Audit 411560

2024-001 Inaccurate Project and Expenditure Reporting Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Recipients of ARPA/SLFRF funding are required to submit complete and accurate Project and Expenditure (P&E) Reports to the U.S. Department of the Treasury. Reported expenditures should agree to the recipient's underlying accounting records and be reported in the proper reporting period. Condition and Context The Town is required to submit annual P&E reports for its ARPA/SLFRF program expenditures. During testing of the annual P&E report, we compared reported expenditures to the Town's general ledger and identified the following reporting discrepancies: • Expenditures totaling $1.9M were incurred during the applicable reporting period and recorded in the general ledger but were not included on the P&E report. • Expenditures totaling $428K were incurred during the reporting period but were incorrectly reported on the FY2023 P&E report rather than the applicable reporting period. • Expenditures totaling $131 were reported on the FY2022 P&E report; however, no corresponding expenditure could be identified in the general ledger for the reporting period. As a result, the expenditures reported to Treasury did not agree to the Town's accounting records and were not reported in the appropriate reporting period. Cause The Town did not maintain adequate controls to ensure that expenditure amounts reported in the annual P&E report were reconciled to the general ledger and reviewed for completeness and accuracy prior to submission. Effect or Potential Effect The Town submitted inaccurate expenditure information to the U.S. Department of the Treasury. Consequently, Treasury and other users of the report may have relied on incomplete or inaccurate information regarding the Town's use of ARPA/SLFRF funds. Questioned Costs No questioned costs are reported as the underlying costs tested during the year were allowable and the reporting requirement is administrative in nature. Identification as a Repeat Finding This is a repeat of finding 2023-001. Recommendation Management should perform a formal reconciliation of expenditures reported on the P&E report to the general ledger prior to submission and establish effective supervisory review procedures to verify the completeness, accuracy, and reporting period of expenditures included in the report. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.

2024-002 Equipment Records and Physical Inventory Requirements Not Maintained Federal Program(s) Information Federal Agency: U.S. Department of Homeland Security Award Name: Assistance to Firefighters Grant Assistance Listing Number: 97.044 Award Year: 2022 Compliance Requirement: Equipment Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement In accordance with 2 CFR §200.313, entities must maintain equipment records that include, at a minimum: • Description of the property; • Serial number or other identification number; • Source of funding for the property, including the Federal Award Identification Number (FAIN); • Who holds title; • Acquisition date; • Cost of the property; • Percentage of federal participation in the project costs for the federal award under which the property was acquired; • Location, use, and condition of the property; and • Ultimate disposition data, including the date of disposal and sales price, if applicable. Additionally, 2 CFR §200.313 requires a physical inventory of federally funded equipment to be taken and the results reconciled to the equipment records at least once every two years. Condition and Context During testing of equipment purchased with grant funds, we noted the Town's equipment inventory records did not contain all elements required by Uniform Guidance. Specifically, the equipment listing was missing certain required information, such as acquisition date, federal award identification, source of funding, title held, percentage of federal participation, cost and condition. Additionally, the Town was unable to provide documentation demonstrating that a physical inventory of federally funded equipment had been conducted and reconciled to the inventory records within the required two-year period. Cause The Town had not established adequate procedures to ensure that equipment records contained all information required by Uniform Guidance. Furthermore, controls were not in place to monitor and document the completion of the required biennial physical inventory. Effect or Potential Effect Incomplete equipment records increase the risk that federally funded assets may not be properly identified, monitored, safeguarded, or disposed of in accordance with federal requirements. Failure to perform and document a physical inventory may result in undetected loss, theft, misuse, or inaccurate reporting of federally funded equipment. Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This is not a repeat finding. Recommendation Management should update its equipment records to include all information required by 2 CFR §200.313, develop and implement written procedures governing the tracking and management of federally funded equipment, perform a comprehensive physical inventory of federally funded equipment and reconcile the results to the equipment records and establish a process to ensure physical inventories are performed and documented at least once every two years. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.