Finding 1136434 (2023-002)

Schedule of Expenditures of Federal Awards Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: ISA-ARPA-ADWR-123022-01 - 2023 Pass-Through Agency: State of Arizona Governor’s Office Pass-Through Number(s): ERMT-20-002 Award Period: January 1, 2023 through January 1, 2026 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Under the U.S. Code of Federal Regulations Title 2, Part 200, Subpart F, Uniform Administrative requires certain auditee responsibilities identified in § 200.508 including the appropriate preparation of financial statements, including the schedule of expenditures of federal awards in accordance with § 200.510. Condition: The District's SEFA was overstated and revised by a known amount of $117,462 comprised of invoices incurred prior to the ARPA act that should not have been submitted under their ARPA grant allocation. Questioned costs: None Context: During our reconciliation of the schedule of expenditures of federal awards (SEFA) to the District's general ledger and invoice listings, it was determined various invoices for inventory/supplies purchases made prior to the ARPA act beginning period of July 1, 2021 were submitted for reimbursement under their ARPA allocation and were presented on the SEFA. The total overstatement and revision of the SEFA was $117,462. Cause: The District does not have effective internal controls in place to ensure compliance with the Uniform Guidance. Effect: The lack of internal controls over the provisions of allowable costs and period of performance compliance requirements provides an opportunity for noncompliance. Repeat Finding: No. Recommendation: We recommend the District design controls to ensure an adequate review process over the invoices recorded and presented on the schedule of expenditures of federal awards to determine compliance with the Uniform Guidance. Views of responsible officials and planned corrective actions: Management concurs with the finding, and as reported in the corrective action plan, District policies will be updated and approved to conform to federal guidance.