City of Arvin

Identification of the Federal Program: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing Number: 21.027, U.S. Department of the Treasury, 2021, OMB #1505-0271) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Suspension and Debarment - Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All nonprocurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. 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, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: During our audit, we noted that for all samples selected for testing, the City did not verify the vendor against the SAM to ensure the vendor was not suspended or debarred from federally-funded programs before the contract was entered into. Cause: The City does not have formal policies and process in place to ensure the suspension and debarment review process over vendors that provides goods or services to the City?s programs was conducted prior to enter into contract. Effect or Potential Effect: Without verifying whether vendors are suspended or debarred from working on federally-funded projects prior to the contract awarded, the City could be contracting with vendors that are prohibited from working on federally funded projects. Questioned Costs: No questioned costs were noted. Context: See Condition above for context of the finding. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommended the City develop policies and procedures to incorporate the suspension and debarment verification prior to awarding contracts. Views of Responsible Officials. Management concurs with the finding.

Identification of the Federal Program: COVID-19 ? Coronavirus Relief Funds (Assistance Listing Number: 21.019, U.S. Department of the Treasury, 2020, KC-ARVIN CARES, County of Kern, California) Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance to the Uniform Guidance, Subrecipient Monitoring and Management, ?200.332 Requirements for pass-through entities, in summary, all pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. Required information includes: (1) Federal award identification (i) Subrecipient Name; (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number; (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ?200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. (d) 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: The City entered into subrecipient agreement with the subrecipient on September 22, 2020. Per the subrecipient agreement, the term for the agreement commenced on September 22, 2022 and will end on September 22, 2025 (five years). In the agreement, the assistance listing number identified is 14.218 and the assistance listing title is Community Development Block Grant. The agreement incorrectly identified the funding assistance number and period of performance which was Coronavirus Relief Fund (assistance listing number 21.019) and the period of performance was March 1, 2020 through December 31, 2020. On December 22, 2020, the period of performance was extended to December 31, 2021. During the audit, we noted the City obtained the supporting documentation on invoice from subrecipient and reviewed the invoice for accuracy; however, there is no indication of review and sign off on invoices provided by the subrecipient. Cause: Insufficient review of the agreement and lack of clear communication between the departments to identify the funding source which resulted in incorrect identification of the assistance listing number and title. When incorrect funding was identified, it also resulted in error in providing longer period of performance to subrecipient than award received. In addition, the City has not adopted any policies or procedures related to the subrecipient monitoring. Effect or Potential Effect: Incorrect identification of assistance listing number and title and a longer period of performance were provided to subrecipient could resulted in award not expended within the end of period of performance (December 31, 2021). Any amounts not expended will need to be returned to the County and back to the U.S. Department of the Treasury. Questioned Costs: No questioned costs were noted. Context: See Condition above for context of the finding. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommended the City amend the subrecipient agreement to correct the assistance listing number and title and the period of performance. In addition, any grant fund that has not been expended by December 31, 2021 should be returned to the County. We also recommended the City adopt policies and procedures on subrecipient monitoring and document the review of subrecipient invoices. Views of Responsible Officials: City management concurs with this finding.

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