CITY OF OXNARDLocal Government

Federal Program Title: Community Development Block Grants/Entitlements Grants Federal Catalog Number: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Category of Finding: Program Income Criteria: Office of Management and Budget (OMB) 2 CFR Part 200, Subpart D, Section 200.307(a), requires that Program income must be expended prior to requesting additional Federal funds. Program income exceeding amounts specified in the Federal award may be added to or deducted from the total allowable costs in accordance with the terms and conditions of the Federal award. Condition: During our audit, it was noted that the City recorded part of the program income as deferred revenue rather than recognizing the full amount upon receiving the gross income earned and generated by CDBG loan activity Cause: Lack of appropriate controls over program income. Effect or Potential Effect: Failure to properly report and manage program income could result in noncompliance with federal regulations, potential repayment of misused funds, and could jeopardize future funding opportunities. Furthermore, the mismanagement of program income could lead to inaccurate financial reporting and a lack of accountability in the program's financial operations. Questioned Cost: $152,065 Context: Program income is still in the process of being reconciled for prior and current year. It appears that the current personnel have a misunderstanding regarding the recording and use of program income. Repeat of a Prior-Year Finding: No. Recommendation: We recommend the City to implement a comprehensive program income tracking and reporting system that ensures compliance with federal regulations. The system should include detailed procedures for documenting income generated, ensuring the funds are allocated to the proper grant or project, and reporting the income accurately in accordance with grant terms. Regular training should also be provided to staff responsible for grant management to ensure adherence to federal guidelines and the organization’s internal controls. City's Response: The City is aware of the OMB 2 CFR Part 200 regulations that pertain to program income and will improve its internal controls to ensure compliance with federal regulations. Corrective Action Plan: The City will improve its internal controls by implementing a new policy and procedures that will require staff training and outline detailed procedures for complying with program income regulations. The policy will: (1) require staff to annually participate in HUD trainings related to program income, (2) require staff to immediately deposit and reconcile program income upon receipt, (3) require staff to prepare a monthly program income report and (4) require management to review the program income report to ensure program income is applied to eligible expenses prior to drawing down grant funds. Planned Implementation Date: March 25, 2025 Responsible Person(s): Albert Ramirez, Assistant Director; Denise Ledesma, Grants Coordinator; and Adrianne Sarreal, Analyst.

Federal Program Title: Community Development Block Grants/Entitlements Grants Federal Catalog Number: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Category of Finding: Reporting Criteria: Pursuant to the OMB 2 CFR Part 200, Appendix XI, Compliance Supplement May 2024, Part 4 – 14.218 Community Development Block Grants/Entitlements Grants (page 4-14.218-25 & 26), the Cash on Hand Quarterly Report, must be submitted to the grantee’s HUD local field office within 30 days after the end of the reporting period. Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. For subaward information, report no later than the end of the month following the month in which the subaward was issued. (For example, if the subaward was made on November 7, 2025, the subaward must be reported by no later than December 31, 2025). Condition: The City failed to submit all of the Fiscal Year 2024 Cash on Hand Quarterly Reports within the required 30-day period following each reporting quarter until February 2025. The City did not submit subaward information for subrecipients receiving federal funds of $30,000 or more from the City to the FSRS until February 2025. These reports were due by the end of the month following the issuance of each subaward. Additionally, staff responsible for financial reporting were not adequately trained on the specific requirements for reporting under federal grants, which contributed to the late submission of the reports. Cause: Lack of appropriate control over reporting. Effect or Potential Effect: Noncompliance may result in suspension, termination, or disallowance of grant funds, and delay or withhold of future grant payments. Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend that the City develop and implement policies and procedures for completeness and timely submission of reports. This may include: 1. Thoroughly review the reporting requirements each year for any possible updates, substitutions, or missing reports, and document the process, including the preparer and reviewer. 2. Prepare a listing of subaward agreements, including details such as the subrecipient, original and amended amounts, execution date (i.e., when it becomes legally binding), reporting date, name of the person who submitted the report, name of the person who reviewed the report, etc., for each program to identify and track the reporting of subaward information. 3. Staff responsible for financial reporting should receive specific training on federal reporting requirements to ensure accuracy and compliance. City's Response: The City is aware of the OMB 2 CFR Part 200 regulations that pertain to Cash on Hand Report and Federal Funding Accountability and Transparency Act (FFATA) reporting. With respect to the Cash on Hand Report, staff reviewed the published HUD guidance but needed further clarification to properly complete the report. Staff reached out to our HUD Representative and received clarification. Staff has all the information needed to properly complete the report and plan to submit the report quarterly as required. With respect to the FFATA Reporting, staff inadvertently thought the report was due annually, rather than monthly. Corrective Action Plan: The City will improve its internal controls by implementing a new policy and procedures that will: (1) require staff to annually participate in HUD trainings related to federal grant reporting, (2) require management and staff to meet monthly to discuss and track federal reporting requirements and review a listing of subaward agreements and (3) require staff to submit the Cash on Hand Report quarterly and the FFATA Report monthly. Planned Implementation Date: March 25, 2025 Responsible Person(s): Albert Ramirez, Assistant Director; Denise Ledesma, Grants Coordinator; and Adrianne Sarreal, Analyst.

Federal Program Title: Staffing for Adequate Fire & Emergency Response Federal Catalog Number: 97.083 Federal Agency: U.S. Department of Homeland Security Category of Finding: Reporting Criteria: According to Notice of Funding Opportunity (NOFO) Fiscal Year 2023 Staffing for Adequate Fire and Emergency Response (SAFER) Grant program, recipients are required to submit semi-annual Federal Financial Reports and Program Performance Reports within 30 days after the end of each reporting period. Condition: The City submitted the Performance Progress Report for the period of January 2024 to June 2024 one day late, and the Federal Financial Report for the period of July 2023 to December 2023 three months late. Cause: The primary cause of the delayed financial reporting was the unexpected turnover of key staff members responsible for financial reporting. The City did not have sufficient backup procedures in place to ensure a smooth transition or proper training for new personnel in time to meet reporting deadlines. This lack of continuity resulted in delays in financial data preparation. Effect or Potential Effect: The delays in financial reporting may lead to non-compliance with federal reporting requirements. This could impact the City’s standing with the funding agency, potentially affecting future funding opportunities Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend the City to establish a contingency plan to address staff turnover, including cross-training key personnel and maintaining detailed documentation of financial reporting processes. The City should also implement a standardized handoff procedure to ensure that incoming staff are adequately trained and have access to the necessary resources to continue the reporting function without disruption. Management Response and Corrective Action Plan City's Response: As noted in the auditor findings, the late filings for Safer Grant Reporting in Fiscal Year 2024 were due to turnover in the department’s grant administrator position and the redistribution of work responsibilities. The slight delays in the reporting did not produce any notice of non-compliance or drawdown withholdings by the Grantor. The Department has completed the redistribution of work responsibilities and now has a dedicated grant administrator and management oversight. Corrective Action Plan: The department will develop a contingency plan and training procedures to ensure continuity of grant procedures and a review process to ensure reporting accuracy. Planned Implementation Date: June 30,2025 Responsible Person(s): Rose Rodarte and Francine Gutierrez

Federal Program Title: Staffing for Adequate Fire & Emergency Response Federal Catalog Number: 97.083 Federal Agency: U.S. Department of Homeland Security Category of Finding: Activities Allowed/Unallowed Criteria: According to 2 CFR 200.430, employees working on federally funded projects are required to submit timesheets that accurately reflect the time spent on the project. These timesheets must be approved by a responsible supervisor to ensure that the reported hours are accurate, reasonable, and properly allocated. Additionally, organizations must establish and maintain effective internal controls to ensure compliance with timekeeping and payroll procedures. Condition: During the audit, it was found that the City's time roster report approval process was not consistently followed. We selected four pay periods for testing. In two of these periods, the time roster reports were not properly reviewed and approved by a battalion chief supervisor before submission for payroll processing. These time roster reports were automatically approved by the system to meet payroll processing deadlines, bypassing the required supervisory review. Cause: The failure to adhere to the time roster report approval process was due to a lack of oversight and insufficient enforcement of internal control procedures. Effect or Potential Effect: The lack of proper time roster approval creates a risk of inaccuracies in the allocation of payroll costs to federal grants, which could result in non-compliance with federal regulations. Additionally, failure to follow the required process could lead to improper charging of labor costs, potentially jeopardizing the City’s eligibility for future funding and risking the disallowance of grant-related costs. Questioned Cost: None. Repeat of a Prior-Year Finding: No. Recommendation: We recommend the City to strengthen its internal controls related to time roster report approval. Specifically, a formal time roster report approval process should be implemented that includes clear guidelines for timely approval by supervisors. The City should also establish a tracking system to ensure that time roster report is approved before submission for payroll processing. Regular training for staff and supervisors on the importance of accurate timekeeping and approval procedures should be conducted to reinforce compliance with federal grant requirements. Management Response and Corrective Action Plan City's Response: The City uses Telestaff to maintain Fire employees’ work schedules and as the system of record for payroll timekeeping. The audit identified several rosters that were not finalized (approved) by the Duty Chief before the conclusion of their shift and were auto-finalized by the system. Going forward, the City will ensure that the finalization process by the Duty Chief, which essentially serves to confirm that the time and attendance as reflected in Telestaff is what was actually worked, is adhered to. Oxnard Fire Department Policy 1005 requires that the Duty Chief review and approve the roster at the conclusion of their shift to verify the accuracy of the roster for payroll processing. In instances where overtime related to late relief is in unapproved status (depicted with an asterisk in the system), the Duty Chief will ensure the late relief is approved before finalizing the daily roster. After the roster is finalized (approved) by the Duty Chief, the timekeeper reviews the roster for the appropriate general ledger account(s), paycode(s), and project coding to ensure proper accounting of payroll costs. If the Duty Chief has not finalized the roster by 0800, the timekeeper will inform the Department Assistant Chiefs to initiate completion of the task. Corrective Action Plan: The Department will conduct a formal review of its processes and policies to identify potential weaknesses in the payroll timekeeping and approval process, and will update its policies and procedures to align with the roles and responsibilities of those involved in rostering and timekeeping. The department has already taken corrective action to ensure that duty chiefs are finalizing the rosters before the end of their shift and making it the responsibility of the timekeeper to initiate action when finalization by the Duty Chiefs has not occurred so the timekeepers review process can be completed. Planned Implementation Date: June 30, 2025 Responsible Person(s): Karsten Guthrie and Rose Rodarte

2021-001 - Indirect Cost Allocation (SD) CFDA Title and Number: 14.218 - Community Block Grants Name of Federal Agency: Department of Housing and Urban Development Internal Control over Compliance: Allowable Cost Criteria: 2 CFR Part 200.414 requires that governmental entities support indirect costs with a cost allocation plan or an indirect cost proposal prepared in accordance with the Uniform Guidance. 2 CFR Part 200 Appendices III-VII contain the requirements for the development of submission of indirect cost rate proposals and cost allocation plans. A non-Federal entity that has never received a negotiated indirect cost rate, may elect to charge a de minimis rate of 10% of modified total direct costs. Condition: The City does not have a cost allocation plan or an indirect cost proposal prepared in accordance with the Uniform Guidance. The City has not elected to use the 10% de minimis rate either. The City charged $22,573 of liability insurance costs to Fund 285 based on a City cost allocation plan. Cause: The City has not completed the indirect cost study that will comply with requirements of the Uniform Guidance for indirect cost. Effect or Potential Effect: Indirect costs charged to the CDBG program may not be eligible for reimbursement. Questioned Cost: None, since the amount charged was less than 10% of the total cost. Repeat of Prior-Year Finding: 2017-005 Recommendation: The City should complete the central service cost allocation plan (as indicated the Corrective Action for prior year finding 2017-005). It should include the cost allocation plan for indirect costs, including liability insurance, as required by Uniform Guidance. City's Response 2021: The City continues making progress on developing the central service cost allocation plan that will include a cost allocation method for indirect costs, such as liability insurance, in accordance with OMB's Uniform Guidance. Planned Implementation Date: The central service cost allocation plan will be completed by September 2022 and will be implemented with the FY23-24 budget. Responsible Person: Jim Costello, Financial Analyst III; Beth Vo, Assistant CFO

2021-002 - CDBG HUD Findings (SD) CFDA Title and Number: 14.218 - Community Block Grants Name of Federal Agency: Department of Housing and Urban Development Internal Control over Compliance: Allowable Cost Criteria: Recipients of CDBG grants are required to be in compliance with all requirements imposed by the U.S. Department of Housing and Urban Development at all times. Condition: The City received fifteen findings and two concerns from the U.S. Department of Housing and Urban Development Block Grant (CDBG) Program. HUD conducted the remote monitoring in order to assess the City's performance and compliance with applicable requirements. This report covered grants B-18-MC-06-0534 and B-19-MC-06-0534 for $2,502,719 and $2,516,091, respectively. A finding is a deficiency in program performance based on violation of a statutory or regulatory requirement. A concern is a deficiency in program performance that is not based on a statutory or regulatory requirement but is brought to the City's attention. The following summarizes the findings: 1) Fair Housing Eligibility - The City did not provide sufficient documentation to support a subrecipient's eligibility and national objective. 2) Fire Station Equipment and Vehicles - Fire Station generators is an ineligible use of CDBG funds. 3) Citywide Homebuyer Loan Program - The City provided all participants a standard loan of $30,000 instead of limiting the amount of the loan to 50% of the required down payment as specified in CDBG regulations. 4) Conflict of Interest - The City provided homeowner loan to a City employee and there was no evidence that the City determined whether a conflict of interest existed. 5) Time and Activity Sheets - The City did not provide documentation associating staff costs charged to specific CDBG program with eligible housing activities carried out. 6) Lead-Based Paint - The City's rehabilitation program relies solely on a form signed by the City inspector indicating that the home was built after 1978 to determine when a property required lead-based paint inspection, assessment and correction. 7) Procurement Written Policies and Procedures - The City's purchasing policy manual did not address if cost plus a percentage cost and percentage of construction cost methods of contracting were prohibited. 8) Procurement History - The City's documentation was not sufficient to detail the procurement history to identify the rationale for the method of procurement, the selection of contract type, contract selection or reject, or the basis for the cost or price of the contract. 9) Procurement Procedures for Housing Services Programs and Fire Department - The City did not have policies to guarantee that environmental consultants are procured for based on qualifications. There was no evidence provided for the procurement of select fire department equipment and vehicles. 10) Financial Standards - HUD was unable to determine the account codes assigned to specific CDBG activities, CFDA title and grant number within the City's accounting records. Without these, HUD was unable to identify the source and application of the CDBG award. 11) Source Documentation - Source Documentation did not support all expenditure costs of select vouchers reviewed. 12) Record Retention and Access Policy - The City's record retention and access policy did not comply with 2 CFR Part 200 requirements. 13)Protected Personally Identifiable (PII) Information - The City did not provide written documentation to support an internal control self-assessment nor measures to safeguard PII information. 14) Audit Costs - HUD was unable to determine if measures are in place to ensure HUD awards are charged no more than a reasonably proportionate share of the audit costs. 15) Equipment Records - The City's equipment records do not comply with all requirements of 2 CFR Part 200. Cause: The deficiencies were attributed to HUD to various causes including: - Not having updated policies and procedures for the CDBG programs - The procurement policies and procedures needing to be revised to comply with 2 CFR Part 200 - Not having the appropriate accounting codes to keep track of CDBG costs by activity/program/grant number - Not keeping complete documentation to support costs charged to CDBG Effect or Potential Effect: Various Questioned Cost: None for current year. For prior years: $470,000 for Finding #2; $5,137.16 for Finding #11 Context: The U.S. Department of Housing and Urban Development conducted a routine monitoring assessment over a selection of CDBG grants and administered by the City during program years 2018 and 2019, and determined that the City had fifteen findings which would require corrective actions, and two concerns for which they provided recommended actions. Repeat of a Prior-Year Finding: No. Recommendation: We recommend that the City continue to follow up with the U.S. Department of Housing and Urban Development in order to sufficiently meet the required corrective action plan. City's Response 2021: The City continues to follow up with the U.S. Department Housing and Urban Development (HUD) in order to sufficiently complete its Corrective Action Plan detailed in the City's response to Fiscal Year 2021 Remote Auditing letter to HUD dated February 8, 2022. Planned Implementation Date: Corrective Action completion dates vary by finding, with all Corrective Actions to be completed by May 9, 2022. Responsible: Andrea Palmer, Grants Manager

2019-001 ? Preparation of the Schedule of Expenditures of Federal Awards (NC) CFDA Title and Number: 16.922 Equitable Sharing Program Name of Federal Agency: U.S. Department of Justice Compliance Requirement: Auditee Requirements Criteria: CFR 200.510(b) states that the auditee must prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ?200.502 Basis for determining Federal awards expended. CFR 200.502 states that the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. Condition: The amount reported as expended related to Equitable Sharing Program included approximately $180,000 in funds received but not expended. Cause: The staff member who prepared the SEFA was unaware of the criteria noted above. Effect or Potential Effect: The SEFA is the basis of the auditor?s identification of major programs. Our determination of major programs was impacted by the overstatement of expenditures. Questioned Cost: None Context: The errors were corrected during the audit. Repeat of a Prior-Year Finding: No Recommendation: We recommend the City to provide additional training to staff members who are responsible for preparing the SEFA. City's Response 2019: The City?s staff accountant who prepared the SEFA was new to the process. She followed how this item was reported in prior years and made an error in reporting the receipts for 16.922 Equitable Sharing Program. Going forward, all staff involved in grant accounting and reporting will attend formal training on the Uniform Guidance issued by the Office of Management and Budget (OMB) as well as stay abreast of current developments and new guidance issued by the State Controller?s Office, Grants.Gov and the AICPA. Planned Implementation Date: June 30, 2020 Responsible Person: Chief Financial Officer, Kevin Riper

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