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City of Redwood City 6.1. B. - Page 222 Single Audit Reports Schedule of Findings and Questioned Costs, Continued For the Year Ended June 30, 2011 B. FINDINGS - FINANCIAL STATEMENTS AUDIT, CONTINUED Schedule of Expenditures of Federal Awards & Prior Period Adjustment to the Financial Statements Mana�ement Resvonse: In May 2010, Redwood City entered ulto a cooperative agreement wit11 the United States Bureau of Reclaination (USBR) for Federal finallcial assistance with the Redwood City Recycled Water Project (Project). The Cooperative Agreenlent was later modified in July 2010. Tl1e objective of tlle Cooperative Agreeinent was to reiinburse Redwood City for the appropriate Federal cost sllare associated with the Project, wllich was tlle lesser of 25% of tlle total project cost or $1,100,000.00, which is t11e inaxinluin federal cost sllare as prescribed ii1 Public Law 110-229, section 512, section 1646. Tl1e Cooperative Agreenlent with USBR entitled Redwood City to 11ave incurred allowable costs on or after August 1, 2002 for pre-construction activities, and on or after May 8, 2008 for constructioil related activities, which if had beeil ulcurred after the Cooperative Agreement was entered into, would have been allowable, allocable, and reasonable under the terins and conditioils of t11e Agreenlent. Ii1 FY2010-11, Redwood City was therefore reinlbursed for Projects costs incurred prior to authorization. T11ese allowable costs went back as far back as 2007. Tl1e City did not report $1,037,656 u1 prior period federal expenditlires u1 the sclledule of e�enditures of federal awards for the respective reporting periods l�ecause tllese allowable costs were not authorized until 2010. T11e City is currently working on a grant inanageinent policy C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT No fuzduzgs or questioned costs 11