Finding 1057388 (2023-002)

2023-002 Improve Oversight Over Reporting of Federal Awards (Significant Deficiency) Federal Agency: Department of the Treasury Cluster/Program: COVID-19 Coronavirus State and Local Fiscal Recovery Fund AL Number(s): 21.027 Award Year: 2023 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement A non-federal entity is required to submit a performance report annually using a form or format authorized by OMB (2 CFR section 200.329) based on expenditures reported in the Town’s general ledger. Management of the Town is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal pro¬gram. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of per¬forming their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context In the March 2023 annual performance report, the Town reported expenditures of $239,098 for the MRHS switches project. These expenditures did not occur until fiscal year 2024 and should not have been reported.   2023-002 Improve Oversight Over Reporting of Federal Awards (Significant Deficiency) (Continued) Cause The Town has not established adequate procedures to ensure expenditures reported on the annual report agree with the Town’s general ledger. Effect or Potential Effect The Town is not in compliance with the Uniform Guidance requirements for reporting. Questioned Costs There are no questioned costs as a result of this finding, as these costs were allowable and did occur, but they were reported in the incorrect reporting period. Recommendation The Town should implement controls to ensure that reports are reconciled to the general ledger prior to submission. Views of Responsible Official Management agrees with the finding. Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.