San Bernardino, City ofLocal Government

Federal Program CDBG-Entitlement Grants Cluster, AL 14.218 Criteria The requirements of 2CFRPart170 Appendix A states 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 following month in which the direct recipient awards such subawards. Part 3 of the compliance supplement requires this reporting at the $30,000. Condition During the audit, we noted reporting of subaward information to FSRS was not performed within the required timeframe. Cause The City did not have controls in place to ensure FSRS reporting was completed in the required timeframe. Identification as a Repeat Finding Reported as finding 2023-001 in the prior year. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Context/Sampling In fiscal year 2023, a nonstatistical sample of two subrecipient agreements entered within the fiscal year under audit were selected to review FSRS submissions. This accounted for $77,454 of federal expenditures. Upon follow-up with the City regarding the correction of finding 2023-001, they were unable to provide evidence that the City had implemented the necessary corrective action. As a result, this finding will remain as a repeat finding. 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.

Federal Program CDBG-Entitlement Grants Cluster, AL 14.218 Criteria The requirements of 2CFRPart170 Appendix A states 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 following month in which the direct recipient awards such subawards. Part 3 of the compliance supplement requires this reporting at the $30,000. Condition During the audit, we noted reporting of subaward information to FSRS was not performed within the required timeframe. Cause The City did not have controls in place to ensure FSRS reporting was completed in the required timeframe. Identification as a Repeat Finding This is a repeat finding. Listed as 2022-001 in prior year single audit report. Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Context/Sampling A nonstatistical sample of two subrecipient agreements entered within the fiscal year under audit were selected to review FSRS submissions. This accounted for $77,454 of federal expenditures. 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.

Federal Program Emergency Rental Assistance Program, AL 21.023 Criteria Per 2CFR200.332, the City is to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Condition During the audit, we noted the most recent subrecipient monitoring procedures were performed from August 2022 through January 2023 over payments made to recipients from July 2021 through August 2022. Only two payments included in the monitoring sample were within fiscal year 2023. Because the first advance to the subrecipient for fiscal year was made in July 2022, we were unable to determine that the two payments are a result of the City's fiscal year 2023 expenditures. No monitoring procedures were performed over the remainder of the months in the fiscal year, therefore resulting in discrepancies in the submitted quarterly reporting. Cause The City did not have controls in place to subrecipient monitoring was performed in a timely manner. Identification as a Repeat Finding This is not a repeat finding Effect The City could jeopardize future grant funding due to program noncompliance. Questioned Costs None. Context/Sampling The most recent subrecipient monitoring performed was selected to review. This accounted for $5,057,447 of federal expenditures. Recommendation We recommend the City implement a tracking system to remind staff to perform monitoring procedures in a timely manner. Management’s Response See Corrective Action Plan.

Federal Program American Rescue Plan Act, AL 21.027 Criteria The requirements of 2CFR 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 2CFR Part 200, Subpart F (Uniform Guidance). Condition During the audit, we noted the agreement with subrecipient did not include the items noted in the criteria above. Cause The City did not have controls in place to ensure the required information was included in the subrecipient agreement. Identification as a Repeat Finding This is not a repeat finding. Effect The City could jeopardize future grant funding due to program noncompliance and subrecipients could be unaware of the required compliance requirements. Questioned Costs None. Context/Sampling The only new subrecipient agreement entered for the fiscal year under audit was selected for review. There were no federal expenditures related to the agreement for the period under audit as the agreement was entered into in June 2023. Recommendation We recommend the City review 2CFR200 to ensure information required in subrecipient agreements is properly included. Management’s Response See Corrective Action Plan.

2022-001 ? Subaward Reporting Requirements for Federal Funding Accountability and Transparency Act (FFATA) Significant Deficiency and Non-Material Noncompliance Federal Program CDBG-Entitlement Grants Cluster, CFDA 14.218 Criteria The requirements of 2 CFR Part 170 Appendix A states 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 following month in which the direct recipient awards such subawards. Part 3 of the compliance supplement requires this reporting at the $30,000. 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. 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 the City implement a tracking system to remind staff of the various reports due and respective deadlines. Management?s Response See Corrective Action Plan.

Federal Program Emergency Solutions Grant, Assistance Listing Number 14.231 Criteria Per 2 CFR section 200.318 through 200.326, the non-federal entity must follow the procurement standards which includes conducting all procurement transactions in a manner providing full and open competition and performing a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold. Condition During the audit, the City was unable to provide support to show that competitive bidding, advertising, and a cost analysis was performed for the contract entered into during the year under audit. Cause The City did not properly follow its policies and procedures to ensure that procurements adhered to procurements standards required by Uniform Guidance. Identification as a Repeat Finding This is not a repeat finding. Effect Contracts could be entered into that do not follow the guidelines set forth by the compliance requirements and the City policies. Questioned Costs None. Recommendation We recommend for the City to follow its policies and procedures to ensure compliance with federal requirements and that the support be maintained. Management?s Response See Corrective Action Plan.

Federal Program COVID-19 - Emergency Rental Assistance Program, Assistance Listing Number 21.023 Criteria The entity is a direct recipient who made a first tier subaward of $25,000 or more and therefore, was required to report subaward data through Federal Funding Accountability and Transparency Act Reporting System (FSRS) under FFATA. Condition During the audit, we noted that the City was unaware of FFATA reporting requirements and did not report their subaward. Cause The City did not comply with reporting requirements under the Transparency Act. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 1 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $3,111,240 $6,222,480 $6,222,480 $0 $0 Identification as a Repeat Finding This is not a repeat finding. Effect The City could jeopardize future grant funding due to noncompliance with program requirements. Questioned Costs None. Recommendation We recommend the City implement a tracking system to remind staff of reporting requirements and submission deadlines. Management?s Response See Corrective Action Plan.

Federal Program Emergency Solutions Grant, Assistance Listing Number 14.231 Criteria Per 2 CFR section 200.318 through 200.326, the non-federal entity must follow the procurement standards which includes conducting all procurement transactions in a manner providing full and open competition and performing a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold. Condition During the audit, the City was unable to provide support to show that competitive bidding, advertising, and a cost analysis was performed for the contract entered into during the year under audit. Cause The City did not properly follow its policies and procedures to ensure that procurements adhered to procurements standards required by Uniform Guidance. Identification as a Repeat Finding This is not a repeat finding. Effect Contracts could be entered into that do not follow the guidelines set forth by the compliance requirements and the City policies. Questioned Costs None. Recommendation We recommend for the City to implement controls to ensure its policies and procedures are being followed prior to entering into a procurement agreement with federal funds to ensure compliance with federal requirements and that the support be maintained. Management?s Response See Corrective Action Plan.

Federal Program COVID-19 - Emergency Rental Assistance Program, Assistance Listing Number 21.023 Criteria The entity is a direct recipient who made a first tier subaward of $25,000 or more and therefore, was required to report subaward data through Federal Funding Accountability and Transparency Act Reporting System (FSRS) under FFATA. Condition During the audit, we noted that the City was unaware of FFATA reporting requirements and did not report their subaward. Cause The City did not comply with reporting requirements under the Transparency Act. Identification as a Repeat Finding This is not a repeat finding. Effect The City could jeopardize future grant funding due to noncompliance with program requirements. Questioned Costs None. Recommendation We recommend the City implement a tracking system to remind staff of reporting requirements and submission deadlines. Management?s Response See Corrective Action Plan.

Finding Number: 2020-003 ? Equipment and Real Property Management Noncompliance Federal Program CDBG-Entitlement Grants Cluster, CFDA 14.218 Criteria: Per 2 CFR section 200.313(d)(2), the non-federal entity must take a physical inventory of the property acquired under federal awards and reconcile the results with the property records at least once every two years. Condition: During the audit, we noted that the City has not taken a physical inventory of the property acquired under federal awards in the past two years. Cause: The City did not properly follow its policies and procedures to ensure that proper records are maintained for equipment and real property acquired under federal awards. Identification as a Repeat Finding: This is not a repeat finding. Effect: Federally funded property and equipment could be lost, stolen, or disposed of without following federal disposition requirements. Question Costs: None. Recommendation: We recommend for the City to take a physical inventory of the property acquired under federal grants and reconcile the results with the property records to ensure proper and complete records are maintained. Management's Response: See Corrective Action Plan.

Finding Number: 2020-004 ? Performance Reporting Noncompliance Federal Program: CDBG-Entitlement Grants Cluster, CFDA 14.218 Criteria: Per 24 CFR section 135.23, each recipient that administers covered housing and community development assistance in excess of $200,000 in a program year, must submit HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons (OMB No. 2529-0043). Condition: During the audit, we noted that the City did not submit HUD60002, Section 3 Summary report for the fiscal year 2019-20. Cause: The City did not properly follow its policies and procedures to ensure that the required performance report was submitted to HUD. Identification as a Repeat Finding: This is not a repeat finding. Effect: The City could jeopardize future grant funding due to noncompliance with program requirements. 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.