Audit 4974

U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: Recipients may use CSLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (codified as 42 USC 802 and 42 USC 803 respectively), Treasury’s Interim Final Rule and Final Rule at 31 CFR sections 35.7 and 35.8 and FAQ’s on the Treasury website. Condition: During the testing of grant transactions, it was determined that an invoice for security equipment was not part of an approved project. Cause: The City did not review the charge to determine if it was eligible to be allocated to the grant award. At the time the invoice was charged the City did not employ an ARPA Director. Effect: The City charged questioned costs to the grant award. Questioned Costs: $45,000 Repeat Finding from Prior Year: No Recommendation: Procedures to review all invoices presented for payment to CSLFRF accounts for allowability before the transaction is recorded on the general ledger must be followed. Views of Responsible Official: Management agrees with the finding. In June 2022, the City of Fall River hired an ARPA Director to oversee the program. It was at this time that new procedures were implemented to ensure heightened oversight and monitoring. Specifically, the ARPA Director became responsible for receiving invoices, reviewing to ensure requested funds were approved in contract, and in specific circumstances in which a City Department is paying invoice, documentation was required to be sent directly to the ARPA Director for review and record keeping. Trainings were offered to these clerks tasked with paying these invoices to ensure compliance with the rules for State and Federal Procurement.

U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2022 reporting date, the City’s Project and Expenditure Reports overstated expenditures by $274,713 and overstated obligations by $14,045,059. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting and reported the unpaid balance of one contract as expended. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding.

U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: Recipients may use CSLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (codified as 42 USC 802 and 42 USC 803 respectively), Treasury’s Interim Final Rule and Final Rule at 31 CFR sections 35.7 and 35.8 and FAQ’s on the Treasury website. Condition: During the testing of grant transactions, it was determined that an invoice for security equipment was not part of an approved project. Cause: The City did not review the charge to determine if it was eligible to be allocated to the grant award. At the time the invoice was charged the City did not employ an ARPA Director. Effect: The City charged questioned costs to the grant award. Questioned Costs: $45,000 Repeat Finding from Prior Year: No Recommendation: Procedures to review all invoices presented for payment to CSLFRF accounts for allowability before the transaction is recorded on the general ledger must be followed. Views of Responsible Official: Management agrees with the finding. In June 2022, the City of Fall River hired an ARPA Director to oversee the program. It was at this time that new procedures were implemented to ensure heightened oversight and monitoring. Specifically, the ARPA Director became responsible for receiving invoices, reviewing to ensure requested funds were approved in contract, and in specific circumstances in which a City Department is paying invoice, documentation was required to be sent directly to the ARPA Director for review and record keeping. Trainings were offered to these clerks tasked with paying these invoices to ensure compliance with the rules for State and Federal Procurement.

U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2022 reporting date, the City’s Project and Expenditure Reports overstated expenditures by $274,713 and overstated obligations by $14,045,059. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting and reported the unpaid balance of one contract as expended. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding.