Finding Text
Finding 2024-005 Reporting – Internal Control over Reporting
Identification of the Federal Program:
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF)
Federal Agency: U.S. Department of the Treasury
Federal Award Identification Number: 1505-0271
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to the U.S. Department of the Treasury’s State and Local Fiscal Recovery Funds (SLFRF) requirements, certain recipients must submit an annual Project and Expenditure Report by April 30, covering the reporting period from April 1 to March 31. This requirement applies to:
- Tribal governments that are allocated less than $30 million in SLFRF funding.
- Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding and NEUs that are allocated less than $10 million in SLFRF funding.
The Project and Expenditure Report must include:
a. Project descriptions detailing major activities funded.
b. Financial data, including cumulative and current-period obligations and expenditures.
c. Estimated future expenses for obligations incurred by December 31, 2024, but to be spent in 2025 and 2026.
d. Project status, categorized as: not started, completed less than 50 percent, completed 50 percent or more, and completed.
e. Program income earned and expended, if applicable.
f. adopted project budgets (for States, U.S. territories, metropolitan cities and counties with a population that exceeds 250,000 residents only).
g. demographic data for Public Health and Negative Economic Impact expenditures.
h. Detailed expenditure data for any contracts and grants awarded, loans issued, transfers made to other government entities, interagency agreements entered into, and direct payments made by the recipient that are equal to or greater than $50,000.
Condition:
During our review of the City's Annual March 2024 Project and Expenditure Report, we identified significant discrepancies in the reported financial data. The City reported total cumulative expenditures of $6,908,231, current period obligations of $6,908,231, and current period expenditures of $6,908,231. However, the correct amounts should have been total cumulative expenditures of $3,104,398, current period obligations of $3,803,833, and current period expenditures of $106,617.
Cause:
The City does not have internal controls in place to ensure that City employees are adequately trained on the reporting requirements.
Effect or Potential Effect:
Failure to report correct obligated and expended amounts in the annual report resulted in noncompliance with SLFRF reporting requirements. These misstatements may compromise the accuracy and transparency of financial reporting and expenditure tracking.
Questioned Costs:
None noted.
Context:
See condition above for the context of the finding.
Identification as a Repeat Finding, If Applicable:
No.
Recommendation:
We recommend the City implement a review and reconciliation process to ensure accurate reporting of expenditures, obligations, and cumulative totals. This includes providing training to staff on the proper reporting period and reconciliation requirements, establishing internal controls for data validation before submission, and enhancing coordination between departments responsible for financial reporting.
Views of Responsible Officials:
Management concurs with the finding and agrees to implement necessary corrective procedures.