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