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SECTION II—FINANCIAL STATEMENT FINDINGS <br /> Our audit did not disclose any significant deficiencies, or material weaknesses or instances of noncompliance <br /> material to the basic financial statements. We have also issued a separate Memorandum on Internal Control <br /> dated December 27, 2016 which is an integral part of our audits and should be read in conjunction with this <br /> report. <br /> SECTION III—FEDERAL AWARD FINDINGS AND QUESTIONED COSTS <br /> Our audit disclosed the following findings and questioned costs required to be reported in accordance with <br /> Uniform Guidance. <br /> a Finding reference number: SA2016-001 <br /> • CFDA number: 14.218 <br /> o CFDA Title:Community Development Block Grant <br /> • Name of Federal Agency:United States Department of Housing and Urban Development <br /> • Criteria: In accordance with the requirements of OMB Uniform Administrative Requirements <br /> Subtitle A, Chapter I, Part 180 Subpart C, Section 180.300 states that when a non-Federal entity <br /> enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify <br /> that the entity they intend to do business with is not federally suspended, debarred or otherwise <br /> excluded. <br /> o Condition: During our review of contracts with Axis Community Health and Neighborhood <br /> Solutions,in which CDBG funding was awarded to,City staff was unable to provide documentation <br /> that they verified that these entities were not suspended, debarred or otherwise excluded from <br /> participating in this transaction. <br /> • Effect: The City is not in compliance with the requirements as listed in the OMB Uniform <br /> Administrative Requirements for Federal grant program expenditures. <br /> O Cause:City staff was unaware this requirement pertained to all covered transactions of grant funds. <br /> • Recommendation: We recommend the City verify each entity they enter into contract with are not <br /> federally suspended,debarred or otherwise excluded from receiving Federal grants before engaging <br /> in any transactions,and that substantial documentation for this verification is maintained. <br /> • View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action <br /> Plan separately prepared by the City. <br /> 2 <br />