Finding 1078919 (2023-002)

Finding No.: 2023-002 Federal Agency: U.S. Department of Treasury AL Program: COVID-19 21.027 Coronavirus State and Local Fiscal Recovery Funds Requirement: Allowable Costs/Cost Principles Questioned Costs: $0 Criteria: According to 2 CFR 200.439, capital expenditures for special purpose equipment with a unit cost on or above $5,000 or for general purpose equipment are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity. Condition: In our audit of the 21.027 funding, we identified that the Authority made capital expenditures on equipment without prior approval from the pass-through entity. Cause: The Authority did not consider the requirements for capital expenditures under 2 CFR 200.439. There was no procedure in place to ensure that equipment purchases were pre-approved by the federal awarding agency or pass-through entity. Effect: The Authority is in noncompliance with the applicable requirement. Amounts associated with the instances of noncompliance are material to the program, however as subsequent approval was received by the pass-through entity, no questioned costs result. Recommendation: The Authority should establish procedures to ensure compliance with the requirements under 2 CFR 200.439. This includes obtaining prior approval from the federal awarding agency or pass-through entity for such purchases and maintaining proper documentation to justify the necessity of the expenditures. Additionally, the Authority should train personnel responsible for managing federal awards on these requirements. Views of Responsible Officials: GMHA's corrective action plan does not indicate disagreement and provides planned corrective actions.