Audit 19937

Finding Number: 2022-001 Repeat Finding: No Program Name/Assistance Listing Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: N/A Pass-Through Agency: N/A Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting CRITERIA Under 2 CFR ?200.303, the City is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the City is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. As noted in the Interim Final Rule and the Final Rule, Coronavirus State & Local Fiscal Recovery Funds (CSLFRF) recipients with allocations less than $10.0 million and populations less than 250,000, were required to prepare and submit a one-time Interim Report through July 31, 2021, and Project and Expenditure Reports annually through March 31 of each respective year. Both the Interim Report and the Project and Expenditure Reports contain key line items that contain critical information, and the reported amounts must agree to the City?s accounting records. Additionally, the Project and Expenditure Reports also include Expenditure Category (EC) references defined by the U.S. Department of Treasury, which recipients should utilize to report the nature of the activities for which the CSLFRF monies were expended. CONDITION The City did not maintain adequate supporting documentation for the expenditure amount reported on the Interim Report. Additionally, the City?s Project and Expenditure Report for March 2022 did not include the correct EC codes based on the actual manner in which CSLFRF monies were expended. CAUSE Documentation was not maintained that agreed to the amounts on the Interim Report. Additionally, City personnel were unfamiliar with the U.S. Department of Treasury guidance regarding EC codes and their relationship to the City?s manner of use for CSLFRF funding. EFFECT The City was not in compliance with federal regulations and guidelines for reporting. CONTEXT The City did not maintain documentation to support the $929,000 of costs reported on the Interim Report; however, the amount appeared reasonable based on subsequent expenditure reports prepared by City personnel for the period of reporting. Additionally, while the City utilized the entire CSLFRF funding in a manner consistent with replacing lost public sector revenue to provide for government services (i.e. to help fund firefighter salaries and benefits), the City?s Project and Expenditure Report for March 2022 did not include the correct EC code based on this actual manner of use. The Project and Expenditure Report indicated that funds were used for `EC 1.14 Other Public Health Services?, rather than `EC 6.1 Revenue Replacement?. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The City should ensure that accurate federal reports are prepared and that proper supporting documentation is maintained for all amounts indicated on such reports. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.

Finding Number: 2022-001 Repeat Finding: No Program Name/Assistance Listing Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: N/A Pass-Through Agency: N/A Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting CRITERIA Under 2 CFR ?200.303, the City is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance that the City is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. As noted in the Interim Final Rule and the Final Rule, Coronavirus State & Local Fiscal Recovery Funds (CSLFRF) recipients with allocations less than $10.0 million and populations less than 250,000, were required to prepare and submit a one-time Interim Report through July 31, 2021, and Project and Expenditure Reports annually through March 31 of each respective year. Both the Interim Report and the Project and Expenditure Reports contain key line items that contain critical information, and the reported amounts must agree to the City?s accounting records. Additionally, the Project and Expenditure Reports also include Expenditure Category (EC) references defined by the U.S. Department of Treasury, which recipients should utilize to report the nature of the activities for which the CSLFRF monies were expended. CONDITION The City did not maintain adequate supporting documentation for the expenditure amount reported on the Interim Report. Additionally, the City?s Project and Expenditure Report for March 2022 did not include the correct EC codes based on the actual manner in which CSLFRF monies were expended. CAUSE Documentation was not maintained that agreed to the amounts on the Interim Report. Additionally, City personnel were unfamiliar with the U.S. Department of Treasury guidance regarding EC codes and their relationship to the City?s manner of use for CSLFRF funding. EFFECT The City was not in compliance with federal regulations and guidelines for reporting. CONTEXT The City did not maintain documentation to support the $929,000 of costs reported on the Interim Report; however, the amount appeared reasonable based on subsequent expenditure reports prepared by City personnel for the period of reporting. Additionally, while the City utilized the entire CSLFRF funding in a manner consistent with replacing lost public sector revenue to provide for government services (i.e. to help fund firefighter salaries and benefits), the City?s Project and Expenditure Report for March 2022 did not include the correct EC code based on this actual manner of use. The Project and Expenditure Report indicated that funds were used for `EC 1.14 Other Public Health Services?, rather than `EC 6.1 Revenue Replacement?. The sample was not intended to be, and was not, a statistically valid sample. RECOMMENDATION The City should ensure that accurate federal reports are prepared and that proper supporting documentation is maintained for all amounts indicated on such reports. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.