Finding 2021-009 Lack of Internal Controls Over Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus Relief Fund (CRF) ALN Numbers: 21.019 Award Number: SLT0591/0845/1405 Award Year: 2020 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Reporting requirements for the Coronavirus Relief Fund state that the recipient shall provide quarterly financial progress reports at the end of each quarter during the fiscal year. The quarterly reports are due within 10 days after the end of each quarter. Condition and Context: During our compliance testing over reporting requirements, management was unable to provide documentation of when the reports were submitted and could not provide documentation of how the amounts reported to the granting agency were calculated. Cause: Lack of internal controls over reporting requirements. Effect: Failure to follow reporting requirements could result in the loss of federal funding. Questioned costs: None noted. Repeat finding: This is a repeat of Finding 2020-010; therefore, we believe this to be a systemic issue. Recommendation: We recommend that management complies with all reporting requirements of the program. Management Response: Management agrees with this finding, see Corrective Action Plan.
Finding 2021-005 Late Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus Relief Fund (CRF) and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively CFDA Numbers: 21.019 and 21.027, respectively Award Number: SLT0591/0845/1405 and SLFRP2520/4754, respectively Award Year: 2020 and 2021, respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that the reporting package be submitted within the earlier of 9 months after year end or 30 days after the report issuance in accordance with the provisions of 2 CFR part 200, subpart F, section 200.512. Condition and Context: The Community did not adhere to the Uniform Guidance requirement of submitting the reporting package within the earlier of 30 days after the receipt of the audit report, or the nine months after the end of the audit period. Cause: Lack of internal controls around Uniform Guidance requirements. The Community did not timely engage with an audit preparation consultant or independent auditor to meet the reporting deadline. Effect: The Community was not in compliance with reporting requirements. Questioned costs: None. Repeat finding: This is a repeat of Finding 2020-006; therefore, we believe this to be a systemic issue. Recommendation: We recommend that management comply with Uniform Guidance reporting requirements and timely engage an independent auditor to perform the annual audit to achieve compliance with the regulations. Management Response: Management agrees with this finding, see Corrective Action Plan.
Finding 2021-006 Lack of Internal Control Over Cash Management Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds ALN Numbers: 21.027 Award Number: SLFRP2520/4754 Award Year: 2020 and 2021, respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management, as contained in 2 CFR 200.305, states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Community’s cash balances at December 31, 2021 were $7,921,377 and total unearned revenue was $10,052,324, leading to a cash shortfall of $2,130,947. This resulted from the temporary borrowing of federal funds to pay expenses in the General Fund and other federal award programs. Unearned revenue as of December 31, 2021 was $5,910,042 in the Coronavirus State and Local Fiscal Recovery Fund, which is reported as the ARPA Special Revenue Fund in the financial statements. Cause: Lack of internal controls over cash management. Effect: The Community was not in compliance with 2 CFR 200.305 related to cash management requirements. Cash restricted for the programs was used to fund other programs of the Community. Questioned costs: $2,130,947, which is the shortfall between cash balances and unearned revenue balances. Repeat finding: This is a repeat of Finding 2020-007; therefore, we believe this to be a systemic issue. Recommendation: We recommend the Community monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash. Management Response: Management agrees with this finding, see Corrective Action Plan.
Finding 2021-007 Lack of Internal Controls Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus Relief Fund (CRF) and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively ALN Numbers: 21.019 and 21.027, respectively Award Number: SLT0591/0845/1405 and SLFRP2520/4574, respectively Award Year: 2020 and 2021, respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Per OMB Section 200.403(a), costs should be necessary and reasonable for the performance of the federal award. Condition and Context: The Community could not provide adequate supporting documentation for costs charged to the programs. During our review of non-payroll costs charged to the CRF program, the Community could not provide supporting documentation (invoice, check request, or management approval) for 2 of the 8 non-payroll transactions charged to the program. During our review of non-payroll costs charged to the CSLFRF program, the Community could not provide supporting documentation (invoice, check request, or management approval) for 9 of the 18 non-payroll transactions charged to the program. Cause: Lack of internal controls over supporting documentation and approval over expenditures charged to the programs. Effect: Lack of internal control over cash disbursements pose the risk that the Community will expend federal funds for non-grant purposes. Questioned costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Repeat finding: This is a repeat of Finding 2020-008, therefore, we believe this to be a systemic issue. Recommendation: We recommend that management implement policies and procedures to ensure that only allowable costs are charged to the program and that supporting documentation be retained as records for all transactions. Management Response: Management agrees with this finding, see Corrective Action Plan.
Finding 2021-008 Lack of Internal Controls Over Activities Allowed or Unallowed and Allowable Costs/Costs Principles Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus Relief Fund (CRF) and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively CFDA Numbers: 21.019 and 21.027, respectively Award Number: SLT0591/0845/1405 and SLFRP2520/4520, respectively Award Year: 2020 and 2021, respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Per 2 CFR part 200.430, personnel expenses recorded into a federal program must be based on records that accurately reflect the work performed. Hourly employees should be paid for hours worked and documented through a system of internal controls which provides reasonable assurance that the charges are accurate, allowable and properly allocated. Internal controls procedures should be in place to ensure that all cash disbursements and payroll transactions are adequately supported by documentation, approved with accurate account coding on the approval form, retained for support either in the vendor, employee, or program file. Condition and Context: During our testing of payroll transactions charged to the CRF program, the Community did not provide documentation of approved pay rates for any of the 10 paychecks reviewed. The Community also did not provide any supporting documentation or justification for a journal entry moving payroll costs into the CRF program. During our testing of payroll transactions charged to the CSLFRF program, the Community did not provide documentation of approved pay rates for either of the 2 paychecks reviewed. Cause: Lack of internal controls over payroll transactions. Effect: Lack of internal control over payroll transactions poses the risk that the Community will expend federal funds for non-grant purposes or that employees will be paid and incorrect rate. Questioned costs: Actual and likely questioned costs are estimated to be below the reporting threshold of $25,000. Repeat finding: This is a repeat of Finding 2020-009; therefore, we believe this to be a systemic issue. Recommendation: We recommend that management implement policies and procedures to ensure that all paychecks are supported by an approved pay rate, hours worked agree to the hours paid, are accurately calculated and recorded in the general ledger and retained for records for the program. Management Response: Management agrees with this finding, see Corrective Action Plan.
Finding 2021-010 Lack of Internal Controls Over Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN Numbers: 21.027 Award Number: SLFRP2520/4520 Award Year: 2021 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Reporting requirements for the Coronavirus State and Local Fiscal Recovery Funds state that quarterly reports covering the three calendar quarters from March 3, 2021 to December 31, 2021 must be submitted by January 31, 2022. Condition and Context: During our compliance testing over reporting requirements, management was unable to provide documentation that the reports were submitted. Cause: Lack of internal controls over reporting requirements. Effect: Failure to follow reporting requirements could result in the loss of federal funding. Questioned costs: None noted. Repeat finding: No. Recommendation: We recommend that management complies with all reporting requirements of the program. Management Response: Management agrees with this finding, see Corrective Action Plan.