Finding 1123398 (2024-006)

Finding 2024-006 – Allowable Costs/Cost Principles Federal Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number (ALN): 21.027 Federal Agency: U.S. Department of the Treasury Pass-Through Grantor: Wyoming Office of State Lands and Investments (OSLI) Grant Year: 2024 Criteria In accordance with 2 CFR 200.403(a) and (f), federal expenditures must: • Be necessary, reasonable, and allocable to the specific federal award under which they are charged. • Not be included as an expenditure or used to meet cost-sharing requirements of another federally financed program in the current or prior period. Further, per 2 CFR 200.303 and the State and Local Fiscal Recovery Funds (SLFRF) Compliance and Reporting Guidance, recipients are required to: • Maintain accounting records that support accurate, compliant financial data. • Develop and implement internal controls to ensure that expenditures charged to SLFRF funding are eligible, properly documented, and not duplicated across funding sources. • Submit accurate Project and Expenditure Reports and ensure that funds passed through from other entities are properly identified and reported. These requirements collectively emphasize that expenditures must be tracked and reported separately by distinct grant award, even when received under the same Assistance Listing number, to prevent double reimbursement and misstatement of federal expenditures. Condition The City received two separate funding sources under Assistance Listing Number 21.027 (SLFRF): 1. A direct SLFRF award from the U.S. Department of the Treasury; and 2. A pass-through SLFRF award from the Wyoming State Lands and Investments (OSLI). During our testing of expenditures charged to the OSLI-administered SLFRF grant in fiscal year 2024, we identified one instance where the City submitted and received reimbursement for an expenditure of $50,744. The City previously had applied this same expenditure toward advance funding received under the direct SLFRF award from the U.S. Department of the Treasury in 2023. This resulted in a duplicate reimbursement of $50,744, constituting an unallowable cost under federal cost principles and SLFRF compliance requirements. Cause The duplication occurred due to turnover in key personnel and insufficient internal controls to reconcile prior advance-funded expenditures against current-year reimbursement requests. Additionally, the City does not have adequate procedures to track and allocate costs separately by individual SLFRF award or review SEFA preparation and grant reimbursement submissions for potential duplication of expenditures across funding sources under the same ALN. Effect or Potential Effect As a result of this deficiency, the City received duplicate reimbursement in the amount of $50,744, resulting in an unallowable cost that may require repayment or other corrective action. Inaccurate reporting of federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) could lead to scrutiny from the federal grantor and require amendments or adjustments. This exposes the City to potential federal grantor review and the risk of losing eligibility for future federal funding if repeated noncompliance is identified or corrective actions are not implemented. Questioned Costs $50,744 Context During our testing of Allowable Costs/Cost Principles of expenditures charged to the SLFRF grant administered by the State Lands and Investments (OSLI), we identified one instance out of twenty-two tested, where the City submitted and received reimbursement for an expenditure that had already been previously applied to advance funding received under the direct SLFRF award from the U.S. Department of the Treasury in a prior period. Although both funding streams fall under Assistance Listing 21.027, they are separate awards with distinct reporting and compliance requirements. Federal regulations require that costs be tracked and reported by individual grant award to prevent duplication of reimbursements and improper reporting. Identification as a Repeat Finding This is a new finding for the fiscal year ended June 30, 2024. Recommendation We recommend that the City implement internal controls to prevent expenditures reimbursed under one grant from being resubmitted for reimbursement under a separate grant award. The City should establish and maintain separate tracking systems for each distinct grant award, including reconciliation of prior expenditures before submitting new reimbursement requests. A secondary review of all grant reimbursement requests and SEFA preparation should be required to ensure proper cost allocation and compliance with federal regulations. Furthermore, the City should consult with the State Lands and Investments to determine the necessary corrective action regarding the $50,744 questioned cost, including potential repayment. Finally, management should provide training to all personnel involved in federal grant administration to ensure understanding of cost principles, award-specific tracking requirements, and federal reporting expectations. Views of Responsible Officials Management concurs with the finding and acknowledges the deficiency in internal controls and cost allocation. The City will strengthen its internal reconciliation procedures, implement secondary reviews for all grant reimbursement submissions, and establish distinct tracking mechanisms for each SLFRF award. In addition, management will consult with the State Lands and Investments regarding the questioned cost and ensure any necessary corrective actions are taken. Staff training will be provided to improve awareness and compliance with federal grant requirements going forward. See Corrective Action Plan.