Finding Text
Finding: 2023-004-HC – Material Weakness in Internal Control over Compliance and Other Matter
Federal agency: U.S. Department of Treasury
Federal program title: Coronavirus State and Local Fiscal Recovery Funds
Assistance Listing Number (ALN): 21.027
Pass-through agency: None
Federal award number: 1505-0271
Federal Award Year: FY2021, FY2022, FY2023
Control Category: Activities Allowed or Unallowed, and Allowable Costs/Cost Principles
Questioned Costs: FY2021 $197,448; FY2022 $487,891; FY2023 $657,937.
Criteria or specific requirement: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls,
requires that non-federal entities receiving Federal awards (i.e. auditee management) establish and maintain
internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and
conditions of the Federal award.
Additionally, pursuant to the compliance supplement for ALN 21.027, Activities Unallowed, include deposits
into pension funds.
Condition: During our review of a sample of FY23 expenditures, we discovered that pension costs were
included as allowable costs determined by the program manager. We expanded our scope to include the entire
grant reporting period, which included FY2021, FY2022, and FY2023. We discovered that pension costs were
included for all three fiscal years. All reported pension costs are included above under Questioned Costs.
Cause: Policies and procedures have not been designed and implemented to ensure compliance with Activities
Allowed or Unallowed and Allowable Costs.
Effect: This condition narrowly resulted in noncompliance with federal requirements and could have resulted in
misstated reports and undetected errors. This could have led to the loss of federal funds to the County.
Recommendation: We recommend that the County implement necessary internal controls to ensure its
compliance with the requirements of the Uniform Guidance. The County has adequate costs under the standard
allowance to substitute for the questioned costs, which should be substituted for other government services’
costs.
Management’s Response: Management’s response is provided within the corrective action plan on page I-103.