Budget and Audit Committee Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01014 May 31, 2022 Consent Item 04
Title: Fiscal Year (FY) 2020/21 Single Audit Report
Location: Citywide.
Recommendation: Pass a Motion: 1) accepting the (FY) 2020/21 Single Audit Report; and 2) forwarding it to City Council for approval.
Contact: Osvaldo Lopez, Finance Manager, (916) 808-4740, [email protected]; Emily Combs, Director of Finance, (916) 808-7914, [email protected], Department of Finance.
Presenter: None.
Attachments:
1-Description/Analysis
2-Single Audit Resolution
3-Exhibit A - Single Audit Report
4-Exhibit B - Corrective Action Plan
Description/Analysis
Issue Detail: The Single Audit Report, for FY 2020/21 that ended June 30, 2021, was prepared to present the City’s Schedule of Expenditures of Federal Awards (SEFA). The SEFA reports $152.2 million in federal expenditures. As required by federal law, an independent public accounting firm audited the SEFA.
The single audit report (Exhibit A) identified one finding related to subrecipient monitoring. The City’s department responsible for addressing this finding have provided response in the attached corrective action plan (Exhibit B).
Policy Considerations: This report is required by federal and state law. (Code of Federal Regulations, title 2, section 200.501 et seq., and California Government Code section 12410.5).
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): This action is not a project subject to CEQA because it involves only organizational or administrative activities that will not result in direct or indirect physical changes in the environment (CEQA Guidelines §15378(b)(5)).
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: It is in the best interest of the City to accept the FY 2020/21 Single Audit Report and the Management Letter for the following reasons:
• The FY 2020/21 Single Audit Report is required by federal and state law. • Macias, Gini & O’Connell LLP, an independent public accounting firm, has audited the SEFA and rendered an unmodified audit opinion that the information is fairly stated in relation to the City’s audited financial statements. The auditors tested three major federal programs and reported one instance of noncompliance in the FY 2020/21 Single Audit Report.
• The City has provided a corrective action plan for this instance of noncompliance.
Financial Considerations: There are no financial considerations associated with this report.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO.
Adopted by the Sacramento City Council
ACCEPTING THE FISCAL YEAR 2020/21 SINGLE AUDIT REPORT
BACKGROUND
A. The City’s Fiscal Year (FY) 2020/21 Single Audit Report was prepared to present the City’s Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2021. The SEFA was audited, as required by federal law, by an independent public accounting firm.
B. The public accounting firm of, Macias, Gini & O’Connell LLP audited the City’s FY2020/21 SEFA and rendered its unmodified opinion that the schedule is fairly presented in relation to the City’s audited financial statements.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Council accepts the FY2020/21 Single Audit Report, attached hereto as Exhibit A.
Section 2. Exhibit A and B are part of this resolution.
Table of Contents:
Exhibit A Single Audit Report
Exhibit B Corrective Action Plan
C
ITY OF SACRAMENTO, CALIFORNIA
S
ingle Audit Reports
F
or the Fiscal Year Ended June 30, 2021
CITY OF SACRAMENTO, CALIFORNIA
Single Audit Reports
For the Fiscal Year Ended June 30, 2021
T
able of Contents
P
age
I
ndependent Auditor’s 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 .............................................................. 1 I
ndependent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance .................................................................................. 3 S
chedule of Expenditures of Federal Awards .............................................................................................. 7 N
otes to Schedule of Expenditures of Federal Awards ................................................................................ 9 S
chedule of Findings and Questioned Costs .............................................................................................. 10 S
ummary Schedule of Prior Audit Findings ............................................................................................... 14 Man
agement’s Response and Corrective Action Plan ................................................................................ 15 www.mgocpa.com
Macias Gini & O’Connell LLP
500 Capitol Mall, Suite 2200
Sacramento, CA 95814
1 Independent Auditor’s 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 T
o the Honorable Mayor and Members of the City Council
City of Sacramento, California
We
have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits 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 the City of Sacramento, California (City), as of and for the fiscal year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 15, 2021.
In
ternal Control Over Financial Reporting
I
n 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 audit procedures that are appropriate in the circumstances 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 the City’s internal control.
A de
ficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely 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 corrected, on a timely basis. A significant deficiency is a deficiency, or a 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.
O
ur consideration of 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 signif icant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.
2 Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control a nd compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Sacramento, California
December 15, 2021
www.mgocpa.com
Macias Gini & O’Connell LLP
500 Capitol Mall, Suite 2200
Sacramento, CA 95814
3 Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
T
o the Honorable Mayor and Members of the City Council
City of Sacramento, California
R
eport on Compliance for Each Major Federal Program
We
have audited the City of Sacramento, California’s (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’ s major federal programs for the fiscal year ended June 30, 2021. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
Ma
nagement’s Responsibility
Man
agement is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.
A
uditor’s Responsibility
O
ur responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Pri nciples, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.
W
e believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance.
O
pinion on Each Major Federal Program
I
n our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the fiscal year ended June 30, 2021.
4 Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is required to be reported in accordance with the Uniform Guidance and which is described in the accompanying schedule of findings of questioned costs as item 2021 -001. Our opinion on each major federal program is not modified with respect to this matter.
The City’s response to the noncompliance finding in our audit is described in the accompanying management’s response and corrective action plan. The City’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the type s of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we did identify a certain deficiency in internal control over compliance , described in the accompanying schedule of findings and questions costs as item 2021- 001, that we consider to be a significant deficiency.
The City’s response to the internal control over compliance finding identified in our audit is described in the accompanying management’s response and corrective action plan. The City’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
5 The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City, as of and for the fiscal year ended June 30, 2021, and the related notes to the financ ial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated December 1 5, 2021, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awa rds is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Sacramento, California
March 30, 2022
6 This page intentionally left blank.
CITY OF SACRAMENTO, CALIFORNIA
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2021
Federal Pass-Through
Assistance Entity
Listing Identifying Federal Expenditures to
Number Number Expenditures Subrecipients
United States Department of Housing and Urban Development Passed through Sacramento Housing and Redevelopment Agency:
CDBG - Entitlement Grants Cluster
Community Development Block Grants/Entitlement Grants
Meadowview Streetscape 14.218 2018-0737 498,365 $ -$
Meadowview Streetscape Phase II 14.218 2018-0737 331,181 - D.W Babcock School Access Improvements 14.218 2019-1894 600,000 - Midtown Street Lighting Phase III Design 14.218 2018-1764 22,824 - Lower Broadway Preliminary Design 14.218 2017-0171 41,482 - SIM Center Signal Crossings 14.218 2018-0346 580,487 -
Sutterville Road Pedestrian Crossing 14.218 2018-0347 220,745 - Del Paso Road Diet Construction 14.218 2020-1406 36,849 - Oak Park Improvement Construction 14.218 2019-1045 220,626 - Meadowview Park Improvements Construction 14.218 2019-1052 441,353 - River District Basketball Court 14.218 2020-0356 54,377 - Nielsen Park 14.218 2020-1180 17,349 -
Robla Community Park 14.218 2020-1175 101,452 -
Subtotal Community Development Block Grant/Entitlement Grants 3,167,090 - Subtotal CDBG - Entitlement Grants Cluster 3,167,090 - United States Department of the Interior
Direct Programs:
Central Valley Improvement Act, Title XXXIV
Habitat and Facility Improvement American River Salmonid Spawni ng and Rearing Habitat Restoration 15.512 --- 719,505 - Central Valley Project Improvement Act (CVPIA)
Lower American River Restoration Prioritization and Monitoring 15.648 --- 5,877 - American River Juvenile Salmonid and Habitat Monitoring 15.648 -- - 48,911 -
Subtotal Central Valley Project Improvement Act (CVPIA) 54,788 - Total United States Department of the Interior 774,293 - United States Department of Justice
Direct Programs:
Public Safety Partnership and Community Policing Grants COPS Hiring Program - 2017 16.710 --- 636,670 -
Edward Byrne Memorial Justice Assistance Grant Program
Edward Byrne Memorial Justice Assistance Grant Program - 2017 16 .738 --- 80,282 -
Edward Byrne Memorial Justice Assistance Grant Program - 2018 16.738 --- 122,456 - Edward Byrne Memorial Justice Assistance Grant Program - 2019 16.738 --- 17,173 - Subtotal Edward Byrne Memorial Justice Assistance Grant Program 219,911 - Equitable Sharing Program 16.922 --- 41,863 -
Total United States Department of Justice 898,444 -
United States Department of Labor
Passed through Sacramento Employment and Training Agency:
WIOA Cluster
WIOA Youth Activities 17.259 046301IS-19(E) 51,308 -
United States Department of Transportation
Passed through State of California Department of Transportation (CALTRANS):
Highway Planning and Construction Cluster
Highway Planning and Construction 20.205 CML-5002 (155) 177,925 - Highway Planning and Construction 20.205 CML-5002 (178) 10,553 - Highway Planning and Construction 20.205 ATPL-5002 (189) 677,332 - Highway Planning and Construction 20.205 CML-5002 (193) 61,547 - Highway Planning and Construction 20.205 STPCML-5002 (222) 34,448 - Highway Planning and Construction 20.205 STPL-5002-175 33,821 - Highway Planning and Construction 20.205 BRLS-5002 (134) 2,074,074 - Highway Planning and Construction 20.205 BRLS-5002 (164) 327,004 - Highway Planning and Construction 20.205 BRLS-5002 (168) 115,667 - Highway Planning and Construction 20.205 STPL-5002 (173) 3,368,603 - Highway Planning and Construction 20.205 STPL-5002 (174) 289,710 - Highway Planning and Construction 20.205 ATPL-5002 (179) 384,481 - Highway Planning and Construction 20.205 STPL-5002 (195) 718,375 - Highway Planning and Construction 20.205 CML-5002 (190) 3,743 - Highway Planning and Construction 20.205 CML-5002 (219) 5,706 - Highway Planning and Construction 20.205 HSIPL-5002 (183) 99,248 - Highway Planning and Construction 20.205 HSIPL-5002 (184) 4,319 - Highway Planning and Construction 20.205 HSIPL-5002 (185) 378,756 - Highway Planning and Construction 20.205 HSIPL-5002 (186) 145,831 - Highway Planning and Construction 20.205 HSIPL-5002 (187) 158,607 - Highway Planning and Construction 20.205 HSIPL-5002 (188) 478,747 - Highway Planning and Construction 20.205 CML-5002 (192) 719,399 - Highway Planning and Construction 20.205 STPL-5002 (196) 197,745 - Highway Planning and Construction 20.205 STPL-5002 (213) 10,245 - Highway Planning and Construction 20.205 ATPL-5002 (203) 122,382 - Highway Planning and Construction 20.205 HSIPL-5002 (198) 86,555 - Highway Planning and Construction 20.205 HSIPL-5002 (199) 90,148 - Highway Planning and Construction 20.205 HSIPL-5002 (200) 97,916 - Highway Planning and Construction 20.205 HSIPL-5002 (201) 152,371 - Highway Planning and Construction 20.205 ATPL-5002 (204) 117,302 - Federal Grantor/Pass-Through Grantor/Cluster Title/Federal Program Name/City Program Nam The accompanying notes are an integral part of this schedule. 7 CITY OF SACRAMENTO, CALIFORNIA
Schedule of Expenditures of Federal Awards (Continued)
For the Fiscal Year Ended June 30, 2021
Federal Pass-Through
Assistance Entity
Listing Identifying Federal Expenditures to
Number Number Expenditures Subrecipients
Highway Planning and Construction 20.205 HSIPL-5002 (209) 20,659 $ - $ Highway Planning and Construction 20.205 HSIPL-5002 (210) 2,409 - Highway Planning and Construction 20.205 HSIPL-5002 (211) 44,005 - Highway Planning and Construction 20.205 HSIPL-5002 (212) 8,854 - Highway Planning and Construction 20.205 STPL-5002 (221) 3,449 - Subtotal Highway Planning and Construction Cluster 11,221,936 - Passed through State of California Office of Traffic Safety:
Highway Safety Cluster
State and Community Highway Safety 20.600 PT20148 36,822 - State and Community Highway Safety 20.600 PT21046 40,395 - Subtotal Highway Safety Cluster 77,217 - Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 PT21046 107,160 - Total United States Department of Transportation 11,406,313 - United States Department of the Treasury
Direct Programs:
Equitable Sharing 21.016 --- 7,948 - COVID-19 Coronavirus Relief Fund 21.019 --- 82,897,925 34,850,625 COVID-19 Emergency Rental Assistance Program 21.023 --- 15,270,93 4 15,270,934 Total United States Department of the Treasury 98,176,807 50,121,559 United States Environmental Protection Agency
Passed through California State Water Resources Control Board:
Drinking Water State Revolving Fund Cluster
Capitalization Grants for Drinking Water State Revolving Funds Meter and Pipe Installation Project 66.468 3410020-034C 17,570,744 - Direct Program:
Brownfields Multipurpose Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements Assessment and Cleanup - Northeast Sacramento 66.818 --- 20,349 - Revolving Loan Fund 66.818 --- 1,594 - Subtotal Brownfields Multipurpose Assessment, Revolving Loan Fund, and Cleanup Cooperative Agreements 21,943 - Total United States Environmental Protection Agency 17,592,687 - United States Department of Education
Passed through State of California Department of Education Twenty-First Century Community Learning Centers
Twenty-First Century Community Learning Centers - 2015 84.287 15- 14349-2192-8A 38,958 - Twenty-First Century Community Learning Centers - 2016 84.287 16- 14349-2192-8A 394 - Twenty-First Century Community Learning Centers - 2017 84.287 17- 14349-2192-8A 123,565 - Subtotal Twenty-First Century Community Learning Centers 162,917 - United States Department of Homeland Security
Direct Program:
National Urban Search & Rescue (US&R) Response System
Urban Search and Rescue 2016 97.025 --- 58,294 - Urban Search and Rescue 2016 97.025 --- 794 - Urban Search and Rescue 2016 97.025 --- 1,512 - Urban Search and Rescue 2017 97.025 --- 21,283 - Urban Search and Rescue 2019 97.025 --- 310,293 - Urban Search and Rescue 2020 97.025 --- 852,677 - Urban Search and Rescue Florence Hurricane 97.025 --- 142,598 - Urban Search and Rescue Tropical Storm Dorian 97.025 --- 161,141 - Urban Search and Rescue Hurricane Douglas 97.025 --- 226,781 - Urban Search and Rescue Oregon Fires 97.025 --- 11,322 - Urban Search and Rescue Tropical Cyclone Laura 97.025 --- 30,638 - Subtotal National Urban Search & Rescue (US&R) Response System 1,817,333 - Passed through California Governor's Office of Emergency Services Disaster Assistance - Public Assistance (Presidentially Declared Disasters) 97.036 FEMA-4482-DR-CA 16,007,862 - Homeland Security Grant Program
Homeland Security Grant Program - 2018 97.067 2018-0054 1,730,553 766,772 Homeland Security Grant Program - 2018 97.067 2018-0054 83,779 - Homeland Security Grant Program - 2019 97.067 2019-0035 214,240 - Passed through the Sacramento County Office of Emergency Services Homeland Security Grant Program
Homeland Security Grant Program - 2018 97.067 2018 135,199 - Homeland Security Grant Program - 2019 97.067 2019 26,869 - Subtotal Homeland Security Grant Program 2,190,640 766,772 Total United States Department of Homeland Security 20,015,835 766,772 Total Expenditures of Federal Awards 152,245,694$ 50,888,331 $ Federal Grantor/Pass-Through Grantor/Cluster Title/Federal Program Name/City Program Name The accompanying notes are an integral part of this schedule. 8 CITY OF SACRAMENTO, CALIFORNIA
Notes to the Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2021
9 NOTE 1 – BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal award activity of the City of Sacramento, California (City) under programs of the federal government for the fiscal year ended June 30, 2021. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations , Part 200, Uniform Administrative Requirements, C ost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City.
As a result of the COVID-19 pandemic, many new federal programs have been established and funding has been added to existing federal programs. Expenditures funded from the following acts are denoted by the prefix COVID-19 in the federal program title in the Schedule:
• Coronavirus Preparedness and Response Supplemental Appropriations Act • Families First Coronavirus Response Act
• Coronavirus Aid, Relief, and Economic Security Act (CARES Act) • Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) • American Rescue Plan Act (ARP)
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported in the accompanying Schedule are presented using the modified accrual basis of accounting for governmental funds and the full accrual basis for proprietary funds. Such expenditures are recognized followi ng the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown, if any, in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
NOTE 3 – ASSISTANCE LISTING NUMBERS (ALN)
The ALNs included in the accompanying Schedule were determined based on the program name, review of grant contract information, and the U.S. General Services Administration’s SAM.gov website.
NOTE 4 – INDIRECT COST RATE
The City has elected not to use the 10- percent de minimis indirect cost rate allowed under the Uniform Guidance Section 2 CFR 200.414.
CITY OF SACRAMENTO, CALIFORNIA
Schedule of Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2021
10 Section I Summary of Auditor’s Results
FINANCIAL STATEMENTS
Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified
Internal control over financial reporting:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? None reported
Noncompliance material to the financial statements noted? No
FEDERAL AWARDS
Internal control over major federal programs:
• Material weakness(es) identified? No
• Significant deficiency(ies) identified? Yes
Type of auditor’s report issued on compliance for
the major federal programs: Unmodified
Any audit findings disclosed that are required to be
reported in accordance with 2 CFR 200.516(a)? Yes
Identification of major federal programs:
Assistance Listing Number Name of Federal Program ___ Highway Planning and Construction Cluster:
20.205 Highway Planning and Construction
21.019 Coronavirus Relief Fund
21.023 Emergency Rental Assistance Program
Dollar threshold used to distinguish between type A and type B program: $3,000,000
Auditee qualified as a low-risk auditee? Yes
CITY OF SACRAMENTO, CALIFORNIA
Schedule of Findings and Questioned Costs (Continued)
For the Fiscal Year Ended June 30, 2021
11 Section II Financial Statement Findings
No matters were reported.
Section III Federal Awards Findings
Reference Number: 2021-001
Category of Finding: Subrecipient Monitoring
Type of Finding: Significant Deficiency and Instance of Noncompliance
Federal Agency: U.S. Department of the Treasury
Federal Assistance Listing Number: 21.019
Federal Program Title: COVID-19 Coronavirus Relief Fund Federal Award Year: 2020
Criteria:
Title 2 - Grants and Agreements, Subtitle A - Office of Management and Budget Guidance for Grants and Agreements, Chapter II - Office of Management and Budget Guidance, Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D - Post Federal Award Requirements Standards for Financial and Program Management §200.303 Internal controls (2 CFR 200.303):
The non-Federal entity must:
(a) 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 Fede ral 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 and the “Internal Control Integrated Framework,” issued by the Com mittee of Sponsoring Organizations of the Treadway Commission (COSO).
Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements Standards for Financial and Program Management . Subrecipient Monitoring and Management. §200.332 Requirements for pass-through entities (2 CFR 200.332):
CITY OF SACRAMENTO, CALIFORNIA
Schedule of Findings and Questioned Costs (Continued)
For the Fiscal Year Ended June 30, 2021
12 All pass-through entities must:
(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 described in paragraphs (d) and (e) of this section, which may include consideration of such factors as:
(1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency).
(c) 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 ach ieved. Pass- through entity monitoring of the subrecipient must include:
(1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward.
(3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass -through entity as required by §200.521 Management decision.
(4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has no t otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass- through entity may rely on the subrecipient ’s cognizant audit agency or cognizant oversight agency to perform audit follow -up and make management de cisions related to cross -cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award- specific requirements, to manage ri sk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward.
(d) Depending upon the pass -through entity ’s assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals:
(1) Providing subrecipients with training and technical assistance on program-related matters; and (2) Performing on-site reviews of the subrecipient’s program operations; (3) Arranging for agreed-upon-procedures engagements as described in §200.425.
CITY OF SACRAMENTO, CALIFORNIA
Schedule of Findings and Questioned Costs (Continued)
For the Fiscal Year Ended June 30, 2021
13 Condition:
While the City has a process in place to perform risk assessments and monitor subrecipients, there was no formal documentation of these activities being performed. Out of 22 subrecipients tested, there were nine instances in which evidence of a risk assessment and/or the monitoring of subrecipients was not available.
Cause:
Through inquiry of City personnel, City management communicated to project manager s, whom are responsible for conducting subrecipient risk assessments and performing monitoring procedures, the importance of retaining evidence of the risk assessments and monitoring. However, although project managers performed the required risk assessment and monitoring, evidence of the actual work perf ormed was not consistently retained.
Effect:
In the absence of a formally documented risk assessment and monitoring process for determining appropriate monitoring procedures, including document retention, sufficient and effective monitoring may not occur for those subrecipients most at risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward.
Questioned Costs:
No questioned costs were identified.
Context:
Disbursements to subrecipients for the Coronavirus Relief Fund program for the fiscal year ended June 30, 2021, totaled $34,850,625. The total amount passed through to the 22 subrecipients tested was $19,599,318.
Recommendation:
City departments that pass through federal funds to subrecipients should have a formally document ed process for performing risk assessments over its subrecipients, including document retention, which guides the frequency and extent of monitoring activities to be performed.
Views of Responsible Officials and Corrective Action Plan:
Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
CITY OF SACRAMENTO, CALIFORNIA
Summary Schedule of Prior Audit Findings
For the Fiscal Year Ended June 30, 2021
14 Finding
Number
Federal Program
Title
Assistance
Listing
Number
Compliance
Requirement Status
2018-004 Homeland Security
Grant Program
97.067 Subrecipient
Monitoring
Partially corrected -
expected to be remediated
in fiscal year 2021/2022.
2019-002 National Urban
Search and Rescue
(US&R) Response
System
97.025 Reporting Fully corrected.
15 CITY
OF SACRAMENTO, CALIFORNIA
Management’s Response and Corrective Action Plan
For the Fiscal Year Ended June 30, 2021
FINDING 2021-001
Management’s or Department’s Response:
We concur.
Views of Responsible Officials and Corrective Action:
The City agrees that the absence of a formally documented risk assessment and monitoring process poses a risk of subrecipient noncomplia nce with federal statutes, reg ulations, and terms and conditions of the subaward. Moving forward, the City will develop and document a formal process for performing risk assessment and monitoring over subrecipients, including documentation requirements. The City will continue to educate project managers and emphasize the importan ce of documentation retention as procedures are performed.
Note, that the City has spent all remaining Coronavirus Relief Fund program funding as of March 2022.
No expenditures related to subrecipients were incurred for this program for fiscal year 2022.
Implementation Date: March 2022
Name of Responsible Person: Ash Roughani
1 CITY OF SACRAMENTO, CALIFORNIA
Management’s Response and Corrective Action Plan
For the Fiscal Year Ended June 30, 2021
FINDING 2021-001
Management’s or Department’s Response:
We concur.
Views of Responsible Officials and Corrective Action:
The City agrees that the absence of a formally documented risk assessment and monitoring process poses a risk of subrecipient noncompliance with federal statutes, regula tions, and terms and conditions of the subaward. Moving forward, the City will develop and document a formal process for performing risk assessment and monitoring over subrecipients, including documentation requirements. The City will continue to educate project managers and emphasize the importance of documentation retention as procedures are performed.
Note, that the City has spent all remaining Coronaviru s Relief Fund program funding as of March 2022. No expenditures related to subrecipients were incurred for this program for fiscal year 2022.
Implementation Date: March 2022
Name of Responsible Person: Ash Roughani