Finding Text
Assistance Listing Number, Federal Agency, and Program Name - ALN 20.205, Department of Transportation, Highway Planning and Construction - ALN 21.027, Department of the Treasury, COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Federal Award Identification Number and Year - ALN 20.205: SHO M455- 136 (2024), STU M455-129 (2024), STU 2873-215 (2024), CRP M455-164 (2024), SHO M455-137 (2024), SHO M455-135 (2024), and STU M455-125 (2024) - ALN 21.027: N/A
Pass-through Entity - ALN 20.205: Colorado Department of Transportation - ALN 21.027: N/A
Finding Type - Material weakness
Repeat Finding - Yes
2023-003
Criteria - According to 2 CFR 200.502, the determination of when a federal award is expended must be based on when the activity related to the federal award occurs. Generally, the activity pertains to the events that require the nonfederal entity to comply with federal status, regulations, and the terms and conditions of federal awards, such as expenditure/expense transactions associated with awards including grants.
Condition - The fiscal year 2024 schedule of expenditures of federal awards (SEFA) that was initially provided to the auditors was incorrect because it included expenditures related to fiscal years 2023 and 2025.
Questioned Costs - N/A
If Questioned Costs are not Determinable, Description of why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported - N/A
Identification of How Questioned Costs Were Computed - N/A
Context - Within Highway Planning and Construction, the expenditures reported on the initial SEFA included $142,724 that related to expenditures incurred in fiscal year 2023. There was also $16,128 that related to expenditures incurred in fiscal year 2024 that was not reported on the initial SEFA. Within Coronavirus State and Local Fiscal Recovery Funds, the expenditures reported on the initial SEFA included $15,921 that related to expenditures incurred in fiscal year 2023 and $99,200 that related to expenditures incurred in fiscal year 2025.
Cause and Effect - The City reported federal expenditures in congruence with requests for reimbursement from the federal agency, rather than when the expenditures was incurred.
Recommendation - The City should implement controls to ensure that the SEFA is prepared in accordance with applicable rules and regulations.
Views of Responsible Officials and Corrective Action Plan - The City of Fort Collins, Colorado has determined that two separate and identifiable root causes led to the inclusion of expenditures from fiscal years 2023 and 2025 in the initial fiscal year 2024 SEFA.
1. Improper Accrual of Prepayments:
A small number of transactions involving partial prepayments were not properly accrued in accordance with accounting standards. To address this issue, the City will implement a formal review process where all reimbursement requests are reviewed by the grant accountant prior to
submission. This review will include a targeted examination of expenditure listings to identify and ensure appropriate treatment of any transactions requiring accrual as prepayments.
2. Inconsistencies Between Reimbursement Packets and the General Ledger:
For the Highway Planning and Construction Cluster, the SEFA preparation process previously relied on reimbursement request packets compiled by departmental staff. In some cases, these packets did not accurately reflect the timing of expenditures recorded in the general ledger. To enhance accuracy, the City will implement a reconciliation procedure requiring the grant accountant to cross-reference reimbursement packet data with the general ledger during SEFA preparation. This step will help ensure that all expenditures are properly reported in the appropriate fiscal year.
The City is confident that these corrective actions will strengthen internal controls over SEFA preparation and prevent recurrence of similar issues in future reporting periods.