Prior Year Finding: 2024-003 Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Relief Fund Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: Not Available, (7/1/2024 – 6/30/2025) Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Internal Control: Per 2 CFR 200.303(a), a non‑Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. These internal controls should comply with the guidance in Standards for Internal Control in the Federal Government or the COSO Internal Control – Integrated Framework. Compliance: Per 2 CFR 200.213, suspension and debarment restrict awards, subawards, and contracts with parties that are debarred, suspended, or otherwise excluded from participation in Federal assistance programs. Per 2 CFR 180.300, an entity may determine suspension and debarment status by: (a) Checking the SAM Exclusions database; (b) Collecting a certification from the vendor; or (c) Including a clause or condition in the covered transaction. Condition/Context: The vendor was not suspended or debarred, and a suspension and debarment check was performed and maintained in the vendor file. However, there was no evidence to confirm that the check was completed prior to contract execution or the initiation of transactions, as documentation did not include a dated “Received” stamp as required by the Town’s internal control process. Questioned Costs: There are no questioned costs related to this finding as the vendors were not federally suspended or debarred. Cause: The Town did not consistently perform its stated control requiring the SAM.gov check to be reviewed, approved, and dated by the Assistant Town Administrator prior to contract execution or the processing of expenditures. Effect: The Town’s internal controls related to federal suspension and debarment were not consistently performed for purchases made under the program. Failure to verify suspension and debarment requirements may result in the Town entering into a contract or purchase with a vendor that is suspended or debarred and not authorized to provide goods or services under the program. Recommendation: We recommend that the Town reinforce the consistent execution of its existing procedures and internal controls to ensure vendors are verified as not suspended or debarred prior to charging goods and services to the program. In addition, the Town should consistently retain documentation evidencing the timely performance and review of suspension and debarment checks for audit purposes. Views of Responsible Officials: Management agrees with the finding.
Prior Year Finding: No Federal Agency: U.S. Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Relief Fund (CSLFR) Assistance Listing: 21.027 Pass-Through Entity: Maryland Department of Housing and Community Development Pass-Through Award Number and Period: Not Available, (7/1/2024 – 6/30/2025) Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria or Specific Requirement: Internal Control: Per 2 CFR 200.303(a), a non‑Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the 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 comply with the guidance in Standards for Internal Control in the Federal Government or the COSO Internal Control – Integrated Framework. Compliance: Per U.S. Department of the Treasury CSLFRF guidance, non‑Federal entities are required to accurately identify, classify, and report amounts designated as revenue replacement. Reported revenue replacement amounts must be supported by the underlying accounting records and must not exceed the elected standard allowance of $10,000,000. Condition/Context: The amount reported by the Town as revenue replacement in the required CSLFRF reports did not agree to the expenditures designated as revenue replacement in the underlying accounting records. Specifically, the reported revenue replacement amounts did not reconcile to the expenditures recorded and designated as revenue replacement in the Town’s general ledger. As a result, the reported revenue replacement amounts were not supported by the underlying accounting records for the program. Questioned Costs: There are no questioned costs related to this finding, as all expenditures charged to the program were allowable and properly supported. Cause: The Town’s internal controls were not designed or operating effectively to ensure accurate reporting under the CSLFRF program, specifically with respect to properly identifying, reconciling, and reviewing amounts designated as revenue replacement prior to submission of required federal reports. Effect: Failure to accurately report revenue replacement amounts may result in misstated program activity in required federal reports or increase the risk that unallowable expenditures could be allocated to the program. While this issue did not impact expenditure allowability or exceed the standard allowance, it adversely affects the reliability of CSLFRF reporting. Recommendation: We recommend the Town enhance its internal controls over CSLFRF reporting to ensure that amounts reported as revenue replacement are accurately identified, supported, and reconciled to the underlying accounting records prior to submission of required federal reports. This should include implementing a formal reconciliation process between the general ledger and CSLFRF reporting schedules, along with documented review procedures to verify that expenditures designated as revenue replacement are allowable, properly classified, and consistently supported by accounting documentation. Views of Responsible Officials: Management agrees with the finding.