FINDING 2023-005
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): CY2021
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
Recipients of State and Local Fiscal Recovery Funds (SLFRF) grants are required to submit
quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury
(Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient
and its population, as well as the recipient's allocation amount. Information to be reported includes projects
funded, expenditures, and contracts for the appropriate reporting period.
The Town was classified as a Tier 5 auditee - a metropolitan city with a population below 250,000
residents which received less than $10 million in SLFRF funding. Tier 5 auditees are required to submit an
annual P&E report due in April of each year.
INDIANA STATE BOARD OF ACCOUNTS
22
TOWN OF DALEVILLE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The Town was required to file one annual P&E report on April 30, 2023. The report was to cover
the period of April 1, 2022 to March 31, 2023. The Town submitted this report for audit. However, there
was no documented internal control in place over the report to ensure it was complete and accurate.
The lack of internal controls allowed the Town to submit incorrect amounts in the P&E report for
March 2023:
For revenue replacement, cumulative expenditures/obligations were understated by
$45,298.
For revenue replacement, current expenditures/obligations were overstated by $61,703.
For essential pay, cumulative expenditures/obligations were understated by $24,189.
For essential pay, current expenditures/obligations were understated by $1,885.
For the solar project, cumulative expenditures/obligations were overstated by $1,560.
For the solar project, current expenditures/obligations were overstated by $22,981.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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 be in compliance 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). . . ."
31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of
performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the
uses of funds . . ."
Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, Page
10, states in part:
". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be
reported on a cash or accrual basis, as long as the methodology is disclosed and consistently
applied. Reporting must be consistent with the definition of expenditures pursuant to
2 CFR 200.1. Your organization should appropriately maintain accounting records for
compiling and reporting accurate, compliant financial data, in accordance with appropriate
accounting standards and principles. . . ."
INDIANA STATE BOARD OF ACCOUNTS
23
TOWN OF DALEVILLE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
A proper system of internal controls was not designed or implemented by management of the Town
to ensure that policies and procedures were in place related to reporting. Embedded within a properly
designed and implemented internal control system should be internal controls consisting of policies and
procedures. Policies reflect the Town's management statements of what should be done to effect internal
controls, and procedures should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, noncompliance. As
such, the P&E report contained the errors, and accurate information was not provided to the Treasury.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of
the federal award could result in the loss of future federal funding to the Town. In addition, not meeting the
SLFRF reporting requirements increases the likelihood that the public will not have access to transparent
and accurate information regarding expenditures of federal awards.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that the Town's management establish a proper system of internal controls and
develop policies and procedures over the preparation and review of federal reports. Additionally,
management should develop policies and procedures to ensure that the Town provides the Treasury with
complete and accurate information for the P&E report.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.