CITY OF WEST COVINALocal Government

Finding Number 2020-001 ? Internal Control Environment - Material Weakness Criteria - An important element of internal controls over financial reporting is for the City to have procedures in place to ensure that all applicable financial reporting guidelines are followed and properly applied. Condition and Context - Over the past year, the City has experienced a high turnover at all levels in the Finance Department. As a result, the request for the Actuarial Valuation report for GASB 75 Accounting Information regarding Other Post-Employment Benefits (OPEB) and GASB 68 Accounting and Financial Reporting for Pensions ? An Amendment of GASB Statement No. 27 was postponed. This matter has been the cause of significant delays in producing complete, reconciled and properly adjusted financial statements and other information. Cause - The City did not maintain the appropriate staffing levels within the Finance Department to ensure that all financial closing procedures were performed. This is a repeat finding from prior year identified as finding 2019-001. Effect - Delay in the completion of the Comprehensive Annual Financial Report. Recommendation - We recommend the City maintain appropriate staffing in the Finance Department which will ensure that the policies and procedures in the year-end review process are properly carried out. Views of Responsible Officials and Planned Corrective Action - See attached Corrective Action Plan.

Finding Number 2020-002 ? Errors in Pension Census Data - Material Weakness Criteria - In order for the City to record its liability for providing supplemental pension benefits to eligible participants, it must submit census data to actuaries who use this information to calculate the City?s liability. Condition and Context - During the audit, we were unable to vouch participant information from the census data to source documents. Cause - Due to the turnover of key staff, there is a lack of appropriate documentation maintained in personnel files. Effect - The City?s pension liability could be improperly calculated and misstated. Recommendation - We recommend the Finance Department review the participant files, ensure only eligible participants are included in the census data to be submitted and maintain proper documentation for the information provided to actuaries. Management?s Response - See attached Corrective Action Plan.

Finding Number 2020-003 ? Internal Control over Federal Grant Reporting - Material Weakness Criteria - An important element of internal controls over financial reporting is for the entity to have procedures in place for the accurate completion of the Schedule of Expenditures of Federal Awards (SEFA). Condition and Context - Over the past year, the City has experienced a high turnover at all levels in the Finance Department. As a result, the SEFA has not been prepared by a consistent person and has required multiple revisions. This is a repeat finding from prior year identified as finding 2019-002. Cause - The City did not maintain the appropriate staffing levels within the Finance Department to allow for the proper preparation of the SEFA, including a responsible individual to perform a review of the completed SEFA. Effect - The City could be under/over stating expenditures on the SEFA. Recommendation - We recommend the City maintain proper staffing levels within the Finance Department to allow for the proper preparation of the SEFA, including a responsible individual to perform a review of the completed SEFA. Views of Responsible Officials and Planned Corrective Action - See attached Corrective Action Plan.

Finding Number 2020-004 ? Purchasing Approvals - Significant Deficiency Criteria - A system of purchasing approval should be established, maintained and updated in a timely manner. Condition - During our audit of the City, we noted that a listing of authorized purchasing approval limit signatures was not updated to reflect changes in authorized personnel. Cause - The City did not update authorized purchasing approvals in a timely manner. Effect - Approval for payments could be completed by individuals without the appropriate authorizations. Recommendation - We recommend that the City perform an annual review of authorized purchasing approvals on record and make any necessary updates as soon as possible. Management?s Response - See attached Corrective Action Plan.

2020-005 ? Bank Reconciliation Review - Significant Deficiency Criteria - Bank reconciliations should be prepared, reviewed and approved in a timely manner. Condition - During our audit of the City, we noted that bank statements for various accounts were not reviewed or approved in a timely manner. Cause - Even though the bank reconciliations were prepared, there was no documentation for the date of completion and no indication of a review had been completed. Effect - Errors in the reconciliations can go undetected for a period of time without the appropriate review and approval procedures. Recommendation - We recommend that the City ensure that all bank reconciliations are reviewed in a timely manner and documentation of when the preparation and review are completed. Management?s Response - See attached Corrective Action Plan.

Finding Number 2019-003 Significant Deficiency and Noncompliance Federal Program Equitable Sharing Program, CFDA 21.016 Criteria Per 2 CFR Section 180.300, when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity is not suspended or debarred or otherwise excluded. This verification may be accomplished by checking SAM exclusions, collecting a certification from the entity, or adding a clause or condition to the covered transaction with that entity. Condition During the audit, we noted that the City did not perform procedures over suspension and debarment before entering into an agreement. Cause The City did not follow procedures for verifying that a vendor was neither suspended nor debarred prior to entering into an agreement with them. Effect The City may have passed through funds to an ineligible vendor and require to repay funds to the grantor. Questioned Costs None. Identification as a Repeat Finding This is not a repeat finding. Recommendation We recommend the City follow its written procedures for suspension and debarment prior to entering into agreements and maintain the documentation for the required retention period. Views of Responsible Officials See attached Corrective Action Plan.

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