Finding 1147979 (2023-001)

Improve Controls and Documentation over Reporting Process Federal Agency: Department of Treasury Award Name: Coronavirus State and Local Fiscal Recovery Fund AL Number: 21.027 Award Year: 2023 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement OMB's Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients design internal controls to ensure that reports submitted to the Federal government are timely, complete, and accurate. Management is also responsible for establishing and maintaining effective internal controls over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context During the audit of the Town's compliance with the requirements of the CSLFRF program, two issues were identified: 1. The Town did not submit its required annual performance and evaluation report by the designated deadline. The report was due by April 30, 2023 but was submitted on May 24, 2023. 2. Discrepancies were identified between the expenditures reported in the performance and evaluation report and those recorded in the Town's general ledger. Specifically, the $10,810 were incorrectly reported as current period expenditures in the 2023 report but were correctly included as current period expenditures in the 2022 report. In addition, $428,822 of expenditures were incorrectly reported as current period expenditures in the 2023 report but should have been reported in the 2024 report as they were incurred from April to May 2023. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, key line items on reports submitted may not be complete or accurate. No questioned costs are reported as expenditures were actually incurred, and the finding relates to an error in bifurcating costs across reports. Recommendation The Town should design and implement an internal control procedure to ensure that reports are submitted timely and are complete and accurate. Views of Responsible Official Management agrees with the finding. Planned Corrective Action Management's corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.