2024-001 Improve Internal Controls Over Reporting Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement OMB’s Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients design internal controls to ensure that reports submitted to the State/Federal government are complete and accurate. Management is also responsible for establishing and maintaining effective internal controls over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Key line items, specifically current period expenditures and total cumulative expenditures, included on the submitted annual project and expenditure report to the U.S. Treasury did not agree to the general ledger. The amounts reported as current period and cumulative expenditures on the project and expenditure report did not reconcile to the Town’s underlying accounting records by $99,207 and $102,022, respectively. In addition, the Town did not submit the project and expenditure report by the April 30, 2024 due date. The project and expenditure report was submitted on March 17, 2025. Cause The Town did not have a control implemented to verify the accuracy of the reports prior to submission. Effect or Potential Effect Due to the weaknesses in internal control noted above, key line items on reports submitted may not be complete, accurate or timely. No questioned costs are reported as it is not quantifiable. Recommendation The Town should design and implement improved internal controls to ensure that reports are reviewed in detail and agreed back to the general ledger prior to submission to ensure completeness and accuracy. The Town should also implement processes to ensure timely submission of the project and expenditure report. Views of Responsible Officials Management agrees with the finding.