CITY OF GARDENALocal Government

Finding: 2022-001 Allowable Costs/Cost Principles ? Internal Control and Compliance over Payroll Expenditures Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants / Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-21-MC-06-0577/B-20-MW-06-0577 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to ?200.430 Compensation - Personal Services under Uniform Guidance Title 2 Grants and Agreement, Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E ? Cost Principles: In general, costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph in accordance with the Standards for Documentation of Personnel Expenses. When budget estimates are used, the Standards for Documentation of Personnel Expenses require the following: Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity's written policies) are identified and entered into the records in a timely manner. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a Federal awards based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: During our audit, we noted that the City charged the payroll related expenditures to the program based on the City Council approved budget and payroll allocation percentage; however, there was no further justification of actual activities performed by the City staff during the year to the budgeted allocation. Cause: The program did not follow the Uniform Guidance requirements. Effect or Potential Effect: Without further reviewing and reconciliation over actual activities performed by the City staff, it resulted in the City not in compliance with the Uniform Guidance. Questioned Costs: None noted. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City incorporate the Uniform Guidance requirements into its existing policies and procedures to ensure the City is in compliance with the Uniform Guidance. Views of Responsible Officials: Management concurs the finding.

Finding: 2022-002 Cash Management ? Internal Control and Compliance over Drawdown Requests Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants / Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-21-MC-06-0577/B-20-MW-06-0577 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to the City?s Administrative Policy & Procedures Ref: APP-2022-002: Drawdowns: A drawdown is a request for payment against a grantee's line of credit. Grantees create a voucher in Integrated Disbursement and Information System (?IDIS?) Online to draw down funds. Grantees draw funds as required to pay for work that has occurred for an activity. Once the grantee creates and approves a drawdown voucher in IDIS Online, HUD will process the voucher request and wire-transfer the requested amount to the grantee in two to three business days. Drawdowns will be processed by two staff members, one to initiate and create the drawdown and the second to verify and approve. The City will complete drawdowns within 60 days of the end of each fiscal quarter with the exception of the last quarter to allow for the calculation of end-of-year expenses. Pursuant to the City?s Administrative Policy & Procedures Ref: APP-2013-003: Compliance with Grant Requirement: Request for reimbursement (drawdown) are accurate and submitted on scheduled (or as soon as possible after completion of related grant activities). Close out: Grants should be closed out when the grant has expired (reached the end date) and all open administrative, compliance, legal and audit issues have been resolved. Condition: During our audit, we noted that the Community Development Block Grants / Entitlement Grants drawdown requests were not performed timely. 1) July 2021 through May 2022 related expenditures drawdown request was requested on June 9, 2022 2) June 2022 related expenditures drawdown request was requested on January 31, 2023. Quarterly Reimbursement (End Date) Deadlines Requested Date September 30, 2021 November 30, 2021 June 9, 2022 December 31, 2021 February 28, 2022 June 9, 2022 March 31, 2022 May 30, 2022 June 9, 2022 June 30, 2022 After year-end accrual January 31, 2023 Cause: The City did not follow the grant management policies in place to ensure the reimbursement requests are being prepared for timely submission. Effect or Potential Effect: The City is not in compliance with its grant management policies. The delay in requesting the drawdown requests only impacts the City?s cashflow and it also resulted in filing the Consolidated Annual Performance and Evaluation Report late. Questioned Costs: None noted. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City follow its grant management policies to ensure drawdown requests and close outs are submitted and prepared timely. Views of Responsible Officials: Management concurs the finding.

Finding: 2022-003 Cash Management ? Internal Control and Compliance over Reimbursement Requests and Close Outs Identification of the Federal Program: Assistance Listing Numbers: 16.034/16.738 Assistance Listing Title: Coronavirus Emergency Supplemental Funding Edward Byrne Memorial Justice Assistance Grant Program Federal Agency: U.S. Department of Justice Pass-Through Entity: N/A Federal Award Identification Number: 2020-VD-BX-1207 2019-DJ-BX-0160/ 2020-DJ-BX-0486 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to the City?s Administrative Policy & Procedures Ref: APP-2013-003: Compliance with Grant Requirement: Request for reimbursement (drawdown) are accurate and submitted on scheduled (or as soon as possible after completion of related grant activities). Close out: Grants should be closed out when the grant has expired (reached the end date) and all open administrative, compliance, legal and audit issues have been resolved. Pursuant to the U.S. Department of Justice Grant Manager?s Memorandum, PT. I: Project Summary Project Number #2019-DJ-BX-0160 section 7 Program Period: from 10/1/2018 to 9/30/2020. Condition: During our audit, we noted that the reimbursement requests for programs - Coronavirus Emergency Supplemental Funding and Edward Byrne Memorial Justice Assistance Grant Program were not requested from the Department of Justice and the old grant closeout was not closed out accordingly. Cause: The City did not follow the grant management policies in place to ensure the reimbursement requests are being prepared for timely submission. In addition, the City did not monitor the grant agreement to ensure the grant?s period of performance requirement is met. Effect or Potential Effect: The City is not in compliance with its grant management policies. Questioned Costs: None noted. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City follow its grant management policies to ensure reimbursement requests and close outs are submitted and prepared timely. Views of Responsible Officials: Management concurs the finding.

Finding: 2022-004 Reporting ? Internal Control and Compliance over Reporting Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants/Entitlement Grants Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: N/A Federal Award Identification Number: B-21-MC-06-0577, B-20-MW-06-0577 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to the City?s Administrative Policy & Procedures Ref: APP-2022-002: Action Plan - Due to HUD by May 15th for the following fiscal year which begins July 1, CAPER - Due 90 days after the end of the fiscal year (September 30th). Pursuant to the Uniform Guidance April 2022 Compliance Supplement: PR29, Cash on Hand Quarterly Reports ? PR29 in the IDIS reports the financial status of the grants and cooperative agreement funds and cash transactions using those funds. These reports are required to be submitted to HUD on a quarterly basis, 30 days after the reporting period end date. The due dates of each quarterly report is noted below: Reporting Period Grantee Submission (End Date) Deadlines September 30, 2021 October 30, 2021 December 31, 2021 January 30, 2022 March 31, 2022 April 30, 2022 June 30, 2022 July 30, 2022 Consolidated Annual Performance and Evaluation Report (?CAPER?) (24 CFR 91.520): Integrated Disbursement and Information System (IDIS) (OMB No. 2506-0077) ? Grantees may include reports generated by IDIS as part of their annual performance and evaluation report that must be submitted for the CDBG Entitlement program 90 days after the end of a grantee?s program year. Section IV.B.2.(c) of the CDBG-CV Notice reiterated the waiver authorized by a May 7, 2020, HUD memorandum (found in the waiver information link noted in IV. Other Information, below) that waives the 90 day requirement for program year 2019 annual performance and evaluation reports, subject to the condition that within 180 days after the evaluation reports, subject to the condition that within 180 days after the close of a jurisdiction?s program year that it submit its performance report. Auditors are only expected to test information extracted from IDIS in the following systemgenerated reports and which include (1) PR26 ? CDBG Financial Summary Report (?PR26?). A grantee?s CAPER, submitted through the IDIS e-Con Planning Suite, is due 90 days after the close of a jurisdiction?s program year. Condition: During the audit, we noticed that the City did not prepare the Annual Action Plan within the timeframe to meet its grant management policy. 1) FY2021-2022 Annual Action Plan was adopted on August 10, 2021 (not before May 15, 2021) 2) FY2022-2023 Annual Action Plan was adopted on August 9, 2022 (not before May 15, 2022) During the audit, we noticed that three out of four quarters the PR29 were not filed within the deadline and noted below: Reporting Period Grantee Submission (End Date) Deadlines Filed Date September 30, 2021 October 30, 2021 March 6, 2023 December 31, 2021 January 30, 2022 March 6, 2023 March 31, 2022 April 30, 2022 July 28, 2022 June 30, 2022 July 30, 2022 July 28, 2022 During the audit, we noticed that the PR26 and the CAPER was not filed as of March 22, 2023. Cause: The City did not follow the grant management policies in place to ensure the reporting requirements are met. Effect or Potential Effect: The City was not in compliance with the program?s reporting requirements. Questioned Costs: None noted. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City follow its grant management policies to ensure the reporting requirements are met. Views of Responsible Officials: Management concurs the finding.

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