Finding 1105669 (2023-003)

Criteria—As outlined within the Compliance Supplement, the City is required to submit quarterly reports to the Department of the Treasury that detail the City’s use of Coronavirus State and Local Fiscal Recovery Fund (“CSLFRF”) spending. The Department of the Treasury has provided reporting requirements as outlined within Key Line Items, which include increased reporting on expenditures and subawards greater than $50,000. Additionally, the Department of Treasury allows recipients to replace lost public sector revenue to provide government services. Under the Final Rule, recipients can elect a one-time “standard allowance” of $10 million to spend on the “provision of government services” during the period of performance or, as the City has elected, calculate lost revenue for the years 2020, 2021, 2022, and 2023 based on a formula provided in the Final Rule to determine the amount of CSLFRF funds that can be used for the “provision of government services.” Condition and Context—We found that the City aggregated all project expenditures and reported them within the category for amounts under $50,000. However, testing found numerous project expenditures and contracts greater than that amount. Additionally, we noted previous years’ submitted revenue loss calculation amounts were changed and the City was unable to provide us with evidence supporting their revenue loss calculation as reported in the quarterly reports submitted to the Department of Treasury throughout the year ended 12/31/2023. Cause—The City has failed to establish internal controls to ensure that CSLFRF reports submitted to the Department of Treasury are free from material misstatements. Effect or Potential Effect—Inconsistent application of the revenue loss calculation procedures and potential noncompliance with the reporting requirements of the Uniform Guidance. Recommendation—We recommend that the City amend future reports to ensure that sufficient expenditure detail is reported to the Department of the Treasury and that consistent proper amounts of revenue loss are calculated with supporting documentation and recognized within those reports. View of Responsible Officials and Planned Corrective Action Plan—The City will update amounts and descriptions within the Department of Treasury’s reporting portal to ensure all amounts expended are properly reported and proper revenue loss amounts are recognized.