Reference Number:
Prior Year Finding:
Federal Agency:
Federal Program:
Assistance Listing Number:
Award Number and Year:
Compliance Requirement:
Type of Finding:
Criteria or specific requirement:
2023-002
No
U.S. Department of Treasury
COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds
21....
Reference Number:
Prior Year Finding:
Federal Agency:
Federal Program:
Assistance Listing Number:
Award Number and Year:
Compliance Requirement:
Type of Finding:
Criteria or specific requirement:
2023-002
No
U.S. Department of Treasury
COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds
21.027
ARPl 7SL1 (5/23/2021 - 12/31/2026)
Earmarking and Reporting
Material Weakness in Internal Control Over Compliance,
Material Noncompliance
Compliance: Earmarking - Under Treasury's Final Rule that became effective on April 1, 2022,
recipients can calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on the formula
provided in the Final Rule to determine the amount of State and Local Fiscal Recove1y Funds
(SLFRF) that can be used for the "provision of government services." To calculate revenue loss at
each of these dates, recipients must follow a four-step process which includes: a. Calculate revenues
collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal
year before January 27, 2020), called the base year revenue. b. Estimate counterfactual revenue, which
is equal to the following formula, where n is the number of months elapsed since the end of the base
year to the calculation date: base year revenue x (1 + growth adjustment) n/ 12. The growth adjustment
is the greater of either a standard growth rate- 5 .2 percent- or the recipient's average annual revenue
growth in the last full three fiscal years prior to the COVID-19 public health emergency. c. Identify
actual revenue, which equals revenues collected over the twelve months immediately preceding the
calculation date. d. Revenue loss for the calculation date is equal to counterfactual revenue minus
actual revenue (adjusted for tax changes) for the twelve-month period. Further, the Final Rule defines
the term general revenue to include revenues collected by a recipient and generated from its
underlying economy and would capture a range of different types of tax revenues, as well as other
types of revenue that are available to supp01t government services. In calculating revenue, recipients
should sum across all revenue streams covered as general revenue.
Reporting - Per 2 CFR 200.328 and 31 CFR section 35.4(c), States, territories, metropolitan cities,
counties, and Tribal governments were required to submit one interim rep01t and quarterly Project
and Expenditure repo1ts thereafter. A Key Line Item containing critical info1mation, as defined by
Treasury, in these reports is the Revenue Replacement section.
Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective
internal control over the Federal award that provides reasonable assurance that the non-Federal entity
is managing the Federal award in compliance with Federal statutes, regulations, and the terms and
conditions of the Federal award. These internal controls should comply with guidance in "Standards
for Internal Control in the Federal Government" issued by the Comptroller General of the United
States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
Condition:
Prince George's County (the County) did not calculate their revenue loss in accordance with the Final
Rule. As a result, amounts reported under the Revenue Replacement section of the Project and
Expenditure reports were inaccurate for all quarters within the fiscal year ended June 30, 2023.
Context:
The County used inconect base year revenues in their revenue loss calculation. Only general fund
revenue was used in the calculation instead of summing across all revenue streams as defined by the
Final Rule. Fmther, the County used an incorrect growth rate of 4.0% instead of 5.2% as required by
the Final Rule. The Revenue Replacement section of the Project and Expenditure rep01ts were
inaccurate due to these errors.
Cause:
The County's policies and procedures were not sufficient to ensure that their revenue loss calculation
was in accordance with the Final Rule and that accurate information was reported in their Project and
Expenditure reports under the Revenue Replacement section.
Effect:
The County was not in compliance with federal requirements, and failure to comply with those
requirements could jeopardize future funding.
Questioned costs:
Undetermined.
Recommendation:
We recommend that the County revise the revenue loss calculation to be in accordance with the U.S.
Treasury's guidance as outlined by the Final Rule and submit a revised Project and Expenditure report
to the U.S. Treasury 's SLFRF p011al.
Action taken in response to finding: The Office of Management and Budget (0MB) revised the
revenue loss calculation. A revised Project and Expenditure report will be submitted by 0MB
through the U.S. Treasury's SLFRF portal in April 2024.
Name(s) of the contact person(s) responsible for corrective action: David Juppe Revenue and
Legislation Manager.
Planned completion date for corrective action plan: April 30, 2024.
Explanation of disagreement with audit finding:
There is no disagreement with the audit finding.
Views of responsible officials:
At the time that the Office of Management and Budget (0MB) calculated the revenue loss it
was unclear whether it applied to only general funds or all funds. Guidance from the U.S.
Treasury Department was updated frequently following enactment of the American Rescue
Plan Act of 2021. Based on the finding of the audit that the revenue loss calculation is not in
accord with the Final Rule, 0MB staff re-calculated the data using all funds .
Any questions concerning the findings or corrective action plan can be directed to Stanley A.
Earley, Director, 0MB at 301 -952-3300.