Finding Text
FINDING 2023-006
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 Finding: Material Weakness
Condition and Context
Recipients are required to submit an initial interim report and quarterly or annually submit 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 City was classified as a city with a population below 250,000 residents that was allocated less
than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. As such, an annual
P&E report, covering one calendar year from April 1, 2022 to March 31, 2023, was prepared and submitted
by the Deputy Clerk-Treasurer to the Treasury by April 30, 2023. However, the City did not provide
evidence the completed and filed report was reviewed by another individual to ensure the accuracy of the
information provided.
The lack of internal controls was a systemic issue 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). . . ."
Cause
A proper system of internal controls which would include segregation of key functions was not
designed by management of the City. Embedded within a properly designed and implemented internal
control system should be internal controls consisting of policies and procedures. Policies reflect the City'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 design or implementation of the components of a system of internal controls,
including policies and procedures that provide segregation of duties and additional oversight as needed,
the internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the City design and implement a proper system of internal
controls, including policies and procedures that would provide segregation of duties to ensure appropriate
reviews, approvals, and oversight are taking place to ensure the required reports are completed and filed.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.