2025-001 Improve Compliance and Controls Over Reporting 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 Pass-Through Entity: Not applicable Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards to ensure compliance with Federal statutes, regulations, and terms and conditions. For SLFRF funds, the Treasury Compliance and Reporting Guidance requires recipients to submit accurate and complete Project and Expenditure Reports (P&E Reports), including both current period and cumulative expenditures. Condition and Context During our testing of SLFRF expenditures reported in the 2025 Project and Expenditure (P&E) Report, we noted that the Town’s underlying accounting records and supporting detail did not agree to the amounts reported to Treasury. Specifically, current period expenditures per the general ledger differed from the amounts reported in the P&E Report. For the project “Park St. Sewer Main”, the Town reported local expenditures of $324,641, as current period expenditures despite the project having been fully expended in a prior reporting period. Overall, the total expenditures reported was not impacted as the budget for the project was not changed. Cause The discrepancy was caused by the Town’s lack of a formal control requiring reconciliation and detailed review of SLFRF report data to underlying accounting records before submission. Effect or Potential Effect Reporting discrepancies hinder the review and administration process of the grantor and could lead to incorrect allocation of funding. Questioned Costs None. Identification as a Repeat Finding No. Recommendation The Town should implement a formal reconciliation process requiring agreement of current period expenditures to the general ledger prior to submission of reports and retain such documentation. 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.