CITY OF SANTA MARIA

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grant Federal Award Identification Number: B-20-MC-6-0545, B-21-MC-6-0545, B-22-MC-6-0545, B-24- MC-6-0545 Assistance Listing Number: 14.218 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 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). Additionally, 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award section 200.303 requires that entities 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: FFATA reports were not filed for subgrants. Questioned Costs: None. Context: FFATA reports were not filed for subgrants for fiscal year 2023-2024. Cause: The Department had turnover during the audit period and did not have adequate staffing to know which reports to submit per the grant agreement. Effect: FFATA reporting was not completed. Repeat Finding: This is not repeat finding. Recommendation: We recommend the City implement policies and procedures to ensure that FFATA reporting occurs for all subawards of $30,000 or more for all federal awards and that the reporting be performed timely. Views of Responsible Officials: The City concurs with the finding.

Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number: N/A Assistance Listing Number: 21.027 Award Period: July 1, 2023 through June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires compliance with the provisions of procurement, suspension, and debarment. The City should have internal controls designed to ensure compliance with those provisions. Condition: During our testing, we could not verify that the City performed the suspension and debarment verification. Questioned Costs: None. Context: The City did not maintain documentation of the suspension and debarment verification for four out of the five samples tested. However, none of the sampled vendors were suspended or debarred as of the City’s verification performed during the audit. Cause: The City did not have controls in place to maintain the proper documentation. Effect: There is a potential the City could contract with a disbarred or suspended entity if the verification is not performed. Repeat Finding: This is not repeat finding. Recommendation: We recommend the City perform suspension and debarment procedures on all vendors with which it plans to enter into a covered transaction and maintain the documentation as evidence that the requirement was fulfilled. Views of Responsible Officials: The City concurs with the finding.

The City's single audit report for the fiscal year ending June 30, 2023, was not filed on time. The audit report was due March 31, 2024.

FINDING 2022-001 Criteria: Per Uniform Guidance 2 CFR 200.512(a), the single audit must be completed and the data collection form must be submitted within the earlier of 30 calendar days after receipt of the auditors' report, Or nine months after the end of the audit period. Condition: The City's single audit report for the fiscal year ending June 30, 2022, was not filed on time. The audit report was due March 31, 2023. Cause: City's financial report was not completed until March 28, 2024. Effect or Potential Effect: Federal funds may be suspended or terminated if the data collection form is not completed within the time requirements. Questioned Costs: None Repeat Finding: Yes, see Finding 2021-001. Recommendation: The City's single audit should be filed on a timely basis. Corrective Action Plan: The Cíty of Santa Maria has contracted with an outside consultant to help catch up on the financials that are overdue. The consultant has been a great help and is engaged through the end of fiscal year 2025. Fiscal year 2024's Single Audit is still scheduled to be completed on time. Planned completion date: FY23and FY24completed by Mar 31, 2025 and subsequent years delivered on time. If there are any questions regarding this plan, please contact Xenia Bradford, Finance Director, at xbradford@cityofsantamaria.org or 805-925-0951.