FINDING 2024-003
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY 2023
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to
the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates,
are based upon type of recipient and its population, as well as the recipient's allocation amount. Information
to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period.
The City was classified as a metropolitan city with a population below 250,000 residents that
received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) funding. As such, the initial P&E report, covering the period from March 3, 2021 to March
31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports
are to cover one calendar year, April 1 through March 31, and must be submitted to the Treasury by April
30 each year.
The City submitted one P&E report during the audit period. The internal controls in place were not
effective and did not prevent, or detect and correct, errors in the P&E report prior to submission. As a
result, the Current Period Obligation and Current Period Expenditure amounts for Project Identification
Numbers 0022.0000 and 0.24 were each overstated by $298,172 and $1,490,414, respectively.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
INDIANA STATE BOARD OF ACCOUNTS
18
CITY OF PORTAGE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page
10, states in part:
". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be
reported on a cash or accrual basis, as long as the methodology is disclosed and consistently
applied. Reporting must be consistent with the definition of expenditures pursuant to
2 CFR 200.1. Your organization should appropriately maintain accounting records for
compiling and reporting accurate, compliant financial data, in accordance with appropriate
accounting standards and principles. . . ."
31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of
performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the
uses of funds, . . ."
Cause
The City's management did not have effective internal controls in place to ensure proper amounts
were reported prior to submission. The City had established Project Identification Numbers based on the
City's calendar year expense amounts. However, the City's calendar year, January 1 to December 31,
differed from the P&E annual report calendar year, April 1 through March 31. This resulted in Project
Identification Number 0022.0000 Current Period Obligation and Current Period Expenditures not to be
reduced to zero and Project Identification Number 0.24 Current Period Obligation and Current Period
Expenditures amounts to include $1,490,414 of January 1 through March 31, 2023, expenditures that were
outside the P&E annual report that was due April 30, 2024, parameters.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and
conditions of the federal award could result in the loss of federal funding to the City.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the City strengthen its system of internal controls over the
preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are
effective in preventing, or detecting and correcting, noncompliance.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY 2023
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to
the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates,
are based upon type of recipient and its population, as well as the recipient's allocation amount. Information
to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period.
The City was classified as a metropolitan city with a population below 250,000 residents that
received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) funding. As such, the initial P&E report, covering the period from March 3, 2021 to March
31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports
are to cover one calendar year, April 1 through March 31, and must be submitted to the Treasury by April
30 each year.
The City submitted one P&E report during the audit period. The internal controls in place were not
effective and did not prevent, or detect and correct, errors in the P&E report prior to submission. As a
result, the Current Period Obligation and Current Period Expenditure amounts for Project Identification
Numbers 0022.0000 and 0.24 were each overstated by $298,172 and $1,490,414, respectively.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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. These internal controls should be in compliance with guidance in 'Standards for
Internal Control in the Federal Government' issued by the Comptroller General of the
United States or the 'Internal Control Integrated Framework', issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). . . ."
INDIANA STATE BOARD OF ACCOUNTS
18
CITY OF PORTAGE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page
10, states in part:
". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be
reported on a cash or accrual basis, as long as the methodology is disclosed and consistently
applied. Reporting must be consistent with the definition of expenditures pursuant to
2 CFR 200.1. Your organization should appropriately maintain accounting records for
compiling and reporting accurate, compliant financial data, in accordance with appropriate
accounting standards and principles. . . ."
31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of
performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the
uses of funds, . . ."
Cause
The City's management did not have effective internal controls in place to ensure proper amounts
were reported prior to submission. The City had established Project Identification Numbers based on the
City's calendar year expense amounts. However, the City's calendar year, January 1 to December 31,
differed from the P&E annual report calendar year, April 1 through March 31. This resulted in Project
Identification Number 0022.0000 Current Period Obligation and Current Period Expenditures not to be
reduced to zero and Project Identification Number 0.24 Current Period Obligation and Current Period
Expenditures amounts to include $1,490,414 of January 1 through March 31, 2023, expenditures that were
outside the P&E annual report that was due April 30, 2024, parameters.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and
conditions of the federal award could result in the loss of federal funding to the City.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the City strengthen its system of internal controls over the
preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are
effective in preventing, or detecting and correcting, noncompliance.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.