FINDING 2023-004
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 21
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-003.
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 contracts for the appropriate reporting period.
Recipients are required to submit quarterly or annually P&E reports to the 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.
INDIANA STATE BOARD OF ACCOUNTS
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CITY OF LAWRENCE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The City was classified as a metropolitan City with a population below 250,000 residents that
received an allocation of more than $10 million in State and Local Fiscal Recovery Funds. As such, the
City was required to submit four quarterly P&E reports during the audit period.
The reports to be submitted during 2023 were for quarters ending December 31, 2022, March 31,
2023, June 30, 2023, and August 31, 2023.
The City did not provide audit evidence that the P&E report for the quarter ended December 31,
2022, was prepared and submitted. Additionally, a single employee prepared and submitted the remaining
three P&E reports without evidence of oversight and review.
The lack of internal controls was a systemic issue throughout the audit period. The noncompliance
was related to the P&E report for the quarter ended December 31, 2022.
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. . . ."
Cause
A proper system of internal controls was not designed by management of the City, which would
include segregation of key functions. 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 of what should be done to effect internal controls, and procedures should consist of actions
that would implement these policies. The City was not aware the P&E report for the quarter ending
December 31, 2022, had not been filed.
INDIANA STATE BOARD OF ACCOUNTS
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CITY OF LAWRENCE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. As a result, a quarterly report was not filed with the Treasury.
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 of federal reports are taking place. We also recommended that all
quarterly reports be filed timely with the awarding agency.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
INDIANA STATE BOARD OF ACCOUNTS
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