Audit 412249

Criteria: Recipients of Coronavirus State and Local Fiscal Recovery Funds are required to submit Project and Expenditure (P&E) Reports to the U.S. Department of the Treasury. Treasury reporting guidance requires expenditures reported in the P&E Report to be reported on a current and cumulative basis from the beginning of the award through the end of the applicable reporting period. Accurate reporting is necessary to ensure Treasury receives complete and reliable information regarding the use of federal funds. Condition: During testing of the City's P&E Report, we noted expenditures for the current year were reported as cumulative expenditures, but not as current year expenditures. As a result, amounts reported to Treasury did not agree to the City's accounting records and supporting documentation. Cause: The City lacked adequate internal controls over the preparation and review of the Treasury P&E Report. Specifically, management did not implement procedures to verify that expenditure amounts reported in the P&E Report reflected current period expenditures as required by Treasury guidance prior to submission. Effect: The City submitted inaccurate expenditure information to the U.S. Department of the Treasury. Inaccurate reporting may result in Treasury relying on incomplete or incorrect information regarding program expenditures and may require amended reports or additional follow up with the federal awarding agency. Failure to accurately complete required federal reports constitutes noncompliance with federal reporting requirements. Recommendation: The City should establish and document review procedures over the preparation of Treasury P&E Reports and other federal grant reports. These procedures should include reconciliation of reported expenditures to the underlying accounting records and verification that amounts reported are in accordance with federal agency guidance. Management should also retain documentation supporting the reconciliation and review process.