City of Ingleside, Texas

Finding 2024-III-001 – Schedule of Expenditures of Federal Awards (SEFA) Type of Finding – Material Weakness Criteria: The City is required to properly account for all federal spending and to prepare an accurate and complete SEFA for each fiscal year. Condition/Cause: The Assistant Director of Finance, who is responsible for preparing the SEFA, did not prepare and provide a reconciled SEFA for audit for FY24. During our audit, we were able to assist the Assistant Director of Finance in producing the SEFA after numerous journal entries to the grant fund. Recommendation: We recommend that the City reviews their grant management policies and procedures. A reconciliation of grant expenses should be completed monthly. In addition, complete and accurate files should be maintained for each grant so that an accurate and complete SEFA can be prepared at year-end that ties to the general ledger. Response: City staff will update grant management policies and procedures to include monthly reconciliations of grant expenses and will maintain complete grant files so that an accurate and complete SEFA that ties to the general ledger can be prepared annually for audit and required reporting.

Finding 2023-III-001 – Schedule of Expenditures of Federal Awards (SEFA) Type of Finding – Material Weakness

Criteria: The City is required to properly account for all federal spending and to prepare an accurate and complete SEFA for each fiscal year.

Condition/Cause: The Director of Finance, who is responsible for preparing the SEFA, did not prepare and provide a SEFA for audit for FY23. During our audit, we were able to assist the Director of Finance in producing the SEFA after numerous journal entries to the grant fund.

Recommendation: We recommend that the City reviews their grant management policies and procedures. A reconciliation of grant expenses should be completed monthly. In addition, complete and accurate files should be maintained for each grant so that an accurate and complete SEFA can be prepared at year-end that ties to the general ledger.

Response: City staff will update grant management policies and procedures to include monthly reconciliations of grant expenses and will maintain complete grant files so that an accurate and complete SEFA that ties to the general ledger can be prepared annually for audit and required reporting.

Finding 2023-III-002 – Federal Audit Clearinghouse Submission Type of Finding – Significant Deficiency

Criteria: Governmental entities that spend at least $750,000 of federal funds are required to have a Single Audit and to submit to the Federal Audit Clearinghouse (FAC) by the federally required deadline.

Condition/Cause: As a result of the delayed preparation of the SEFA, the City did not submit a Single Audit reporting package to the FAC by the federally required deadline. Non-compliance with the reporting requirements is a violation of federal grants terms and conditions. The City’s continued failure to meet this filing requirement could affect future federal funding.

Recommendation: We recommend that the City reviews their grant management policies and procedures. A reconciliation of grant expenses should be completed monthly. In addition, complete and accurate files should be maintained for each grant so that an accurate and complete SEFA can be prepared at year-end that ties to the general ledger. The SEFA should be completed in a timely manner so that it can be audited and then submitted to the FAC as required.

Response: City staff will update grant management policies and procedures to include monthly reconciliations of grant expenses and will maintain complete grant files so that an accurate and complete SEFA that ties to the general ledger can be prepared annually for audit and required reporting. The SEFA will be completed in a timely manner and the Single Audit will be submitted to the FAC as required.

Finding 2023-III-003 – Federal Reporting Compliance - American Rescue Plan (ARP) Type of Finding – Significant Deficiency

Criteria: Accurate and complete Project and Expenditure Reports are required to be submitted on a regular basis for ARP funds.

Condition/Cause: Per review of the SEFA and support documentation for the ARP grant funds expended during the reporting period of April 1, 2022 to March 31, 2023, ABIP noted expenses incurred in that period were not included on the required Project and Expenditure Report.

Recommendation: We recommend that the City review their grant management policies and procedures as well as the agreement with their third-party grant management company. A reconciliation of grant expenses should be completed monthly. In addition, complete and accurate files should be maintained for each grant so that accurate and complete reporting can be submitted as required.

Response: The City will review their grant management policies and procedures and will reconcile grant expenses and revenues monthly. In addition, complete and accurate files will be maintained for each grant so that accurate and complete reporting can be submitted as required. Criteria: Accurate and complete Project and Expenditure Reports are required to be submitted on a regular basis for ARP funds.

Condition/Cause: Per review of the SEFA and support documentation for the ARP grant funds expended during the reporting period of April 1, 2022 to March 31, 2023, ABIP noted expenses incurred in that period were not included on the required Project and Expenditure Report.

Recommendation: We recommend that the City review their grant management policies and procedures as well as the agreement with their third-party grant management company. A reconciliation of grant expenses should be completed monthly. In addition, complete and accurate files should be maintained for each grant so that accurate and complete reporting can be submitted as required.

Response: The City will review their grant management policies and procedures and will reconcile grant expenses and revenues monthly. In addition, complete and accurate files will be maintained for each grant so that accurate and complete reporting can be submitted as required.

Finding 2023-III-004 – Federal Reporting – Community Development Block Grant (CDBG) Type of Finding – Significant Deficiency

Criteria: Per the federal grant compliance supplement, for all programs under Assistance Listing 14.228, Section 3 of HUD Act of 1968 is applicable (24 CFR Part 75). A grantee is required to submit annual reports related to hiring opportunities and labor hours.

Condition/Cause: The City was unable to provide documentation that the Section 3 performance report was submitted to HUD as required.

Recommendation: We recommend that the City review their grant management policies and procedures to ensure that the City correctly submits federal reporting to HUD as required.

Response: City staff will review their grant management policies and procedures to ensure that the City is correctly submitting federal reporting to HUD as required.

Finding 2023-III-005 – Federal Special Tests and Provisions – CDBG Wage Rate Requirements Type of Finding – Significant Deficiency

Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL).

Condition/Cause: The City was unable to provide documentation that a provision for compliance with DOL Wage Rate Requirements was included in the CDBG construction contract. This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). The City was unable to provide documentation that certified payrolls were submitted as required.

Recommendation: We recommend that the City reviews their grant management and procurement policies and procedures to ensure that Federal Wage Rate requirements are included in all construction contracts in excess of $2,000 financed by federal assistance. We also recommend that the City adopts policies and procedures to ensure that contractors and subcontractors comply with wage rate requirements.

Response: City staff will review their grant management and procurement policies and procedures to ensure that Federal Wage Rate requirements are included in all eligible construction contracts and procedures to monitor that contractors and subcontractors comply with wage rate requirements.

Finding 2023-III-006 – Grant Agreement Compliance – CDBG Reporting Type of Finding – Significant Deficiency

Criteria: As a recipient of CDBG funding passed through the Texas General Land Office (GLO), the City is required to submit an Audit Certification Form (ACF) to the Texas GLO for each fiscal year.

Condition Cause: The City submitted an ACF on December 15, 2023 and a revised ACF on May 15, 2024. Both certifications contained errors that were corrected with audit adjustments. In addition, the City is required to submit monthly activity reports to the GLO. The City was not able to provide documentation that all 12 reports were submitted as required. In addition, because of the audit adjustments, some of the monthly reports if submitted would have been incorrect.

Recommendation: We recommend that the City reviews their grant management policies and procedures. A reconciliation of grant expenses should be completed monthly. In addition, complete and accurate files should be maintained for each grant so that correct reporting can be submitted as required.

Response: City staff will review their grant management policies and procedures and will complete a monthly reconciliation of grant expenses. Complete and accurate files will be maintained for each grant so that correct reporting can be submitted as required.

Finding 2023-III-007 – Grant Agreement Compliance – CDBG Environmental Review Type of Finding – Significant Deficiency

Criteria: Per the GLO, a CDBG Disaster Recovery subrecipient is responsible for compliance with federal environmental review requirements to complete and certify the results of the environmental review which is submitted to the U.S. Office of Housing and Urban Development (HUD). The City must designate a Certifying Office that has the authority to assume legal responsibility for certifying environmental requirements have been followed.

Condition/Cause: The City was unable to provide documentation that the required environmental review was completed and certified.

Recommendation: We recommend that the City reviews their grant management policies and procedures to ensure that they are in compliance with all grant agreement requirements and that adequate documentation is maintained to document compliance.

Response: City staff will review their grant management policies and procedures to ensure that they are in compliance with all grant agreement requirements and will maintain adequate documentation to document grant compliance.