CITY OF EL CAJONLocal Government

Federal Program: Highway Safety Improvement Program, Assistance Listing Number 20.205 Criteria: Per CFR 200.302, the financial management system of each non-Federal entity must provide records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: During our procedures over the matching compliance requirement, we reviewed reimbursement requests and noted that the amount requested for reimbursement did not agree to the expenditures listed in the City’s expenditure detail. This is because the City implemented a cost sharing/split approach for total project costs where total costs were to be split by various funding sources. The City would account for this by recording each funding source’s portion of the costs in their system as projects were split up by expense and funding source strings. Reimbursement requests were supposed to be submitted based on each funding source’s portion of the costs. The amounts actually requested for reimbursement on the request included total project costs instead of the programs’ specified portion of the project cost resulting in an overpayment. As a result, the City’s records would not identify the proper application of program funds as there is no expenditure to agree to the funds that were overpaid. Cause: Due to the decentralized nature of the reimbursement request process, the reimbursement requests are not reviewed prior to submission to the granting agency. Effect: The City could potentially fund the same expenditures under multiple grants and jeopardize future grant funding due to program noncompliance. Questioned Costs: $31,869. This amount was determined by totaling the overpayments identified. Context/Sampling: A nonstatistical sample of two reimbursement requests were selected for testing which account for $39,389 of federal program expenditures. Recommendation: We recommend the City implement a review process to ensure that reimbursement requests are submitted for the appropriate amounts. Management’s Response: See Corrective Action Plan.

2022-001 ? Subaward Reporting Requirements for Federal Funding Accountability and Transparency Act (FFATA) Significant Deficiency Federal Program Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number 21.027 Criteria The requirements of 2 CFR Part 170 Appendix A state that direct recipients of grants or cooperative agreements are required to report first-tier subawards of $50,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Report System (FSRS) by the end of the month following the month in which the direct recipient awards such subawards. Part 3 of the compliance supplement requires this reporting at the $30,000 threshold, however, CSLFRF-specific guidance provided a higher threshold of $50,000. Condition During the audit, we noted reporting of subaward information to FSRS was not performed. Cause The City did not have controls in place to ensure FSRS reporting was completed in the required timeframe. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Recommendation We recommend the City implement a tracking system to remind staff of the various reports due and respective deadlines. Management?s Response See Corrective Action Plan.

2022-002 ? Subaward Reporting Requirements for Federal Funding Accountability and Transparency Act (FFATA) Noncompliance Federal Program Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number 21.027 Criteria The requirements of 2 CFR Part 170 Appendix A state that direct recipients of grants or cooperative agreements are required to report first-tier subawards of $50,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Report System (FSRS) by the end of the month following the month in which the direct recipient awards such subawards. Part 3 of the compliance supplement requires this reporting at the $30,000 threshold, however, CSLFRF-specific guidance provided a higher threshold of $50,000. Condition During the audit, we identified one subgrant greater than $50,000 which was awarded in the fiscal year 2021-22. It was noted that FFATA subaward reporting was not submitted. The dollar amount of this subaward was $118,810. Cause The City did not have controls in place to ensure FSRS reporting was completed in the required timeframe. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Recommendation We recommend the City implement a tracking system to remind staff of the various reports due and respective deadlines. Management?s Response See Corrective Action Plan.

2022-003 ? Subrecipient Agreements Significant Deficiency Federal Program Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number 21.027 Criteria The requirements of 2 CFR Part 200.332 state the various requirements of subrecipient agreements, which include the assistance listing number of the grant funding being passed through, and indication that the subrecipient would be subject to single audit requirements as set forth in 2 CFR Part 200, Subpart F (Uniform Guidance). Condition During the audit, we noted the agreement with subrecipients did not include the items noted in criteria above. Cause The City did not have controls in place to ensure required information was included in the subrecipient agreement. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Recommendation We recommend the City review 2 CFR Part 200 to ensure information required in subrecipient agreements is properly included. Management?s Response See Corrective Action Plan.

2022-004 ? Subrecipient Agreements Noncompliance Federal Program Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number 21.027 Criteria The requirements of 2 CFR Part 200.332 state the various requirements of subrecipient agreements, which include the assistance listing number of the grant funding being passed through, and indication that the subrecipient would be subject to single audit requirements as set forth in 2 CFR Part 200, Subpart F (Uniform Guidance). Condition During the audit, we noted the agreement with subrecipients did not include the items noted in criteria above. Cause The City did not have controls in place to ensure required information was included in the subrecipient agreement. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Recommendation We recommend the City review 2 CFR Part 200 to ensure information required in subrecipient agreements is properly included. Management?s Response See Corrective Action Plan.

2021-001 ? SF-425, Federal Financial Report Noncompliance Federal Program CDBG-Entitlement Grants Cluster, Assistance Listing 14.218 Criteria Per 2 CFR Part 200, subpart D, section 200.327, Financial reporting, and OMB 0348-0061, SF- 425, Federal Financial Report (the IDIS C04PR29 Cash on Hand Quarterly Report) must be submitted within 30 days after the reporting period end date. Condition During the audit, two out of four Cash on Hand Quarterly reports were submitted later than 30 days after the reporting period end date. Cause The City does not have an effective mechanism to ensure that the required report is submitted timely to HUD. Identification as a Repeat Finding This is not a repeat finding. Effect The City could jeopardize future grant funding due to program noncompliance. Question Costs None. Recommendation We recommend for the City to implement a tracking system to remind staff of the reports due and when they are due. Management?s Response See Corrective Action Plan.

2021-002 ? Subaward Reporting Requirements for Federal Funding Accountability and Transparency Act (FFATA) Noncompliance Federal Program CDBG-Entitlement Grants Cluster, Assistance Listing 14.218 Criteria Per 2 CFR Part 170, Appendix A, a prime grant recipient is required to file a FFATA sub-award report by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $30,000. Condition During the audit, we tested four sub-grants greater than $30,000 individually, which were awarded in the fiscal year 2020-2021. It was noted that FFATA subaward reporting was not submitted timely for these sub-grants. The total amount of these sub-awards was $1,000,000. Cause The Housing department was designated 0.8 FTE to administer the program while the City received additional CDBG-CV funding as a Federal response to provide public assistance. The staffing was needed to focus on updating the allocation plan, public hearings and procurements in order to make sure the funding was used to support those in need as quickly as possible. Identification as a Repeat Finding This is a repeat finding of 2020-002. Effect The City could jeopardize future grant funding due to program noncompliance. Question Costs None. Recommendation We recommend for the City to implement a tracking system to remind staff of the reports due and when they are due. Management?s Response See Corrective Action Plan.

2021-003 ? Insufficient review and approval of costs and reporting Significant Deficiency Federal Program COVID-19 Coronavirus Relief Fund (CRF), Assistance Listing 21.019 Criteria In accordance with Uniform Guidance subpart D, section 200.303, 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, including Allowable Costs and Reporting. Condition Allowable Costs During our audit, we noted three months? worth of timesheets related to direct administrative costs were not reviewed or approved. Employees track their allocated time to allowable activities manually and submit to Finance department for recording. However, no review for accuracy of the timesheets and approval was obtained. Reporting As costs above were not properly approved, the balances reported to the County were inaccurate. The costs are deemed allowable, but because the review of costs was not performed timely, unreliable information was used to prepare County reports. Cause The City did not effectively implement its internal procedures to ensure the allowability of costs and accurate reporting. Identification as a Repeat Finding This is not a repeat finding. Effect The City could be required to return funds if costs are found to be unallowable. Reports submitted to the grantor can include inaccurate information. Question Costs None. Recommendation We recommend for the City to implement an approval system to review allowable costs and activities for proper disbursement and recording. Management?s Response See Corrective Action Plan.

Federal Program - CDBG-Entitlement Grants Cluster, CFDA 14.218 Criteria - The requirements of 24 CFR Section 135.90 state that the Section 3 report be submitted with the annual performance report. Condition - During the audit, we noted that the annual performance report was submitted in December 2020, while the Section 3 report has not been submitted as of the date of this report. Cause - The City did not properly follow its policies and procedures to ensure that the required performance report was submitted timely to HUD. Identification as a Repeat Finding - This is not a repeat finding. Effect - The City could jeopardize future grant funding due to program noncompliance. Question Costs - None. Recommendation - We recommend for the City to implement a tracking system to remind staff of the reports due and when they are due. Management?s Response - See Corrective Action Plan.

Federal Program - CDBG-Entitlement Grants Cluster, CFDA 14.218 Criteria -Per 2 CFR Part 170, Appendix A, a prime grant recipient is required to file a FFATA sub-award report by the end of the month following the month in which the prime recipient awards any subgrant greater than or equal to $25,000. Condition - During the audit, we tested two sub-grants greater than $25,000 individually which were awarded in the fiscal year 2019-20. It was noted that FFATA subaward reporting was not submitted timely for these sub-grants. The dollar amount of these sub-awards was $300,000. Cause- The City did not properly follow its policies and procedures to ensure that the requiredperformance report was submitted timely to HUD. Identification as a Repeat Finding - This is not a repeat finding. Effect - The City could jeopardize future grant funding due to program noncompliance. Question Costs - None. Recommendation - We recommend for the City to implement a tracking system to remind staff of the reports due and when they are due. Management?s Response - See Corrective Action Plan.

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