CITY OF FONTANA
Single Audit Report on
Federal Awards
Year E
nded June 30, 20
2 1
CITY OF FONTANA
Single Audit Report on Federal Awards
Year ended June 30, 2021
TABLE OF CONTENTS
Page
Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards
Report on Compliance for Each Major Federal Program, Report on Internal Control over Compliance and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
Schedule of Expenditures of Federal Awards
Notes to the Schedule of Expenditures of Federal Awards
Schedule of Findings and Questioned Costs
Summary Schedule of Prior Audit Findings
1 3
6 7
9 14
1 City Council
City of Fontana
Fontana, California
Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial
St
a
tements Performed in Accordance With
Government Auditing Standards
I
ndependent Auditor
s
’
Report
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial aud i
ts
contained in
Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements
of
the governmental activities, the business
-
type activities, each major
fund, and the aggregate remaining fund information of t h
e
C
ity of Fontana
(
the “
City
”
)
as of
and
f
or the year ended June 30, 20
2 1
, and the related notes to the financial statements,
which collectively comprise
the
City’s
basic financial statements, and have issued our report
thereon dated
June 9, 2022
.
I
n
t
e
rna
l
C
ontrol Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the
City’s
internal control over financial reporting (internal control) as a basis for designing
the audit
procedures that are appropriate in the
c
i
r
cum
s
ta
nces for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the
City’s
internal control. Accordingly, we do not express an opinion on the effectiveness of
th
e
C
ity
’
s
internal control.
A
deficiency in internal control
exists when the design or operation of a control does not allow managem
ent or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on
a
t
im
ely basis. A
material
weakness
is a deficiency, or a combination of deficiencies, in internal control such that there is
a reasonable possibility that a material misstatement of the entity’s financial statements will not be
prevented or
detected and
co
r
re
cted on a timely basis. A
significant deficiency
is
a deficiency or combination of deficiencies, in internal control that
is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
Our consider
ati
o
n
of the internal control was for the limited purpose described in the first paragraph of this section and was not designed
to identify all deficiencies in internal control
that might be material weaknesses or significant deficiencies and therefore, ma ter
i
al
weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying
sc
hedule of
schedule of findings and questioned costs
we
identified certain deficiencies as items
202
1 -
001
through
202
1 -
00 4
that
we
con
si
d
er to be
material weakn
esses.
2 City of Fontana
City Council
Page Two
Compliance and Other Matters
As part of obt
a
ining reasonable assurance about
whe
ther
the
City’s
financial statements are
f
ree from material
misstatement, we performed tests o
f it
s
co
mpliance
with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which coul
d
have a direct and material effe
ct o
n the
financial statement
amounts. However
,
providing an opinion on complianc
e wi
t
h
t
hose pro
v
isions was not an objective of our audit,
and accordingly, we do not express such
an opinion. The results of
our tests disclosed
no
instance
of
noncompliance or other matters that
is
re
quired to be repo
rted under
Government Auditing Standa
rds
,
i
n the Schedule of Findings
and
Ques
tio
ned Costs.
City of
Fontana
’s Response to Finding
s
The City of
Fontana
’s
response
to the finding
s
identified in our audit
i
s
described i
n
the
accompanying
schedule
of au
dit find
i
ngs and quest
i
on
ed costs. The
Cit
y of
F
ontana
’s
response
s
w
er
e
not subjected
t
o the auditi
n
g
p
rocedures a
pplied in the audit of the financial
statements and, accor
d
ingly, we express no opinion on
the resp
onse
s
.
Purpose of this Report
The purpose of thi
s
report is sol
e
ly
to describe
the
sco
pe
of our testing of internal contr
ol
and compliance and t
h
e results of that testing, and not to provide an op
i
nion on the
effectiveness of the entity’s internal control or on compliance. This report is an integral par t
of an audit p
e
rf
ormed in acco
rda
n
ce
wit
h
Government Auditing Standards
in considering the
enti
t
y’s internal control and compliance. Accordingly, t
h
is communication is not suitable for
any other purpose.
Irvine, California
June 9, 2022
3 City Council
City of Fon
t
a
na
Fontana, Cal
ifornia
Rep
ort on Compliance f
or Ea
c
h Ma
j
or Federal Program; Report on Internal Control
Over Compliance; and R
epo
rt on the Schedule of Expenditures of Federal Awards
Required by
the Uniform Guidance
Independent Auditor
s
’
Report
Report
o
n
C
ompliance
for
Each Major
Federal Program
We hav
e
aud
i
ted the
City of Fontana
’s
(
City)
compliance with the types of complia
nce
requirements described in the
OMB Compliance Supplement
that could have a direct and
m
a
terial effect on each of the
City’s
m
a
j
or
federal p
rog
r
ams
for the
year ended June 30,
20 2
1 . T
h
e
City’s
major federal programs are identified in the summary of audi tor
’s results
section of the accompanying schedule of findings and questioned costs.
Mana
g
ement’s Responsibility
Management is
r
e
sp
onsible fo
r c
o
mpliance wi
th federal statutes, reg
u
lati
o
ns, and the terms
and conditions of its federal
a
wards applicable to
its
federal programs.
Auditor
s
’
Responsibility
Our responsibility is to express an opin
i
on on compliance for each of the
City
’
s
m
ajor feder
al
p
rograms bas
ed on our audit of the t
y
pes
o
f compliance requirements referred to above. We
conducted our audit o
f c
ompliance in accordance with auditing standards generally accepted in the United States
of America; the standards applicable
t
o
f
inancial a
udi
t
s contained
in
Government Auditing
S
tand
a
rds
, issued by the Comptroller General of the United States; and
the
aud
it requirement of Title 2 U.S.
Code of Federal Regulations
Part 200,
Uniform
Administra
t
ive Requirements, Cost Principles, an
d
Au
di
t Requir
eme
n
ts for Fede
ral Awards
(Uniform Guid
a
nce)
.
Those standards and
the Uniform Guidance
require that we plan and
pe
rfo
rm the audit to obtain reasonable assurance about whether noncompliance with the types
o
f compliance requirements referred to
a
bo
ve that co
uld
have a dire
ct and material
effect o
n
a m
a
jor federal program occurred. An audit includes examining, on a test bas
is,
evidence about the
City’s
compliance with those requirements and performing such ot h
er
procedures as we considered necess
a
r
y
in the cir
cum
s
tances.
We believe that our audi
t
pro
v
ides a reasonable basis for our opinion on compliance for each major
fed
eral program. However, our audit does not provide a legal determination of the
City’s
c
o
mpliance.
4 City of Fontana
Cit
y
C
o
un
cil
Page Tw
o
Op
inion o
n Each Major Federal Progr
a
m
In
o
ur opinion, the City complied, in all material respects, with the typ es
of compliance
requirements referred to above that could have a direct and material effe c
t on each of its
major federal pr
o
gr
a
ms
for the ye
a
r
en
ded Jun
e 30, 20
2 1
.
Report on Int
e
rnal C
o
ntrol Over Compliance
Management of
the
City
is responsible for est
ab
lishing and maintaining effective internal
control over compliance with the types of com
p
liance requirements referred to a
b
ov
e
.
In
plannin
g
and
perfor
ming our audit of complian
c
e, we
c
onsidered
the
City’s
internal control
over compliance with the types
of
requirements that could have a direct and material effect on each major federal program
to determine the auditing procedu
r
es
th
at are appr
o
p
ria
te in
t
he circumstances for the p
u
rpose
o
f expressing an opinion on compliance for each major
federal program
an
d to test and report on internal control over compliance in accordance with
the Uniform
G
uidance
, but not for the purpose
o
f
e
xp
ressing an
o
p
ini
on on t
he
effectiveness of intern
a
l cont
r
ol over compliance. Accordingly, we do not express an opinion on the
ef
fectiveness of
the City’s
internal control over compliance.
A
deficiency in internal co
n
trol over compliance
exists when
t
he
de
sign or ope
r
a
tio
n of a
control over compliance do
e
s not
a
llow management or employees, in the normal course of
performing thei
r
assigned functions, to prevent, or detect and correct, noncompliance with a type of comp
l
iance requirement of a federal pr
o
gr
a
m
on a timely
b
asi
s. A
ma
terial weakness
in interna
l
contr
o
l over compliance
is a deficiency, or combination of deficiencies, in
i
nternal
control over compliance, such that there is a reasonable possibility that materi a
l
noncompliance with a type of co
m
pl
i
an
ce requirem
e
n
t o
f a fed
eral program will not be
p
r
evente
d
, or detected and corrected, on a timely basis.
A
significant deficie
nc
y in internal
control over compliance
is a deficiency, or a combination of deficiencies,
in internal control
over complian
c
e
w
it
h a type of
c
omp
liance
requirement of a federal p
r
ogram
t
hat is less
severe than a material weakness in internal control o
ver
co
mpliance, yet important enough
to merit attention by those charged with governance.
Our
c
on
si
d
e
r
a
t
i
on of
in
te
rn
a
l cont
r
ol
o
ve
r
c
omp
l
i
a
n
c
e
w
a
s
for
the l
i
m
i
t
e
d pu
r
pose
d
e
s
c
rib
e
d
in
t
he
f
i
rst p
a
ra
g
r
a
ph of
th
i
s
se
c
t
i
on
a
nd w
a
s
not d
e
s
i
g
n
e
d to
i
d
e
nt
if
y
a
ll
d
e
f
i
c
ie
n
c
ies in
in
t
e
rn
a
l cont
r
ol over
c
o
mpl
i
a
n
c
e
that
m
i
g
ht be
m
a
te
r
ial w
e
a
kn
e
sses
o
r si
g
n
i
fi
ca
nt
d
e
f
i
c
ien
c
ies.
W
e
d
i
d
identify
a
deficiency in interna
l co
ntrol over compli
ance, as described in
the schedule of findings and questioned
costs as 2021
-
005, that we consider to be a
mater
ial weakness.
The purpose of this repo
r
t
o
n internal co
nt
rol over compliance is solel
y
to describe the scope
of
ou
r
te
sting of
internal control over compliance
and the results of that testing based on
the re
quirements of
the Uni
fo
rm Guidance
. Accordingly, this report is not suitable for any
ot
h
er
purpose.
5 City of Fontana
City Council
Page Three
Rep
or
t on Sch
ed
u
l
e
of Expend
itures
of Federal Awards Required
by
Uniform
Guidance
We have audited the
financial
statements of
the
Ci
ty
as of and for the ye
ar ended June 30,
20 2
1 , and have issued
our report thereon
dated
June 9
, 202
2 ,
which
c
on
t
ained an
unmo
di
fied op
i
n
i
o
n
on those fin
an
c
ial statements. Our audit
was conducted for the purpose
of forming an opinion
on the financia
l st
atements as a whole. The accompanying schedule of
expenditures of federal awards is presented for purposes of ad d
it
i
onal analysis
a
s requi
r
e
d
by
the Uniform
G
u
idance
and is not a requir
ed part of the financial statements. Such
informati
on is the respon
sibi
lity of management and was derived from and relates directly to the underlying accounting and other records used
to
prepare the f
in
ancial
s
t
a
t
em
ents.
The in
fo
r
mation has been subjected
to the auditing procedures applied in the audit of
the
financial st
atem
ents and certain additional procedures, including comparing and reconciling such information directly to the und
e
rl
y
ing accountin
g
and oth
e
r
r
ec
ords used to
p
r
epare
the financial statem
ents or to the financial statements themselves, and
other additiona
l
pr
ocedures in accordance with auditing standards generally accepted in the United States of America. In our opinio
n
,
t
he schedule o
f
expendi
t
u
r
e
o
f federal aw
ar
d
s is fairly stated in all
material respects in relation to the financial stat
ements as a whol
e.
Irvine, California
September 30
, 2022
,
except for the Schedule of Expenditures of Federal Awards ,
which
is
dated June 9
, 2022
Federal
Domestic
Program
Amount
Assistance
Identification
Program
Provided to
Number
Number
Expenditures
Subrecipients
U.S. Department of Housing and Urban Development
Direct Assistance:
Community Development Block Grant/Entitlement Grants Cluster
14.218
B-20-MC-06-0565
1,936,174
$
-
B-20-MW-06-0565
909,380
-
B-08-MN-06-0507
359,772
-
B-11-MN-06-0507
321,930
Subtotal Community Development Block Grant/Entitlement Grants Cluster 3,527,256
Emergency Shelter Grant Program
14.231
E-20-MC-06-0565
176,383
14.231
E-20-MW-06-0566
359,688
HOME Investment Partnerships Program
14.239
M-19-MC-06-0548
50,661
-
Total U.S. Department of Housing and Urban Development
4,113,988
-
U.S. Department of Justice
Direct Assistance:
COVID-19 Coronavirus Emergency Supplemental Funding Program
16.034
2020-VD-BX-1282
4,514
-
Equitable Sharing Program
16.922
n/a
2,524,054
-
Total U.S. Department of Justice
2,528,568
-
U.S. Department of Transportation
Passed through the State of California, Office of Traffic Safety:
State and Community Highway Safety Cluster
20.600
PT20046
87,099
-
PT21134
156,078
-
Subtotal State and Community Highway Safety Cluster
243,177
Passed-through the State of California, Department of Transportation:
Highway Planning & Construction Cluster:
Highway Planning and Construction
20.205
HSIPL-5307 (021)
65,227
-
CAT-16-098
976,022
-
Recreational Trails Program
20.219
RT-36-012
257,698
-
Subtotal Highway Planning & Construction Cluster
1,298,947
-
Total U.S. Department of Transportation
1,542,124
-
U.S. Department of Homeland Security
Passed through the San Bernardino County Fire Protection District:
Homeland Security Grant Program
97.067
2018-0054
37,757
-
2019-0035
34,243
-
Passed through the CA Governor's Office of Emergency Services:
Disaster Grants - Public Assistance (Presidentially Declared Disasters)
97.036
FEMA-4482-DR-CA
95,735
-
*
Disaster Grants - Public Assistance (Presidentially Declared Disasters) FEMA-4482-DR-CA
275,418
-
Direct Assistance:
Assistance to Firefighters Grant
97.044
EMW-2018-FO-04186
301,362
-
EMW-2019-FG-04251
66,239
-
Total U.S. Department of Homeland Security
810,754
-
U.S. Department of Treasury
Passed through the County of San Bernardino:
Coronavirus Relief Fund (Pass-through from SB County)
21.019
CARES21-ALLC-FON
644,701
-
*
Coronavirus Relief Fund (Pass-through from SB County)
CARES20-ALLC-FON
1,985,238
-
Passed through the State of California, Dept of Finance:
Coronavirus Relief Fund (Pass-through from State)
21.019
CRF Allocation to Cities
2,330,370
-
*
Coronavirus Relief Fund (Pass-through from State)
21.019
CRF Allocation to Cities
299,569
-
Direct Assistance:
Emergency Rental Assistance Program - 1
21.023
ERA0150
6,378,855
-
Total U.S. Department of Treasury
11,638,733
-
U.S. Department of Justice
Direct Assistance:
Public Safety Partnership and Community Policing Grants (COPS Grant)
16.710
Grant13025283
84,371
-
Total U.S. Department of Agriculture
84,371
-
Total Federal Expenditures
20,718,538
$
-
*
FY 2020 expenditures
n/a - not available
Federal Grantor/Pass-Through Grantor Program Title
CITY OF FONTANA
Schedule of Expenditures of Federal Awards
For the Fiscal Year ended June 30, 2021
See accompanying notes to the schedule of expenditures of federal awards 6 7
CITY
OF
FONTANA
Notes t
o
the Schedule of Expenditures of Federal Awards
Y
e
ar
E
nded June 3
0,
20 2
1 (1)
S
ummary of Significant Accounting Polic
ies Applicable to the Schedule of Expenditures
of F
ederal Awards
(a)
Scope of Presentation
The accompanying sche
du
le presents only
t
he expenditures incurred by the
City
that are re
im
b
ur
sable by agen
ci
es
pro
v
i
ding
federal assistance. For the
purposes
of this schedule, federal financial assistance incl
udes both feder
al
fi
nancial assistance received directly from a fe
de
ral agency, as we
l
l as federal
funds received indirectly from a no
n
-
f
ed
eral agency o
r
oth
er
o
r
ganiz
ation.
Only
the portion of program exp
enditures reimbursable with such federal funds are
reported in the
acco
mpanying schedule. Program expenditures in ex
ce
ss of the
maximum
federal reimbursement authorized or the portion
of
th
e program
exp
en
dit
ure
s
that
were funded with state
, local or other
non
-
federal funds are
excluded from the accompanyi
ng schedule.
Th
e Cit
y did not use the 10% de
minimis indirect cost
r
ate covered in se
c
tion 200.414 of the Uniform Guidance.
(b)
Basi
s
o
f
Accounting
T
he
exp
e
n
ditur
es included in the accompanying schedu
le were reported on the
accrual basis of accounting
. Under the acc
rual
basis of accounting, expenditures
are recogniz
ed
when incurred.
E
x
penditures reported include any property or
equi
pm
e
nt
acquisitions
i
nc
urr
e
d
under
the federal program.
8 CITY OF FONTANA
Schedule of Findin
gs
and Q
uestioned Costs
Year en
ded June 30, 20
2 1
Section I
-
Summary of
A
uditors’ Results
Financial Statements
1. Typ
e of auditors’ report i
ss
u
ed
on whether t
he
fina
n
c
ial s
tatements audited were prepared in
accordance with GAAP:
Unmodified
2. Internal
co
ntrol
over financial reporting:
a.
Material weakness(es) identified?
202
1 -
001
202
1 -
002
20 2
1 -
003
2021
-
004
b.
Significant deficiency(
ies)
iden
ti
f
ie
d?
N
o
ne repor
ted
3. Noncompliance m
aterial to the financ
i
a
l
statements noted?
N
o
ne repor
ted
Federal
Awards
1. Internal control over major progr
ams
:
a.
Material weakness(es) identifi
e
d?
2021
-
005
b.
Significant deficiency(ie
s)
identif
ied?
N
o
ne repor
ted
2 .
Ty
pe
o
f
aud
itors’ re
por
t issued on
compliance
for major
programs:
Unmo
dified
3. Any audit findings d
isclosed that are
required to be repo
rted in
ac
cordance
with 2 CFR 200.516 (
a
)?
No
4. Identification of
ma
jor prog
rams:
CFDA Number
Name
of
Feder
a
l Program or C
luster
20.2 05/20
.219
Highway
Plannin
g
and
Constr
uction
a
nd
R
e
creational Trails
Cluster
21.023
E
mergency Rental Assi
stance
Program
21.019
Coronavirus Reli
ef Fund
5. Dolla
r
thresh
ol
d
us
ed
to dist
inguish
between Type A and Type B programs:
$750,000
6. Audite
e qua
lified a
s
a
low risk
au
d
itee?
No
9 CITY OF FONTANA
Schedule of Findings and Questioned
C
osts
Year en
ded
June 30, 20
2 1
Sec
ti
on II
-
Fin
a
ncial Statem
en
t Findin
g
s
20 2
1 -
00 1
Journal Entries Detected During the Audit
Certain audit schedules were received after the start of the audit, resulting in delays and journal entries provided to the auditor after the scheduled timing of the audit.
As a result of audit proced
u
res and the
City’s review of financial information
for
the fiscal year ended June 30, 202
1 , there were
six
material audit adjustments.
The auditing standards acknowledge that the auditor should not be part of the City’s system of internal control because
a
djusting mat
erial transactions in the
financial statements
creates an independence threat and reduces auditor
transparency. An important element of controls over financial reporting is for management to identify adjustments necessary for financial statem e
nts to be fa
irly
stated.
Recommendation
An important element of controls over financial reporting is for management to identify adjustments necessary for financial statements to be fairly stated.
Whenever possible, adjustments should be reflected in the a c
counting rec
ords prior
to the start of the audit. When this is not possible, management should identify and communicate to the auditors the potential areas of adjustment that may need to be addressed during the audit process. This will help to reduce the r
isk of
mater
ial misstatement.
Management Response
Management acknowledges the importance of making any adjustment, material and/or
immaterial, prior to the start of the audit. The City’s fiscal year -
end closing
process for June 30, 2021, was significantly
delayed and was directly related to
inadequate available staffing resources mainly due to staff turnover. The Finance Department h
as recently undergone a reorganization and as part of its restructuring and in agreement with the recommendation, will thorou ghly reconcile
accounts, additions, deletions, and other adjustments prior to the start of fieldwork. Any adjustments that occur du
ring the audit process will be
communicated to the auditors.
20 2
1 -
00 2
Reconciliation of Investments
During our review
cash
and
investments,
we noted the amounts recorded in the
trial balance did not agree with amounts reported per the bank statements.
Accordingly,
there was not a reconciliation performed over this particular investment account as of the start of the audit.
10 CITY OF FONTANA
Sc
h
edul
e
of Fin
d
i
ngs and Questioned Costs
Year ended June 30, 20
2 1
Recommendation
W
e recommend all cash and investments recorded in the trial balance be reconciled to amounts reported in the bank statements pr
ior to the start of the aud
it.
Management Response
Management recognizes the risk in not reconciling all cash related items prior to the start of the audit. The City’s timely reconciliation of investments was directly related to inadequate avai
lable staffing resources mainly due t
o staff turnover. The
Finance Department has recently undergone a reorganization and as part of its restructuring and in agreement with the recommendation, has since allocated additional professional accounting staff t
o the Accounting Division and is
impl
ementing a monthly close process which will ensure timely reconciliation of all bank accounts and investments along with the recording of the proper adjustments.
20 2
1 -
00 3 Capital Assets
A significant amount of time was spent by the City after the start o
f the audit
to
update the year end capital asset records and reconcile those updated records to the general le
dger. To ensure a
timely completion of these significant transactions at
year end, the City
should
perform and update reconciliations throughout
the year
which would ease the effort needed at year end. In addition, there were several adjustments recorded
by the City during the course of the audit that affected this area and re
sulted in updates to the
accounting schedules.
Adjustments included
prop
erty sold but not reflected in the accounting schedules and property constructed by developers
and paid for by
City that was not reflected in the accounting
schedules.
Recommendation
We recommend that the City consider performing quarterly updates of its capital
assets listings to ease the burden at year end. Instead of having to perform a full year’s worth o
f updates, the effort needed at year end would be reduced due t o the
periodic reconciliations performed during the year. This would also help id entify
errors in a timely manner and give the City an opportunity to correct them prior to the start of the au
dit
.
In addition, the preparer of the capital asset schedule relies o n external department
notification of sales, disposals and acquisition of ca
pital assets. The City should
develop controls to mitigate the reliance on notification when such transaction s have
occurred.
11 CITY OF FONTANA
Sc
h
edul
e
of Fin
d
i
ngs and Questioned Costs
Year ended June 30, 20
2 1
Management Response
Management recogniz
es the importance of recording trans
actions involving capital
assets accurately and timely. To avoid adjustments and misstatement to the capital asset schedule, the Finance department will be performing quarterly reconciliations of Capital Asset related sc
hedules and transactions. Finance wi
ll also be attending
regular CIP meetings to discuss work in progress, completed projects, and acquisition/disposal/sale of assets. The Accounting Division is also implementing new internal procedures to ensure that info
rmation about capital assets is coll
ected in a
timely manner for proper recording. This includes reviewing all accounts related to capital activity, scheduling regular meetings with our departments to ensure flow of communication, and reviewing council mee
ting minutes to ensure all capital r
elated
activity is captured
.
20 2
1 -
00 4
Payroll
D
uring our review of internal controls for payroll, we noted that payroll employees have acc
ess to modify and change employee information and pay ra t
es.
W
e noted
that alth
ough payroll change reports
were generated, they w
ere not reviewed by
someone
independent
of the
payroll
process
.
Rec
ommendation
We recommend that a payroll change report be
reviewed by
Finance or
Human
Resou
rces
for each payroll period
to ensure
all chang
es are
authorized
.
Ma
nagem
ent
Response
Management agrees with the recommendation and has implemented an additional step to the payroll procedure which includes the monthly review of any payroll changes in the previous month changes by the human resources
departme
nt. This
will mitigate the risk of having any unauthorized transactions processed through the payroll process.
12 CITY OF FONTANA
Sc
h
edul
e
of Fin
d
i
ngs and Questioned Costs
Year ended June 30, 20
2 1
Sect
ion III
-
Federal Awa
rd Find
ings a
nd Questioned Cos
ts
(
20 2
1 -
00 5
)
Employee Timecards
Federal Agency:
Department of Transportation
CFDA
Cluster
No
s
.:
20.205 and
20.219
Federal Program
Cluster
:
Highway Planning and
Constr
uction and Recreational Trails
Program
Compliance Requirement: Allowa
ble Costs
-
Payroll
Type of Finding:
Material Weakness
Questioned Costs: $0
Criteria:
2 CFR 200.430(i)
(1)(vii
)
Standards for Documentation of Personnel
Expenses
(1)
Charges to Federal awards for salaries and wages must be based on records that accurately
reflect the work
performed. These records must:
(vii)
Support the
distribution of the employee's salar
y or wages among specific activities or cost
objectives if the employee works on more than one Federal award; a Federal award and non
-
Federal award; an i
ndirect cost activity and a direct cost activity; two o r
more indirect activities which are allocated u
sing different allocation bases; or an
unallowable activity and a direct or indirect cost activity.
Condition:
Of the 40 sample selections
of payroll co
sts,
the City was not able to
pro
vide time
cards
for
28 of the employee
s
to
support the time charged to
the
program.
C
ause:
Due to a change in software, the City was unable to generate time cards of
the
time charged within the former accounting system.
Effect:
Supporting employ
ee timecards are not available
to support
the
allocation
of
payroll costs.
R
ecommendation
:
We recommend timecards be retained in a secure I
T environ
ment
to support payroll costs.
13 CITY OF
FONTANA
Sc
h
edul
e
of Fin
d
i
ngs and Questioned Costs
Ye
ar ended J
u
n
e
3 0,
2 0
2 1
M
anagement
Response
Management acknowledges and agrees with the importance of maintaining source documents used to charge salaries and benefits to Federal awards t o accurately
reflect the work performed. Fi
scal Year 2020
-
21 was the implementation year of the
City’s new payroll system. As such, it was determined that some of the new payroll system settings were implemented in error and resulted in additional charge s to
Federal awards that were not based upon
detailed timecards, personnel activity
reports, or equivalent documentation. This programming issue was fully corrected in Fiscal Year 2022
-
23 and staff is working diligently to reconcile both 2020 -
21 and
2021
-
22 fiscal years.
14 CITY OF
FO
NTANA
Summary Schedule of Prior Audit Findi
n
g
s
Ye
ar ended J
u
n
e
3 0,
2 0
2 1
Sectio
n I
V
–
Sum
m
ary o
f
Pri
o
r Audi
t F
indin
gs and Curre
nt Status
The following
is the status of
prior audit find
ing
s for
t
he y
ear
e
nded Ju
ne
30, 20
2 1
:
(
20 20
-
00 1
)
Journal Entri
es D
etected During the Aud
it
This
fin
ding
has
been repeated as item 2021
-
001
(
20 20
-
00 2
)
Delinquent Loan
Status
This f
inding has been resolved
(
20 20
-
00 3
)
Capital Assets
This finding has been repeated as item 2021
-
003
(
20 20
-
00 4
)
Investment Compliance
This findi
ng has been resolved
(
20 20
-
00 5
)
Written
Purchasing Policy
This finding has been resolved