Finding Text
Criteria: The OMB Compliance Supplement requires that reports submitted to the federal awarding agency include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements.
The City of Elizabeth (the City) must submit quarterly Project and Expenditure Reports that contain costs incurred during the covered period. Critical information includes, in part:
Obligations and Expenditures:
• Cumulative obligation
• Current period expenditure
Condition:Current obligation and expenditure information was not reported in accordance with governing requirements.
Cause:The City did not have adequate internal controls to ensure Project and Expenditure Reports were prepared in accordance with governing requirements.
Effect:Inaccurate information was reported to the federal awarding agency.
Questioned Cost: None
Context/Sampling: A nonstatistical sample of one out of a population of four Project and Expenditure Reports submitted during the year was selected for testing. The City reported current obligations for the amount the City budgeted, rather than the obligations (i.e., contracts/purchase orders) that were entered into during the reported period. The City reported current expenditure for one project as the budgeted amount, did not record current expenditures on another project and recorded expenditures on a project that did not have expenditures.
The City reported three subrecipients and subawards. The City did not enter into an subrecipient or subaward agreements.
The impact is as follows:
Period ended June 30, 2024
Originally Reported Actual
Water 1
Cumulative Obligations $17,000,000 $19,646,341
Current Pd Obligations ⸺ $1,494,959
GS-B (Fire Dept Repairs)
Total Cumulative Exp $877,164 $840,970
Current Obligations $27,207 ⸺
Sewer 1 (Atlantic)
Total Cumulative Exp $1,380,982 ⸺
Prior Year: Repeated
Recommendation:We recommend the City enhance internal controls to ensure Project and Expenditure Reports are prepared in accordance with governing requirements.
Client Reponse: The City recognizes the importance of internal controls and plans to enhance its procedures to ensure Project and Expenditure quarterly reports are prepared in accordance with governing requirements. An ARP consultant was engaged to ensure ARP reporting compliance. All subsequent reports to 2024 fiscal year are in compliance with ARP requirements.