CITY OF THORNTON

Finding 2024-002: Suspension and Debarment Assistance Listing Program Title: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Program Number: 21.027 Federal Agency: U.S. Department of the Treasury Award Year: 2024

Criteria: The Federal Government requires that 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 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. In addition, per the Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements.

Condition: The City does not have adequate controls in place to ensure that suspension and debarment compliance requirements are met.

Cause: Although the City does have a process in place for verifying vendors paid with federal funds are not suspended or debarred from receiving federal funds, this verification took place after a contract was entered into with the vendor instead of before.

Effect or Potential Effect: In the absence of appropriate controls, the City could enter into a contract with a vendor or subrecipient that is suspended or debarred from participating in federal programs, which would result in noncompliance with federal program requirements.

Questioned Costs: None.

Context: Out of a sample of four vendors where suspension and debarment checks were completed by the City, this verification was not completed prior to the City entering into contracts with those vendors.

Identification as a Repeat Finding, If Applicable: Not Applicable

Recommendation: We recommend the City implement procedures to properly ensure that suspension and debarment verification occurs prior entering into a covered transaction with a vendor that receives federal funds.

View of Responsible Officials: Management agrees with this finding.

Finding 2024-003: Reporting Assistance Listing Program Title: CDBG – Entitlement/Special Purpose Grants Cluster: Community Development Block Grants/Entitlement Grants; COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listing Program Number: 14.218 Federal Agency: U.S. Department of Housing and Urban Development Award Year: 2024 Award Numbers: B-20-MC-08-0015, B-20-MW-08-0015, B-21-MC-08-0015, B-22-MC-08-0015, B-23-MC-08-0015 Pass-through Entity: N/A

Criteria: 2 CFR 200.303 requires that the non-federal entity must 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 federal award.

Condition: The quarterly Cash on Hand reports and the annual FFATA report did not have documentation supporting a review by an employee other than the preparer prior to submission. The reports were prepared and submitted to the Department of Housing and Urban Development (“HUD”), but they were not reviewed by anyone other than the preparer prior to submission.

Cause: The City does not have processes and controls in place to ensure that reports are reviewed and requirements are met.

Effect or Potential Effect: Without a supervisory review, there is an increased risk of inaccurate reporting.

Questioned Costs: None.

Context: For the quarterly Cash on Hand reports and the annual FFATA report, there was no documentation supporting a supervisory review and approval of each of the reports.

Identification as a Repeat Finding, If Applicable: Not Applicable

Recommendation: We recommend the City establish polices and procedure to require documentation of a report reviewer other than the preparer, prior to submission of each required report.

View of Responsible Officials: Management agrees with this finding.