Finding Text
Allowable Costs/Cost Principles 2024-003 GENERAL INFORMATION: Grant Title: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of the Treasury CONDITION: The Fayette County Commission paid the outstanding debt, interest, and fees on behalf of the Fayette County Urban Renewal Authority, a discretely presented component unit, utilizing Coronavirus State and Local Fiscal Recovery Funds. The title of the assets (Wolf Creek Park) for which the debt was held was transferred into the name of the New River Gorge Regional Development Authority. The New River Gorge Regional Development Authority is required to reimburse Fayette County Commission with proceeds from the sale of Wolf Creek Park. CRITERIA: 31 CFR Part 35, III. Restrictions on Use states, in part, that: "…In addition to the restrictions on use of funds provided for in the ARPA statute, the interim final rule noted that several uses of funds would be ineligible under any eligible use category, including as a response to the public health and negative economic impacts of the pandemic or as a 'government service' under the revenue loss eligible use category. Specifically, use of funds for debt service, to replenish financial reserves, or to satisfy an obligation arising from a judicial settlement or judgement were ineligible uses of funds under the eligible use categories for public health and negative economic impacts and revenue loss. These restrictions apply to all recipients. Recipients should note that restrictions on use of funds for debt service, to replenish financial reserves, or to satisfy an obligation arising from a judicial settlement or judgment apply to all eligible use categories, not just the eligible use categories in which they were discussed in the interim final rule…" CONTEXT: The questioned costs is one expenditure, totaling $2,024,384.56, identified from a sample of three expenditures, which collectively amounted to $2,331,884.56. This sample was drawn from a total population of 14 expenditures, with an overall total of $2,648,130. QUESTIONED COSTS: $2,024,384.56 CAUSE: The Fayette County Commission classified this expenditure as an acquisition of a capital asset, as opposed to payment of debt service. EFFECT: Fayette County Commission utilized Coronavirus State and Local Fiscal Recovery Funds for payment of debt service incurred prior to March 3, 2021. These expenditures were not used to respond to current and ongoing public health and negative economic impacts of the pandemic or to provide a government service. Additonally, the repayment requirement of the funds creates a situation of saving for future spending needs. REPEAT FINDING: No RECOMMENDATION: The Fayette County Commission is directed to review these regulations and comply with the provisions set forth therein. Additionally, the Commission should establish defined parameters of what constitues debt service to prevent misclassification of future expenditures and ensure future funds are not utilized for unallowable costs. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: See PDF. AUDITOR'S RESPONSE TO THE VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTIONS: See PDF.