FINDING 2023-001
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): FY 2023
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS 13
HOWARD COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-001.
Condition and Context
Recipients 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 contract for the appropriate reporting period.
The County was classified as a metropolitan county with a population below 250,000 residents that
received an allocation of more than $10 million in the Coronavirus State and Local Fiscal Recovery Funds
(SLFRF) funding. As such, the initial P&E report, covering three calendar quarters from March 3, 2021 to
December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent
quarterly reports are to cover one calendar quarter and must be submitted to the Treasury by the last day
of the month following the end of the period covered.
The Deputy County Auditor prepared the quarterly reports, and the County Auditor reviewed the
reports; however, the internal control was not effective and did not detect and allow correction of material
misstatements prior to submission.
Two of the four quarterly reports submitted during the audit period were selected for testing. For
the two reports tested, all activity for the reporting period was not included, information submitted was not
supported by the County's records, and the reports were not fairly presented. Errors identified included the
following:
Quarter 1 report (January 1, 2023 to March 31, 2023)
The Total Cumulative Obligations were understated by $2,937.
The Current Period and Total Cumulative Expenditures were overstated by $62.
Quarter 3 report (July 1, 2023 to September 30, 2023)
The Total Cumulative Obligations were understated by $118,025.
The Current Period Expenditures were understated by $56,781.
The Total Cumulative Expenditures were understated by $147,930.
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). . . ."
INDIANA STATE BOARD OF ACCOUNTS 14
HOWARD COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. . . ."
Cause
Embedded within a properly designed and implemented internal control system should be internal
controls consisting of policies and procedures. Policies reflect the County's management statements of
what should be done to effect internal controls, and procedures should consist of actions that would
implement these policies. These errors were due to not all expenditures being included in the P&E reports
ran for the time frame.
Effect
Without the proper implementation of an effectively designed system of internal controls over
reporting, the County could not ensure that the P&E reports submitted were accurate. 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.
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 County.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County design and implement a proper system of
internal controls, including policies and procedures, to ensure that the County 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.