Audit 370532

Federal Program Information Federal Agency: U.S. Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021, 2022 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement OMB’s Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (UG) requires an entity to establish and maintain effective internal controls over federal programs to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Per program guidelines, recipients must ensure the accuracy and completeness of all required reports, including annual project and expenditure reports and quarterly expenditure reports. Condition and Context During our testing of a sample of two of the quarterly expenditure reports utilizing the Governor’s Office for Emergency Relief and Recovery (GOFERR) funding, we noted the following issues: • The Q1 report included $2,534,152 of expenditures that were attributable to a subsequent period as well as a typographical error in the cumulative total expenditure amount; • The Q2 report included $8,636,710 in duplicative expenditures that were also reported in Q1 as well as a typographical error in the cumulative total expenditure amount; and • Formula discrepancies were noted in both Q1 and Q2 reports, resulting in inaccurate calculations. During our testing of the annual project and expenditure report under the direct portion of ARPA funding we noted a material discrepancy between cumulative expenditures per the general ledger and the amount reported of $94,749. The County attributed these discrepancies to a transition to a new summary process designed to increase reporting efficiency. All reported expenditures were valid and appropriately documented based on testing over allowable costs. Cause Weaknesses in the County’s internal controls over financial reporting led to data entry errors, formula discrepancies, and inaccurate report compilation during the transition to a new reporting process. Effect or Potential Effect There is a risk that inaccurate financial information is reported to the granting agency, which could impact program oversight and public transparency. Material errors in required reports constitute noncompliance with federal reporting requirements and increase the likelihood of errors or misstatements in future reporting periods. No questioned costs are reported as reported costs were valid and supported by underlying documentation. Recommendation The County should strengthen its internal controls over the preparation and review of required reports under the Coronavirus State and Local Fiscal Recovery Funds Program. This should include a formal review of the report data for accuracy, validation of formulas and calculations, and enhanced oversight during system or process transitions. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.