Finding Text
U.S. Department of Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing Number 21.027, Passed through the City of Las Vegas and Clark Country – Compliance and Internal Control Systems Over Compliance, Reporting
Criteria: As defined in 2 CFR 200.303, the auditee is required to establish, document, and maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions are executed in compliance with the terms and conditions of the federal award, federal statutes, and regulations.
Condition: The Organization does not consistently utilize the accrual basis of accounting when creating requests for reimbursement of expenditures under federal grant awards.
Cause: Internal controls over compliance as related to the compliance requirement of reporting were not designed and/or operating effectively.
Effect: An organization is required to select a basis of accounting upon which to present the schedule of expenditures of federal awards (SEFA). This basis selected is disclosed to users of the financial statements as part of the notes to the SEFA. Inconsistent application of the basis of accounting used to support requests for reimbursement may result in a SEFA that is misstated relative to the basis of accounting selected by management and disclosed to users of the financial statements.
Recommendations: We recommend management design and implement a system of internal controls whereby expenditures submitted for federal reimbursement are recognized consistently on the basis of accounting selected by management (e.g., accrual vs. cash).
Views of Responsible Officials and Planned Corrective Actions: Management acknowledges the finding regarding the inconsistent use of the accrual basis of accounting for federal grant reimbursements. At the time of SEFA preparation, the methodology used was based on the reimbursement requests submitted throughout the year, which had been prepared on a cash basis. However, for the final reimbursement under the City of Las Vegas grant ending June 30, 2024, accrued payroll costs for work performed in June but paid in July were included to ensure full reporting of eligible grant activity. This deviation from the previously applied basis led to the noted inconsistency.
Planned Corrective Actions:
• Going forward, management will implement the following corrective actions:
• A consistent accounting basis (accrual) will be selected and formally documented for all SEFA reporting and federal reimbursement requests.
• Internal procedures will be updated to reflect the chosen basis and ensure it is applied uniformly across all reimbursement submissions.
• A secondary review of SEFA reporting will be conducted by senior finance staff or the CEO to ensure consistency with the selected accounting method.
• Staff will be trained annually on SEFA requirements and federal compliance standards under 2 CFR 200.
These corrective actions will be completed by June 30, 2025.