Finding Text
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): FY 2023
Compliance Requirement: Reporting
Audit Finding: Material Weakness
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-004.
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 City was classified as a metropolitan city with a population below 250,000 residents that
received an allocation of less than $10 million in SLFRF award funds. As such, the initial P&E report
covering the period from April 1, 2022 to March 31, 2023, was required to be submitted to the Treasury by
April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to
the Treasury by April 30 each year.
INDIANA STATE BOARD OF ACCOUNTS 24
CITY OF NEW CASTLE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The City submitted one P&E report during the audit period; however, there was no documented
internal control in place over the report to ensure it was complete and accurate.
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 was not designed by management of the City, 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 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 implementation of an effectively designed 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 the City's management establish a proper system of internal controls and
develop policies and procedures over the preparation and review of federal reports.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.