EL MONTE, CITY OF

Finding No. SA 2025-002 – Noncompliance with CSLFRF Period of Performance Requirements Federal Assistance Listing Number: 21.027 Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of Treasury Award Period: Fiscal year 2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Per OMB Compliance Supplement and Compliance and Reporting Guidelines issued by the U.S. Department of Treasury for Coronavirus State and Local Fiscal Recovery Funds, no new obligations or costs may be incurred during the period beginning January 1, 2025 and ending on December 31, 2026. During this two-year period from January 1, 2025, through December 31, 2026, recipients are only permitted to expend funds to satisfy obligations incurred or CSLFRF funds obligated by December 31, 2024. Condition: The City incurred and reported expenditures totaling $10,764 during the period from January 1, 2025 through June 30, 2025, which were not related to CSLFRF funds obligated on or before December 31, 2024. Cause: The City did not have adequate internal controls, policies, and procedures in place to monitor compliance with the CSLFRF period of performance requirements. Effect: Expenditures incurred after the allowable obligation period constitute noncompliance with CSLFRF program requirements and may result in questioned costs, repayment of funds, or other sanctions, including fines, penalties, or the suspension or termination of federal awards. Questioned Costs: $10,764 Repeat finding: No. Recommendation: We recommend that the City strengthen controls over monitoring the period of performance for CSLFRF funds to ensure that expenditures are incurred only in accordance with U.S. Department of the Treasury requirements. Views of responsible officials and planned corrective actions: The Finance Department staff will review all items prior to completing the report. Personnel responsible for implementation: Carmen Tsui, Grant Accountant Completion Date: June 30, 2026

The Finance Department staff will review all items prior to completing the report. Personnel responsible for implementation: Carmen Tsui, Grant Accountant Completion Date: June 30, 2026

Finding No. SA 2025-005 – Inclusion of Anticipated Equitable Sharing Funds in the Adopted Budget Federal Assistance Listing Number: 16.922 Federal Program Title: Equitable Sharing Program Federal Agency: U.S. Department of Justice Award Period: Fiscal year 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Per the OMB Compliance Supplement and guidance issued by the U.S. Department of Justice for the Equitable Sharing Program, agencies are permitted to earmark in their budgets only Equitable Sharing funds that have been awarded and received and are currently on hand. Agencies may not budget or commit anticipated or future Equitable Sharing funds that have not yet been awarded or received. Condition: The City’s adopted budget included anticipated Equitable Sharing funds that had not yet been awarded or received. Cause: The City did not have adequate procedures in place to ensure that only awarded and received Equitable Sharing funds were included in the adopted budget. Effect: Including anticipated funds in the adopted budget may result in noncompliance with Equitable Sharing Program requirements and could lead to sanctions such as suspension or permanent exclusion from the program, denial or extinguishment of future sharing requests, or the requirement to return previously disbursed funds. Questioned Costs: None. Repeat finding: No. Recommendation: We recommend that management strengthen procedures over budget preparation related to the Equitable Sharing Program to ensure that only Equitable Sharing funds that have been awarded and received are included in the adopted budget. Views of responsible officials and planned corrective actions: The Finance Staff will collaborate with Police Department Staff during the budgeting process to ensure that revenue is not inappropriately budgeted. Personnel responsible for implementation: Carmen Tsui, Grant Accountant Completion Date: June 30, 2026

The Finance Staff will collaborate with Police Department Staff during the budgeting process to ensure that revenue is not inappropriately budgeted. Personnel responsible for implementation: Carmen Tsui, Grant Accountant Completion Date: June 30, 2026

F2021-001: Special Tests and Provisions ? Payment to Subrecipients Federal Catalog Number: 14.231 Federal Program Name: Emergency Shelter Grant Program Federal Agency: Department of Housing and Urban Development Pass-Through Entity: Volunteers of America of Los Angeles Federal Award Number and Award Year: E-20-MC-06-0517 ? FY 20-21 Criteria: The recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. This requirement also applies to each subrecipient that is a unit of general-purpose local government (24 CFR Section 576.203). Condition During our tests of controls and compliance over special tests and provisions pertaining to payments to subrecipients, we noted that 4 out of 7 subrecipient reimbursement requests tested were paid beyond the 30 days requirement. Cause The Housing Division of the City was experiencing a staff shortage due to the Covid-19 pandemic. The division did not have adequate monitoring controls in place to ensure that the payments to subrecipients were processed timely. Effect The City is not paying its subrecipients on a timely basis and is not in compliance with laws and regulations related to special tests and provisions ? payment to subrecipients. Questioned Costs Not Applicable. Recommendation We recommend the City strengthen its controls and provide appropriate training to the staff to ensure that payments to subrecipients are made timely and in accordance with the federal requirements. Views of Responsible Officials and Planned Corrective Action Due to the staff turnover in the Housing Division and VOALA as well as the negative impacts of Covid-19 these invoices were not processed timely. Moving forward, the Housing Division will ensure that complete subrecipient invoices will be paid within 30 days of receipt, as per 24 CFR Section 576.203.

Due to the staff turnover in the Housing Division and VOALA as well as the negative impacts of Covid-19 these invoices were not processed timely. Moving forward, the Housing Division will ensure that complete subrecipient invoices will be paid within 30 days of receipt, as per 24 CFR Section 576.203. Corrective Action Plan: The Department will process invoices timely. Responsible Party: Economic Development Director Estimated Completion Date: June 30, 2022

Finding F 2019-001 ? Lack of Updated Written Policies and Procedures Federal Program Information Federal Catalog Number: 16.922 Federal Program Name: Equitable Sharing Program - Federal Asset Forfeiture Federal Agency: Department of Justice Pass-Through Entity: N/A Federal Award Number and Award Year: CA019220 - FY18-19 Criteria or Specific Requirement Uniform Guidance requires nonfederal entities that receive federal awards to establish written policies, procedures or standards of conduct for the following sections: ? Financial management (200.302) ? Payment (200.305) ? General procurement standards (200.318) ? Competition (200.319) ? Methods of procurement to be followed (200.320) ? Compensation ? personal services (200.430) ? Compensation ? fringe benefits (200.431) ? Relocation costs of employees (200.464) ? Travel costs (200.474) In addition, 2 CFR 200.303 requires nonfederal entities to maintain effective internal controls over federal awards. The focus of these policies and procedures should be to ensure that those in the organization who carry out the objectives of the award understand: ? The federal statutes, regulations, and terms and conditions of the award ? How to evaluate and properly monitor compliance ? The steps to take if noncompliance is identified Condition The City has existing written policies, procedures, and standards of conduct in place that needs to be updated to comply with the Federal awards as required by Uniform Guidance (2 CFR 200), Subparts D (Post Federal Award Requirements) and E (Costs Principles). Cause The City lacks qualified staff to update its existing written policies, procedures or standards of conduct to ensure that they met the current requirements of the Federal regulations. Effect Failure to establish these policies, procedures or standards puts the City in noncompliance with current Federal regulations and increases the likelihood of fraud, waste, and abuse of Federal funds. It also may increase the likelihood of findings in subsequent Single Audits due to lack of inadequate internal controls. Also, lack of updated written policies and procedures might result to inconsistent practices among employees and/or departments, processing errors due to a lack of knowledge, inability to enforce employee accountability, and noncompliance with the Uniform Guidance. Questioned Costs Not applicable. Recommendation We recommend that the City review and update its policies and procedures that assure compliance with the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Views of Responsible Officials Subsequent to the year-end closing, the City started the process of updating its policies and procedures to follow the requirements of the Uniform Guidance.

Identifying Number: F 2019-001 Audit Finding: The City has existing written policies, procedures, and standards of conduct in place that needs to be updated to comply with the Federal awards as required by Uniform Guidance (2 CFR 200), Subparts D (Post Federal Award Requirements) and E (Costs Principles). Contact person responsible: Marilyn Toledo, Accounting Manager Subsequent to the FY18-19 year-end closing, the City started the process of updating its policies and procedures to follow the requirements of the Uniform Guidance. Anticipated completion date: June 30, 2020

Finding F 2019-002 ? Equipment Management Federal Program Information Federal Catalog Number: 16.922 Federal Program Name: Equitable Sharing Program - Federal Asset Forfeiture Federal Agency: Department of Justice Pass-Through Entity: N/A Federal Award Number and Award Year: CA019220 - FY18-19 Criteria or Specific Requirement Uniform Guidance 2 CFR Part 200 require property records to be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of Federal Participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. In addition, a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Also, effective control and accountability must be maintained for all property and equipment. The City must be able to account for all pieces and equipment purchased from federal funds. The property and equipment listings associated with federal grants should be reviewed periodically by knowledgeable officers to ensure completeness and accuracy. Condition As of June 30, 2019, the City was in the process of completing its physical inventory of equipment, reconciling the inventory to the property records listing and general ledger and updating its property records to ensure that the appropriate details such as: description (including who holds title, use, and condition of the property) as required by the Uniform Guidance are included. Also, we noted the City lacks internal control procedures over properties. The City did not have a complete list of properties. It did not capitalize one of the properties purchased over $5,000 during the year. The City completed the physical inventory count for the Federal Asset Forfeiture program on November 7, 2019 and updated the schedule of capital assets funded by the Federal Asset Forfeiture program with the necessary information required by the uniform Guidance on December 19, 2019. Repeat Finding This is a repeat finding. See Finding F2018-004. Cause The City lacks manpower to complete the physical inventory of capital assets by June 30, 2019. Effect The City may not identify equipment that is missing, idle or needs repair. The City also may not be able to track equipment or capital assets that are owned by federal agency. Questioned Costs $5,000 Recommendation While the City was able to comply with the requirements after year-end. To ensure that the City continue to be in compliance with the requirements, we recommend that City strengthen its internal controls over the equipment related transactions. Procedures should be in place to ensure that all newly purchased equipment is added promptly to the inventory system and the information on the schedule of capital assets is complete. Views of Responsible Officials The City completed the physical inventory of capital assets funded by Federal Asset Forfeiture on November 7, 2019. The City also completed the schedule of capital assets funded by Federal Asset Forfeiture with all the requirements by Uniform Guidance on December 19, 2019. Furthermore, the City implemented additional procedures over capital assets.

Identifying Number: F 2019-002 Audit Finding: As of June 30, 2019, the City was in the process of completing its physical inventory of equipment, reconciling the inventory to the property records listing and general ledger and updating its property records to ensure that the appropriate details such as: description (including who holds title, use, and condition of the property) as required by the Uniform Guidance are included. Also, we noted the City lacks internal control procedures over properties. The City did not have a complete list of properties. It did not capitalize one of the properties purchased over $5,000 during the year. The City completed the physical inventory count for the Federal Asset Forfeiture program on November 7, 2019 and updated the schedule of capital assets funded by the Federal Asset Forfeiture program with the necessary information required by the uniform Guidance on December 19, 2019. Corrective Actions Taken or Planned: Contact person responsible: Marilyn Toledo, Accounting Manager The City completed the physical inventory of capital assets funded by Federal Asset Forfeiture on November 7, 2019. The City also completed the schedule of capital assets funded by Federal Asset Forfeiture with all the requirements by Uniform Guidance on December 19, 2019. Furthermore, the City implemented additional procedures over capital assets. Anticipated completion date: Complete

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