Audit 357992

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH WRIGHT COUNTY, COVID-19 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (CSLFRF) – FEDERAL ALN 21.027 2024-003 Internal Control Over Compliance With Federal Reporting Requirements Criteria – Subrecipient grant requirements for CSLFRF funding passed through to the City by Wright County, stated "The Subrecipient is required to provide quarterly project and expenditure reports to the county, including the following: 1) A narrative outlining the project activity during the reporting period, and 2) All applicable required data outlined in Part 2, Section B, 3a through 3i of the Compliance and Reporting Guidance." Condition – The City submitted the required report, but its internal controls over compliance with reporting requirements for its COVID-19 CSLFRF federal program were not sufficient to ensure the specific expenditures reported to the county matched those identified in the City's financial statements and Schedule of Expenditures of Federal Awards (SEFA). The City utilized this pass-through federal funding for an approved wastewater treatment facility construction project with multiple funding sources, including federal, state, and local funds. The quarterly report submitted to Wright County mistakenly identified expenditures related to an invoice for construction services performed in December 2023 as funded with the county's subgrant award. However, the City's financial statements and SEFA did not report this invoice as a federal expenditure, identifying it instead as having been paid with local funds. All project expenditures claimed for federal reimbursement and reported as federal expenditures by the City in its financial statements and SEFA were incurred in fiscal year 2024. Questioned Costs – None. The City incurred sufficient, eligible project costs within the period of performance to earn all federal funds claimed. Context – The pass-through funding provided by Wright County was $779,815. Repeat Finding – This is a current year finding. Cause – The City changed its decision as to which project costs would be financed with this subgrant after the quarterly report had been submitted. The individual that had submitted the quarterly report to the county was not made aware of this change. Effect – The specific expenditures reported to Wright County in the City's quarterly report did not match the specific project expenditures or the reporting period identified within the City's financial statement and SEFA for this subgrant award. Recommendation – We recommend the City ensure that reporting to grantor agencies is accurate and consistent with the City's financial reporting, including the specific expenditures the grant was applied to and reporting period in which grant funding was earned. View of Responsible Official and Planned Corrective Actions – There is no disagreement with the audit finding. The City will evaluate its controls over compliance with federal reporting requirements to ensure all reports are accurate and consistent with the City's financial reports in the future. The City has separately issued a Corrective Action Plan related to this finding.

SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – U.S. DEPARTMENT OF THE TREASURY, PASSED THROUGH WRIGHT COUNTY, COVID-19 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS (CSLFRF) – FEDERAL ALN 21.027 2024-003 Internal Control Over Compliance With Federal Reporting Requirements Criteria – Subrecipient grant requirements for CSLFRF funding passed through to the City by Wright County, stated "The Subrecipient is required to provide quarterly project and expenditure reports to the county, including the following: 1) A narrative outlining the project activity during the reporting period, and 2) All applicable required data outlined in Part 2, Section B, 3a through 3i of the Compliance and Reporting Guidance." Condition – The City submitted the required report, but its internal controls over compliance with reporting requirements for its COVID-19 CSLFRF federal program were not sufficient to ensure the specific expenditures reported to the county matched those identified in the City's financial statements and Schedule of Expenditures of Federal Awards (SEFA). The City utilized this pass-through federal funding for an approved wastewater treatment facility construction project with multiple funding sources, including federal, state, and local funds. The quarterly report submitted to Wright County mistakenly identified expenditures related to an invoice for construction services performed in December 2023 as funded with the county's subgrant award. However, the City's financial statements and SEFA did not report this invoice as a federal expenditure, identifying it instead as having been paid with local funds. All project expenditures claimed for federal reimbursement and reported as federal expenditures by the City in its financial statements and SEFA were incurred in fiscal year 2024. Questioned Costs – None. The City incurred sufficient, eligible project costs within the period of performance to earn all federal funds claimed. Context – The pass-through funding provided by Wright County was $779,815. Repeat Finding – This is a current year finding. Cause – The City changed its decision as to which project costs would be financed with this subgrant after the quarterly report had been submitted. The individual that had submitted the quarterly report to the county was not made aware of this change. Effect – The specific expenditures reported to Wright County in the City's quarterly report did not match the specific project expenditures or the reporting period identified within the City's financial statement and SEFA for this subgrant award. Recommendation – We recommend the City ensure that reporting to grantor agencies is accurate and consistent with the City's financial reporting, including the specific expenditures the grant was applied to and reporting period in which grant funding was earned. View of Responsible Official and Planned Corrective Actions – There is no disagreement with the audit finding. The City will evaluate its controls over compliance with federal reporting requirements to ensure all reports are accurate and consistent with the City's financial reports in the future. The City has separately issued a Corrective Action Plan related to this finding.