Audit 380127

Finding Reference: 2024-003 – No written procurement policy Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Compliance Requirement: Procurement, suspension and debarment Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: General procurement standards of the Uniform Guidance under 2 CFR 200.318 require that the non-federal must maintain and use documented procurement procedures that are consistent with applicable state and local regulations, and conform to standards identified in the Uniform Guidance. Condition: The Borough does not have a formal procurement policy that complies with the federal requirements. However, during our testing of compliance with procurement guidelines, no further deviations from federal guidelines were noted. Cause: The Borough was unacquainted with the general procurement standards of the Uniform Guidance. Possible Asserted Effects: Without a documented federal procurement procedure, it is difficult for the Borough to ensure compliance with relevant compliance requirements. Questioned Costs: None noted Context: Per review of the general procurement standards of the Uniform Guidance and related compliance supplement, non-federal entities are required to have their own documented procurement procedures. Per review of the Borough’s policies and procedures, no such policies exist related to federal procurement requirements. Repeat Finding: Not Applicable Recommendations: The Borough should establish a documented procedure that relates to federal procurement. Views of responsible officials and planned corrective actions: The audit findings were communicated to the Borough and expecting the Borough to enter into other federal programs in the future, the Borough has decided to implement its own written procurement policy. The process and implementation are further detailed on the separate corrective action plan.

Finding Reference: 2024-004 – Inappropriate Allocation of Expenses Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR §200.403 and §200.405, costs charged to a federal award must be allowable, allocable, and not reimbursed by another federal source. Internal controls should ensure that expenses are properly reviewed and approved prior to being charged to federal programs. Condition: During our audit, we noted that the Borough initially charged expenses to the COVID-19 ARPA H20 PA grant that were also being reimbursed under a separate federal grant. This resulted in duplicate reimbursement requests for the same costs, rendering the original charges to the COVID-19 ARPA H20 PA grant unallowable. Cause: The Borough’s internal controls over compliance did not detect that the same expenses were being submitted for reimbursement under multiple federal programs. This indicates a lack of adequate review procedures to prevent duplicate claims. Possible Asserted Effects: Although the expenses were ultimately not reimbursed twice, the initial submission of unallowable costs could have resulted in questioned costs and noncompliance with federal requirements. Upon identification by the auditors, the Borough communicated with the grantor agency and received approval to substitute allowable expenses under the grant. Questioned Costs: None noted. The Borough corrected the issue prior to final grant closeout, and no federal funds were improperly expended. Context: All grant expenditures were tested. Repeat Finding: Not Applicable Recommendations: We recommend that the Borough strengthen its internal control procedures over grant expense allocations, including implementing a cross-check process to ensure expenses are not submitted to multiple grants simultaneously. Views of responsible officials and planned corrective actions: After the review of the audit findings, the Borough has implemented additional oversight to include the review/validation of expenses prior to grant payment processing and/or grant closeout. The process and implementation are further detailed on the separate corrective action plan.