City of Stockton
Stockton, California
Single Audit
and Independent Auditors’ Reports
For the Year Ended June 30, 2022
Attachment A
Attachment A
City of Stockton
Single Audit Report
For the Year Ended June 30, 2022
Table of Contents
Page
Independent Auditors’ Reports:
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
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 ....................................................... 3
Schedule of Expenditures of Federal Awards .................................................................................... ........................ 6
Notes to the Schedule of Expenditures of Federal Awards ........................................................................................ 9
Schedule of Findings and Questioned Costs ............................................................................................................ 10
Attachment A
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Attachment A
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
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
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
We have audited, in accordance with the auditing standa rds 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 Stockton, California (the “City”), as of and for the year ended June 30, 2022, and the related notes to the financial statements, wh ich collectively comprise the City’s basic financial statements, and have issued our report thereon dated January 30, 2023.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial stat ements, 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 inte rnal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in in ternal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficien cies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs, we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.
A deficiency 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 assi gned 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 ma terial misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as item 2022-002 to be a material weakness.
Attachment A
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
2 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 attenti on by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as item 2022-001 to be a significant deficiency.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, cont racts 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 require to be reported under Government Auditing Standards.
City’s Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response to the findings identified in our audit and described in the acco mpanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’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 City’s internal c ontrol and compliance. Acco rdingly, this communication is not suitable for any other purpose.
Santa Ana, California
January 30, 2023
Attachment A
200 E. Sandpointe Avenue, Suite 600
Santa Ana, California 92707
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
Independent Auditors’ Report
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Stockton, California’s (the “City”) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for th e year ended June 30, 2022. The City’s major federal programs are identified in the summary of auditors’ resu lts section of the accompanying schedule of findings and questioned costs.
In our opinion, the City complied, in all material resp ects, 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 year ended June 30, 2022.
Basis for Opinion on Each Major Federal Program
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 Princi ples, and Audit Requirements for Federal Awards (the “Uniform Guidance”). Our responsibilities under those standard s and the Uniform Guidance are further described in the Auditors’ Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of C ity and to meet our other ethical res ponsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on complia nce for each major federal program. Our audit does not provide a legal determination of City’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for comp liance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to City’s federal programs.
Attachment A
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
4 Auditors’ Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect materi al noncompliance when it exists. The risk of not detecting material noncompliance resulti ng from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misr epresentations, or the override of internal control.
Noncompliance with the compliance require ments referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards , and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Su ch procedures include examining, on a test basis, evidence regarding City’s complian ce with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstan ces 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 City’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Other Matters
The results of our auditing procedures disclosed instances of noncompliance wh ich are required to be reported in accordance with the Uniform Guidance and which are described in the accompanying schedule of findings and questioned costs as items 2022-005 and 2 022-006. Our opinion on each major fede ral program is not modified with respect to these matters.
Government Auditing Standards requires the auditor to perform limited procedures on City’s response to the noncompliance findings identified in our audit described in the accompanying schedule of findings and questioned costs. City’s response was not subjected to the other a uditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
Report on Internal Control Over Compliance
Our consideration of internal control over compliance was for the limited purpose d escribed in the Auditors’ Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or sign ificant deficiencies in internal control over compliance and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses.
Attachment A
To the Honorable Mayor and Members of City Council
of the City of Stockton
Stockton, California
5 However, as discussed below, we did identify certain defi ciencies in internal contro l over compliance that we consider to be significant deficiencies.
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 c ourse of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of complian ce requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combinati on 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 progr am 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 im portant enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2022-003, 2022-004, 2022-005, and 2022-006, to be significant deficiencies.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
Government Auditing Standards requires the auditor to perform limited pr ocedures City’s response to the internal control over compliance findings identified in our comp liance audit described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the other auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.
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 the Schedule of Expenditures of Federal Awards Required by Uniform Guidance
We have audited the financial statements of the governmental activiti es, the business-type activities, each major fund, and the aggregate remaining fund informa tion of the City as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated January 30, 2023, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming our opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying Sche dule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Uniform Guid ance and is not a required part of the basic financial statements. Such information is the re sponsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare th e basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain other procedures, including comparing and reconciling such information direc tly to the underlying accounting and other records used to prepare the basic financial statements or to the basic fina ncial 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 Expenditure of Federal Awards is fairly stated in all material resp ects in relation to the basic financial statements as a whole.
Santa Ana, California
May 9, 2023, except for the Schedule of Expenditures of Federal Awards, which is as of January 30, 2023.
Attachment A
City of Stockton
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2022
See accompanying Notes to the Schedule of Expenditures of Federal Awards.
6 Assistance Amount
Listing Grant Award Federal Provided to
Number Number Expenditures Subrecipients
U.S. Department of Housing and Urban Development
Direct Program:
CDBG - Entitlement Grants Cluster:
Community Development Block Grants/Entitlement Grants 14.218 B-19-MC-06-0026 62,140$ 62,140$ Community Development Block Grants/Entitlement Grants 14.218 B-20-MC-06-0026 370,111 370,111 Community Development Block Grants/Entitlement Grants 14.218 B-21-MC-06-0026 2,807,169 - Community Development Block Grants/Entitlement Grants 14.218 B-21-MC-06-0026 408,172 408,172 Community Development Block Grants/Entitlement Grants 14.218 Program Income 101,732 - COVID-19 Community Development Block Grants/Entitlement Grants 14.218 B-20-MW-06-0026 323,601 187,315 Neighborhood Stabilization Program 14.218 B-08-MN-060009 2,090 - Neighborhood Stabilization Program 14.218 B-11-MN-060009 2,315 - Total CDBG - Entitlement Grants Cluster 4,077,330 1,027,738 Emergency Solutions Grant Program 14.231 E-20-MC-06-0026 107,570 107,570 Emergency Solutions Grant Program 14.231 E-21-MC-06-0026 239,717 228,407 COVID-19 Emergency Solutions Grant Program 14.231 E-20-MW-06-0026 4,888,469 3,196,890 Total Emergency Solutions Grant Program 5,235,756 3,532,867 HOME Investment Partnership Program 14.239 M-21-MC-06-0221 143,410 - HOME Investment Partnership Program 14.239 M-20-MC-06-0221 296,603 - HOME Investment Partnership Program 14.239 M-21-MC-06-0221 303,397 - Total HOME Investment Partnership Program 743,410 - Total U.S. Department of Housing and Urban Development 10,056,496 4,560,605 U.S. Department of Justice
Direct Program:
COVID - 19 Coronavirus Emergency Supplemental Funding Program 16.034 2020-VD-BX-1296 701,682 - Total Coronavirus Emergency Supplemental Funding 701,682 - Community-Based Violence Prevention Program 16.123 2020-PB-BX-0021 31,625 - Total Community-Based Violence Prevention Program 31,625 - Pass-Through San Joaquin County District Attorney’s Office:
Edward Byrne Memorial Justice Assistance Grant Program 16.738 2018-DJ-BX-0823 30,808 - Edward Byrne Memorial Justice Assistance Grant Program 16.738 2019-DJ-BX-0623 63,408 - Edward Byrne Memorial Justice Assistance Grant Program 16.738 2020-DJ-BX-0458 127,088 - Total Edward Bryne Memorial Justice Assistance Grant Program 221,304 - Total U.S. Department of Justice 954,611 - U.S. Department of Transportation
Pass-Through State of California Department of Transportation:
Highway Planning and Construction Cluster:
Filbert/Miner Traffic Sig 20.205 CML-5008(130) 6,465 -
West Lane Ped Access Imp 20.205 HSIPL-5008(136) 665,939 - Bus Rapid Transit 1-B 20.205 CML-5008(148) 9,225 - BUS RAPID TRANSIT 1-B 20.205 CML-5008(188) 555,378 - BUS RAPID TRANSIT V 20.205 CML-5008(149) 12,301 - INSTALL/UPGRADE BIKE FAC 20.205 CML-5008(150) 167,999 - THORNTON @ HAMMER & LOWER SAC 20.205 CML-5008(156) 558,743 - Federal Grantor/Pass-Through Grantor
Program Title
Attachment A
City of Stockton
Schedule of Expenditures of Federal Awards (Continued)
For the Year Ended June 30, 2022
See accompanying Notes to the Schedule of Expenditures of Federal Awards.
7 Assistance Amount
Listing Grant Award Federal Provided to
Number Number Expenditures Subrecipients
U.S. Department of Transportation (continued)
Pass-Through State of California Department of Transportation (Continued):
Highway Planning and Construction Cluster (Continued):
BRIDGE REHAB/REPLACEMENT 20.205 BPMP-5008(157) 7,548 - HAWK PED SIGNAL INSTALL 7 20.205 HSIPL-5008(151) 180,570 - GUARDRAIL, TRANSITION RAIL 20.205 HSIPL-5008(152) 188,200 - MINER AVE COMP ST IMPR PH1 20.205 ATPL-5008(158) 885,094 - HUNTER ST DIET/BIKE INSTL 20.205 HSIPL-5008(155) 5,328 - WEST LN TRAF SIG CONTROL SYS 20.205 CML-5008(165) 11,938 - HIGH FRICTION TREATMENT 20.205 HSIPL-5008(153) 637,167 - BEAR CREEK/PIXLEY SLOUGH BIKE 20.205 CML-5008-(175) (3,802) - CLOSING GAPS TO SCHOOL 20.205 ATPCML-5008-(178) 1,148,471 - HSIP 8-CONVT SIGNL FR PED 20.205 HSIPL-5008(166) 35,745 - HSIP 8-INSTALL GUARDRAILS 20.205 HSIP-5008(168) 11,406 - HSIP 8-INSTALL PED XNG 9 20.205 HSIPL-5008(161) (23,990) - HSIP 8-RAISED MED @ MLK 20.205 HSIPL-5008(167) 73,453 - HSIP 8-RAISED MED @ PACIFIC 20.205 HSIPL-5008(164) 9,945 - HSIP 8-RAISED MED @ EL DORADO 20.205 HRRRL-5008(163) 734 - HSIP 8-ROAD DIET @ EL DORADO 20.205 HSIPL-5008(162) 2,621 - LT TURN ADD @ VARIOUS LOC 20.205 CML-5008(169) (102,038) - LINCOLN/ 8TH ROUNDABOUT 20.205 CML-5008(176) 13,610 - MARCH LN EBMUD BIKE & PED 20.205 CML-5008(179) 10,634 - MONTAUBAN/HAMMERTOWN RND 20.205 CML-5008(174) 6,488 - PACIFIC/MARCH INTRSEC MOD 20.205 CML-5008(181) 5,301 - REALTIME TRAFFIC FLOW MONITOR 20.205 CML-5008(180) 29,285 - TAM O'SHANTER/KNICKERBOCK 20.205 CML-5008(173) 555,540 - HSIP 9-LT EL DORADO/MARCH 20.205 HSIPL-5008(183) (1,143) - HSIP 9-LT AIRPORT/HAZELTN 20.205 HSIPL-5008(184) 10,041 - HSIP 9-SIDEWLK MED MLK BL 20.205 HSIPL-5008(186) 10,551 - HSIP 9-REC RPD FLSH BCONS 20.205 HSIPL-5008(185) 1,521 - 19-20 ST RESURFAC ON FED 20.205 STPL-5008(190) 2,047,268 - TRANSP MGMT CTR EQUIP UPG 20.205 CML-5008(191) 75,132 - ARCH-AIRPORT RD TS SYNCH 20.205 CML-5008(192) 33,989 - ALPINE & ALVARADO 3-WY TS 20.205 CML-5008(193) 23,424 - Total Highway Planning and Construction Cluster: 7,866,081 - Pass-Through State of California Office of Traffic Safety:
Highway Safety Cluster:
State and Community Highway Safety 20.600 PT22087 83,603 - State and Community Highway Safety 20.600 PT21067 12,163 - Total State and Community Highway Safety 95,766
Coronavirus Emergency Supplemental Funding Program 20.616 TR22010 24,800 - Total Highway Safety Cluster 120,566 -
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 PT22087 156,232 - Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 PT21067 109,123 - Total Minimum Penalties for Repeat Offenders for Driving While Intoxicated 265,355 - Total U.S. Department of Transportation 8,252,002 - Federal Grantor/Pass-Through Grantor
Program Title
Attachment A
City of Stockton
Schedule of Expenditures of Federal Awards (Continued)
For the Year Ended June 30, 2022
See accompanying Notes to the Schedule of Expenditures of Federal Awards.
8 Assistance Amount
Listing Grant Award Federal Provided to
Number Number Expenditures Subrecipients
U.S. Treasury
Direct Program:
Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 11,071,923 - Pass-Through State of California State Water Resources Control Board:
CA WasteWater Arrearage Payment Program 21.027 N/A 2,032,055 - CA Water Arrearage Payment Program 21.027 N/A 1,567,612 - Total Coronavirus State and Local Fiscal Recovery Funds 14,671,590 - Emergency Rental Assistance Program:
Direct Program:
Emergency Rental Assistance 21.023 N/A 18,547,416 - Passed through the State of California Department of Housing and Community Development:
Emergency Rental Assistance 21.023 N/A 18,614,118 - Total Emergency Rental Assistance 37,161,534
Total U.S. Treasury 51,833,124 -
U.S. Small Business Administration
Direct Program:
Shuttered Venue Operators Grant Program 59.075 SBAHQ21SV009148 239,428 - Total U.S. Small Business Administration 239,428 - U.S. Environmental Protection Agency
Direct Program:
Brownfields Training, Research, and Technical Assistance Grants and Cooperative Agreements 66.818 99T74401 187,962 - Water Infrastructure Finance and Innovation (WIFIA) 66.958 N/A 108,000,000 - Total U.S. Environmental Protection Agency 108,187,962 - U.S. Department of Homeland Security
Direct Program:
Assistant to Firefighters Grant (AFG) 97.044 EMW-2018-FO-04270 202,845 - COVID-19 Assistant to Firefighters Grant (AFG) 97.044 EMW-2020-FG-00464 1,181,818 - Staffing for Adequate Fire and Emergency Response (SAFER) 97.083 EMW-2020-FF-01451 353,230 - Total Assistant to Firefighters Grant (AFG) 1,737,893 - Total U.S. Department of Homeland Security 1,737,893 - Total Expenditures of Federal Awards 181,261,516$ 4,560,605$ Federal Grantor/Pass-Through Grantor
Program Title
Attachment A
City of Stockton
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2022
9 Note 1 – Reporting Entity
The financial reporting entity consists of the primary government, City of Stockton, California (the “City”), organizations for which the primary gove rnment is financially accountable, a nd other organizations for which the nature and significance of their relationship with the pr imary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.
The City Council acts as the governing body and is ab le to impose its will on the following organizations, establishing financial accountability:
The Stockton Public Financing Authority
Fiduciary Component Unit:
Successor Agency of the Former Redevelopment Agency of the City of Stockton
Note 2 – Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of City under programs of the federal government for the year ended June 30, 2022. The in formation in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform Guidance”). Because the Schedule presents only a selected porti on of the operations of City, it is not intended to and does not present the financial position of the City. Negative amounts reflected in the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Note 3 – Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following 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 on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Note 4 - Indirect Cost Rate
The City has not elected to use the 10 percent de-minimis indirect rate as allowed under Uniform Guidance.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2022
10 Section I – Summary of Auditors’ Results
Financial Statements
Types of report the auditors issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? 2022-002
Significant deficiency(ies) identified? 2022-001
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major federal programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified? 2022-003 to 2022-006
Type of auditors’ report issued on compliance for 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(s) Name of Federal Program or Cluster Expenditures
14.231 Emergency Solutions Grants Program 5,235,756$
20.205 Highway Planning and Construction Cluster 7,866,081
21.023 Emergency Rental Assistance Program 37,161,534
21.027 Coronavirus State and Local Fiscal Recovery Funds 14,671,590
66.958 Water Infrastructure Finance and Innovation (WIFIA) 108,000,000 Total Expenditures of All Major Federal Programs 172,934,961$ Total Expenditures of Federal Awards 181,261,516$
Percentage of Total Expenditures of Federal Awards 95.41%
Dollar threshold used to distinguish between type A and type B programs: $3,000,000
Auditee qualified as low-risk auditee under 2 CFR 500.520? Yes Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
11 Section II – Financial Statements Findings
A. Current Year Findings– Financial Statement Findings
2022-001 – Internal Control Over Financial Reporting – Prior Year Adjustments, Year-End Closing, Reconciliation, and Delay in Issuance of the Single Audit
Criteria:
Management is responsible for the prep aration and fair presentation as well as th e accuracy of its financial statements including disclosures in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. As part of satisfying that responsibility, manageme nt should ensure complete year-end cl osing and diligently produce reliable and accurate financial information.
Generally accepted auditing standards defined internal c ontrol as a process – affected by the Members of City Council, management, and othe r personnel – designed to provide reasonabl e assurance regarding the achievement of objectives in the following categories:
Reliability of financial reporting
Effectiveness and efficiency of operations, and
Compliance with applicable laws and regulations.
In essences, accounting policies and procedures would aid th e City in providing training for accounting personnel, communicating and providing a source of reference to approved policies, and ma intaining consistency of recording financial transactions.
Management is responsible for providing timely and accurate financial information. Since the City has expended over $750,000 of expenditures of federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Aware (“Uniform Guidance”), states the City is required to submit the Data Collecti on Form and the reporting p ackage to the Federal Audit Clearinghouse and the State Controller’s Office, which include the Basic Financial Statements of the City, within the earlier of 30 days after receipt of auditor’s report, or nine month after the end of the audit period.
Condition:
During the year ended June 30, 2022, the Successor Agency to the Redeve lopment Agency reported a correction of cash with fiscal agent in the amount of $1,868,468 and the adjustment resulted in the net position restatement from $(59,008,834) to $(60,877,302).
During the audit, we noted stale receivable and payable to be reconciled from the subsidia ry ledgers to the general ledgers.
The City has experienced significant delays in the prep aration and issuance of the Single Audit required under Uniform Guidance. Due to the delay in issuance of the Single Audit report, the Data Collection Form is not submitted timely.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
12 Section II – Financial Statements Findings (Continued)
A. Current Year Findings– Financial Statement Findings (Continued)
2022-001 – Internal Control Over Financial Reporting – Prior Year Adjustments, Year-End Closing, Reconciliation, and Delay in Issuance of the Single Audit (Continued)
Cause:
There is no formal process in place to conduct periodic review and reconciliation of th e sub-ledger to the general ledger. Furthermore, detailed review and reconciliation of the general ledger balances from the old financial system (HTE) to the current financial system (MUNIS) is incomplete.
Context and Effect:
A prior period adjustment is reported as noted in the C ondition. Without further reviewing and reconciling the time of the transition from the old financial sy stem to the Munis, stale receivable and payable could result in material misstatement of the financial statements.
The City is neither in compliance with Uniform Guidance nor is it meeting its current demands for external financial reporting.
Recommendation:
We recommend the City evaluate its staff size for Finance Division. We also recommend the City update and follow its policy to review and reconcile th e general ledger. The policy and proced ures should also include the year-end closing procedures and the accounts to be reconciled in accordance with Governmental Accounting Standards Board Statements and provide training to staff to properly perform the reconciliation and closing.
In addition, the policy and procedures should include critical due dates and develop a listing of assignment, including department coordinated items, based on available resources to meet those due dates.
Views of Responsible Officials:
Management concurs the finding.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
13 Section II – Financial Statements Findings (Continued)
A. Current Year Findings– Financial Statement Findings (Continued)
2022-002 – Internal Control Over Preparation of Schedule of Expenditures of Federal Awards
Criteria:
2 CFR 200.302(b)(1) states that the nonfederal entity must identify in its accounts all federal awards received and expended, as well as the federal programs under which they we re received. Federal program and award identification must include, as applicable, the assistance listing title and num ber, the federal award identification number and year, the name of the federal agency, and the name of the pass-through entity, if any. This information enables the auditee to reconcile amounts presented in the financial statements to related amounts in the schedule of expenditures of federal awards.
Pursuant to Code of Federal Regulation §200.510 Financial statements:
All auditees must:
(b) Schedule of expenditures of Federal awards. The aud itee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to u se. For example, when a Federal progr am has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must:
(1) List individual Federal programs by Federal agency. For a cluster of programs, provi de the cluster name, list individual Federal programs within the cluster of program s, and provide the applicable Federal agency name.
For R&D, total Federal awards expended must be s hown either by individual Fe deral award or by Federal agency and major subdivision within the Federal agency. For example, the National Institutes of Health is a major subdivision in the Department of Health and Human Services.
(2) Provide total Federal awards expended for each indi vidual Federal program and the assistance listing number or other identifying number when the assistance listing number information is not available. For a cluster of programs also provide the total for the cluster.
Pursuant to Code of Federal Regulation §200.514 Scope of audit:
(b) Financial statements. The auditor must determine whether the financial statements of the auditee are presented fairly in all material respects in acco rdance with generally accepted accounti ng principles. The auditor must also determine whether the schedule of expend itures of Federal awards is stated fairly in all material respects in relation to the auditee's financial statements as a whole.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
14 Section II – Financial Statements Findings (Continued)
A. Current Year Findings– Financial Statement Findings (Continued)
2022-002 – Internal Control Over Preparation of Schedule of Expenditures of Federal Awards (Continued)
Condition:
During our review of the Schedule of Expenditures of Federal Awards (“Schedule”) provided by the City, we noted the Emergency Rental Assistance Program, passed through th e State of California in the amount of $18,614,118 were excluded in the Schedule.
During the audit, there were multiple rounds of revisions to the Schedule that were provided by the City. Included in the revision was the Federal related expenditures for th e American Rescue Plan Act, that passed through the California State Water Resource Control Board, in the am ount of $3,599,667, which was initially excluded from the Schedule.
Cause:
There was insufficient communication between the Finance Division and project managers overseeing the federal programs and inadequate training to correctly identify funding sources.
Context and Effect:
With a vacancy in the grants department and receipt of unprecedented COVID relief pass through funding, this challenged the departments with insufficient knowledge of the proper reporting processes.
Recommendation:
We recommend frequent communication between the Finance Division and other departments in identifying federal programs. In addition, we recommend the City provide more training to both grant management staff and finance staff to enhance the skill in identifying pass through programs and ensure the accuracy and completeness of the Schedule.
Views of Responsible Officials:
Management concurs the finding.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
15 Section II – Financial Statements Findings (Continued)
B. Prior Year Findings – Financial Statement Findings
No prior year financial statement findings and questioned costs were noted.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
16 Section III – Federal Awards Finding and Questioned Costs
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit
2022-003 - Eligibility – Internal Control Over Eligibility
Identification of the Federal Program:
Assistance Listing Number: 21.023
Assistance Listing Title: Emergency Rental Assistance Program Federal Agency: Department of Treasury
Pass-Through Entity: State of California Department of Finance Federal Award Identification Number: N/A
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to the April 2022 Compliance Supplement, Eligibility:
This approach to eligibility was implem ented in accordance with Consolidated Appropriations Act, 2021, for ERA 1 in sections 501(c)(2)(C)(ii) of the Act concerning docume ntation of payments to ho useholds, sections 501(f)(2)(A) and (B) of the Act concerning signature requirements for a pplications and documentation required for tenants, section 501(k)(1) concerning area median income determinati ons, and sections 501(k)(3)(A)(I) and (II) concerning eligible household determinations and attestatio n requirements. This treatment is further explained in the ERA FAQs; the Consolidated Appropriations Act, 2021; and the Treasury, Department of Justice and Department of Housing and Urban Development joint letter issued August 27, 2021 ( https://home.treasury.gov/system/files/136/Eviction- Moratorium-Joint-Letter.pdf).
To the extent that a grantee has established and consistently followed its own reasonable procedures for implementing an eligibility determination process, consistent with Treasury’s guidance, it is not Treasury’s expectation that grantees should seek additional documentation from a beneficiary after the initial determination of eligibility has been completed, including for those determined to be eligible using self-attestation, categorical eligibility, or fact-specific proxies in qualifying circumstances. Testing of indivi dual household eligibility-rela ted documentation should be limited to material already collected by the grantee duri ng application as much as possible to avoid imposing undue burden on households that remain at risk of housing instability.
Condition:
During our audit, we noted 4 samples out of 40 samples select ed for the eligibility requirement testing with internal control deficiency related to the income eligibility verification. The application reviewer made errors on data input and reported those applicants’ income as zero instead of the actual income provid ed by the applicants. However, we recalculated those four applicants’ in come based on the income verification support provided and those applicants were eligible to receive the grant subsidy based on the income limit.
Cause:
The City did not have proper internal controls in place to review the data input performed by the application reviewer.
Effect or Potential Effect:
The City could potentially be out of compliance with the eligibility requirement due to the error in executing the internal control procedures.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
17 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-003 - Eligibility – Internal Control Over Eligibility (Continued)
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Not applicable.
Recommendation:
We recommend the City enhance its internal control by implementing policies and procedures over eligibility requirement.
Views of Responsible Officials:
Management concurs the finding.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
18 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-004 - Procurement and Suspension, and Debarment – Internal Control over Verification Against the System for Award Management (“SAM”)
Identification of the Federal Program (s):
Assistance Listing Number: 20.205
Assistance Listing Title: Highway Planning and Construction Federal Agency: Department of Transportation
Pass-Through Entity: State of California Department of Transaction Federal Award Identification Number: Refer to the Schedule
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Federal Agency: Department of Treasury
Pass-Through Entity: N/A
Federal Award Identification Number: N/A
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 transaction s” 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 certa in 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 regulatio ns, is not suspended or debarred or otherwise excluded from participating in the transaction. This verificati on may be accomplished by (1) checking the System for Award Management (SAM) Exclusi ons maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/S AM/ (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Excl usions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a cl ause or condition to the covered transaction with that entity (2 CFR section 180.300).
Condition:
During our audit, we noted that the City did not have documentation on verifying the vendors against the SAM to ensure that they were not suspended or debarred from federally funded purchases.
Cause:
The City does not have a process in place to require staff maintain the proof of verification performed on checking the suspension or debarment over vendors that the City makes contracts with federally-funded projects.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
19 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-004 - Procurement and Suspension, and Debarment – Internal Control over Verification Against the System for Award Management (“SAM”) (Continued)
Effect or Potential Effect:
Without verifying whether vendors are suspended or deba rred from working on federally-funded projects, the City could be contracting with vendors that are prohibited from working on federally-funded projects.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Not applicable.
Recommendation:
We recommended the City establish internal control procedures to monitor complianc e requirements to ensure vendors are not suspended or debarred from federally-funded purchases.
Views of Responsible Officials:
Management concurs the finding.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
20 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-005 – Reporting – Internal Control and Compliance over Reporting
Identification of the Federal Program:
Assistance Listing Number: 66.958
Assistance Listing Title: Water Infr astructure Finance and Innovation (WIFIA) Federal Agency: United Statements Environmental Protection Agency Pass-Through Entity: N/A
Federal Award Identification Number: N/A
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to the WIFIA Loan Agreement between the City and the Environmental Projection Agency, Section 16.
Reporting Requirement, below reporting are required:
(a) Updating Financial Model: The City shall provide to the WIFIA Lender not later than one hundred eighty (180) days after the beginning of each City Fiscal Year, an updated Base Case Financial Model reflecting the then-current and projected conditions.
(b) Annual Financial Statements. The City shall deliver to the WIFIA Lender, as soon as available, but no later than one hundred eighty (180) days after the end of each City Fiscal Year.
(c) Reserved
(d) Construction Reporting. The WIFIA Lender shall have the ri ght in its sole discretion to monitor (or direct its agents to monitor) the development of the Project , including environmental compliance, design, and construction of the Project. The City shall be responsible for administering construction oversight of the Project in accordance with applicable federal, state and local governmental requirements. The City agrees to cooperate in good faith with the WIFIA Lender in the conduct of such monitoring by promptly providing the WIFIA Lender with such reports, documentation or othe r information as shall be requested by the WIFIA Lender or its agents, including any independent engineer reports, documentation or information. During the period through Substantial Completion of the Project, the City shall furnish to the WIFIA Lender, on a quarterly basis, a report on the status of the Project, substantially in the form of Exhibit K (Form of Quarterly Report). The report shall be executed by the City’s Au thorized Representative and, for any quarter, shall be delivered to the WIFIA Lender within thirty (30) days following such quarter (or if such day is not a Business Day, on the next following Business Day). If the then-current projection for the Substantial Completion Date is a date later than the Projected Substantial Comp letion Date, the City shall provide in such report a description in reasonable detail to the reasonable satisf action of the WIFIA Lender of the reasons for such projected delay, an estimate of the impact of such de lay on the capital and operati ng costs of the System (if any), and that the new date could not reasonably be expected to result in a Material Adverse Effect.
(e) Public Benefits Report. The City shall deliver to the WIFIA Lender a report, in the form of Exhibit L (Form of Public Benefits Report Public Bene fits Report later than thirty (30) days prior to the Effective Date, (ii) within ninety (90) days following the Substantial Completion Date and (iii) within ninety (90) days following the fifth (5th) anniversary of the Substantial Completion Date. The City agrees that information described under this Section 16(e) may be made publicly available by the WIFIA Lender at its discretion.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
21 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-005 – Reporting – Internal Control and Compliance over Reporting (Continued)
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation) (Continued):
(f) Modifications to Total Project Costs. For the period through the Substantial Completion Date, the City shall provide the WIFIA Lender with written notification at least thirty (30) days prior to instituting any increase or decrease to the aggregate Total Project Costs in an amount equal to or greater than five percent (5%), which notification shall set forth the nature of the proposed increase or decrease and an estimate of the impact of such increase or decrease on the capital costs and operating costs of the System. The City s notice shall demonstrate that the proposed increase or decrease is c onsistent with the provisions of this Agreement, is necessary or beneficial to the Project City ability to comply with its obligations under the Related Documents (including any financial ratios or covenants included ther ein), and could not reasonably be expected to result in a Material Adverse Effect.
(g) Operations and Maintenance. The WIFIA Lender shall have the right, in its sole discretion, to monitor (or direct its agents to monitor) the Project s operations and, as the WIFIA Lender may request from time to time, to receive reporting on the operation and management of the Project, and copies of any contracts relating to the operation and maintenance of the Project. The City agrees to cooperate in good faith with the WIFIA Lender in the conduct of such monitoring by promptly providing the WIFIA Lender with such reports, documentation, or other information requested by the WIFIA Lender. The WIFIA Lender has the right, in its sole discretion, to retain such consultants or advisors, to carry out the provisions of this Section 16(g). On or prior to the Substantial Completion Date, the City shall deliver to the WIFIA Lender an operations and maintenance manual with respect to the Project, in form and substance reasonably acceptable to the WIFIA Lender.
(h) Notices.
a. The City shall, within fifteen (15) days after th e City learns of the occurrence, give the WIFIA Lender notice of any of the following events or receipt of any of the following notices, as applicable, setting forth details of such event:
i. Substantial Completion
ii. Defaults; Events of Default
iii. Litigation
iv. Delayed Governmental Approvals
v. Environmental Notices
vi. Amendments
vii. Related Document Defaults
viii. Uncontrollable Force
ix. Ratings Changes
x. 2 C.F.R. § 180.350 Notices
xi. Additional Principal Project Contracts
xii. Issuance of System Obligations
xiii. Postings on EMMA
xiv. Other Adverse Events
xv. Draws on WIFIA Reserve Account
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
22 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-005 – Reporting – Internal Control and Compliance over Reporting (Continued)
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation) (Continued):
(h) Notices. (Continued)
a. Within thirty (30) calendar days after the City learns of the occurrence of an event specified in clause (i) above (other than sub-clauses (A) (Substantia l Completion), (F) (Amendments) or (I) (Ratings Changes) (in the case of a ratings upgrade)), the City s Authorized Representative shall provide a statement to the WIFIA Lender setting forth the actions the City proposes to take with respect thereto.
The City shall also provide the WIFIA Lender with any further information reasonably requested by the WIFIA Lender from time to time concerning the matters described in clause (i) above.
(i) Requested Information. The City shall, at any time while the WIFIA Loan remains outstanding, promptly deliver to the WIFIA Lender such additional inform ation regarding the business, financial, legal or organizational affairs of the City or regarding the Project or the System Revenues as the WIFIA Lender may from time to time reasonably request.
Condition:
During the audit, we noted that the City was not aware of the reporting requirements from the loan agreements and only filed the Construction Reporting.
Cause:
The City was not familiar with the loan agreement reporting requirements.
Effect or Potential Effect:
Without filing all the required reports by the loan agreement resulted in noncompliance.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Not applicable.
Recommendation:
We recommended the City establish internal control procedures to monitor compliance requi rements to make sure the required reports are filed properly and timely.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
23 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-005 – Reporting – Internal Control and Compliance over Reporting (Continued)
Views of Responsible Officials:
Management concurs the finding.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
24 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-006 – Special Tests and Provisions – Internal Control and Compliance over Obligation, Expenditure, Payment Requirements
Identification of the Federal Program:
Assistance Listing Number: 14.231
Assistance Listing Title: Emergency Solutions Grant Program Federal Agency: U.S. Departme nt of Housing and Urban Development Pass-Through Entity: N/A
Federal Award Identification Number: E- 20-MC-06-0026, E-21-MC-06-0026, E-20-MW-06-0026
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to April 2022 Compliance Supplement, Special Tests and Provisions – Obligation, Expenditures and Payment Requirements –
Obligation-ESG. Funds allocated to metropolitan cities, urban counties, and territories. Within 180 days after the date that HUD signs the grant agreement (or a grant amendment for reallocation of funds) with a metropolitan city, urban county, or territory, the recipient must obligate all of the grant amount, except the amount for its administrative costs.
ESG-CV funds must be obligated by the recipient in accordance with 24 CFR 576.203(a)(1) and (2), except as provided below. The applicable period for obligating ESG -CV funds begins on the date HUD signed the recipient’s grant agreement for the first allocation of ESG-CV funds. Th e obligation deadlines below apply to the both the first and second allocation of ESG-CV funds. HUD is also providing further flexibility for recipients (including states and non-states) to provide additional time to identify entities that have capacity and expertise to mitigate the impacts of coronavirus, including those who have not previously or recently received ESG funding.
a. Recipients that are metropolitan cities, urban counties, or territories may have up to 240 days from the date HUD signs the grant agreement to obligate ESG-CV funds. Recipients must maintain in their program records a description of any changes the recipient implemented to identify and select new subrecipients.
Payments to Subrecipients. The recipient must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient’s complete payment request. This requirement also applies to each subrecipient that is a unit of general-purpose local government (24 CFR section 576.203).
Condition:
During our audit, we noted two out of nine samples selec ted for obligation testing were outside of the obligation without further justifications.
In addition, we noted three out of forty samples selected for payment requirements testing were outside of 30 days window without further justifications.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
25 Section III – Federal Awards Finding and Questioned Costs (Continued)
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued)
2022-006 – Special Tests and Provisions – Internal Control and Compliance over Obligation, Expenditure, Payment Requirements (Continued)
Cause:
The City does not have formal policies and procedures in place to obligate the funds within the required timeframe nor complete the subrecipient’s payment request within 30 days. In addition, the City did not have procedures in place to timely request grantor extensions and/or document exceptions that are outside of uniform guidance.
Effect or Potential Effect:
The exceptions noted resulted in noncompliance.
Questioned Costs:
None.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
Not applicable.
Recommendation:
We recommended the City establish internal control proce dures to monitor compliance re quirements to ensure the subrecipient’s payment requests are processed timely.
Views of Responsible Officials:
Management concurs the finding.
Attachment A
City of Stockton
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2022
26 Section III – Federal Awards Finding and Questioned Costs (Continued)
B. Prior Year Findings and Questioned Costs – Major Federal Award Program Audit
No prior year findings were noted.
Attachment A