Audit 413554

Information on the federal program: Federal Agency: Department of the Treasury Pass-Through Entity: N/A – Direct Grant Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Number: 21.027 Compliance Requirement: Reporting Audit Findings: Significant Deficiency Criteria: The US Department of Treasury’s Compliance and Reporting Guidance for State and Local Fiscal Recovery Funds requires quarterly project expenditure reports to be completed with the key line items: 1) Obligations and Expenditures 2) Subawards 3) Detailed information of any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient that are greater than $50,000. For amounts less than $50,000, the recipient must report in the aggregate for these same categories of loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient. Condition: City of Bloomington completed quarterly reporting in a timely manner. However, the reports did not have evidence of segregation of duties and the cumulative expenses stated on the report did not agree to the cumulative expenditures reported on previous SEFAs. Cause: The City does not have an effective system of internal controls in place to effectively review CSLFRF reporting data prior to submission to the US Department of Treasury. Effect: Cumulative expenditures on the quarterly data submissions were misstated. Questioned costs: There are no questioned costs. Context: During our testing procedures over CSLFRF reporting, we noted that segregation of duties is not present in the Federal reporting process. The Deputy Controller prepared and submitted the reports without a secondary review taking place. As a result, the City did not report cumulative expenditures for the grant that were consistent with the expenditures reported on the SEFA. Identification as a repeat finding, if applicable: Yes, finding 2024-002 in the prior year report. Recommendation: We recommend that the City implement a consistent multi-stage review process for federal data reports, which involves identifying and tracking cumulative expenditures by type. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.

Information on the federal program: Federal Agency: Department of Commerce Pass-Through Entity: N/A – Direct Grant Federal Program: Economic Development Cluster (EDC) Assistance Listing Number: 11.307 Compliance Requirement: Reporting Audit Findings: Material Weakness, Noncompliance Criteria: The Department of Commerce requires semi-annual reporting and project expenditure reports to be completed. The SF-425 Federal Financial Report tracks expenditures and must be submitted semi-annually. Reports for the period ending March 31 are due by April 30, and reports for the period ending September 30 are due by October 31. Condition: An effective internal control system was not in place at the City to ensure compliance with requirements related to the reporting requirements for the Economic Development Cluster grants. Cause: The City does not have an effective system of internal controls in place to effectively review Economic Development Cluster semi-annual reporting data prior to submission to the Department of Commerce and to ensure the reports are accurate and submitted timely. Effect: The absence of formal review and approval controls over grant reporting and reimbursement requests increases the risk that inaccurate or untimely information may be submitted to the grantor and that federal funds may be requested in excess of allowable amounts. Questioned costs: There are questioned costs of $109,233. Context: The City is responsible for establishing and maintaining internal controls over compliance with federal grant requirements, including controls designed to ensure required financial reports are submitted timely and accurately and reimbursement requests include only eligible expenditures applicable to the reporting period. During our testing, Crowe noted that the City did not have formal segregation of duties or documented review and approval controls over the preparation and submission of semi-annual financial reports and project expense reimbursement requests. Specifically, the process did not include an independent review to verify the accuracy, completeness, and appropriate reporting period of amounts submitted prior to submission to the grantor. As a result, we identified one semi-annual Federal Financial Report (SF-425) that was submitted approximately three months after the required due date. Additionally, we identified that the city overclaimed $109,233 in federal reimbursement over the course of the grant. The overclaim occurred because the City included the cumulative project cost in a reimbursement request rather than only the portion of project costs applicable to the current reimbursement period, resulting in previously claimed expenditures being included in the reimbursement calculation. Identification as a repeat finding, if applicable: No. Not a repeat finding. Recommendation: We recommend the City strengthen its internal controls over federal grant reporting and reimbursement requests by establishing formal, documented review procedures for the preparation, review, approval, and submission of required reports and reimbursement requests. These procedures should clearly assign responsibilities among appropriate personnel and incorporate segregation of duties, where practicable, between he preparation and approval functions. Additionally, the City should establish a process to track applicable grant reporting deadlines and reimbursement activity throughout the grant period to promote timely submissions and prevent duplicate or excess reimbursement requests. Views of responsible officials and planned corrective actions: Management acknowledges the finding. See management’s corrective action plan attached to this audit report.