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FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The Town was classified as a metropolitan town with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The Town submitted one P&E report during the audit period; however, the internal controls in place were not effective and did not prevent, or detect and correct, errors. As a result, the following errors in reporting were identified: Expenditures for a police car were overstated by $5,868. Expenditures for a utility truck, digital sign, and fire safety equipment occurred outside of the reporting period but were reported resulting in an overstatement of $72,605. Reported expenditures for fire safety equipment were overstated by $30,000. Expenditures for a Water Tower Project were not reported on the P&E report, resulting in an understatement of $58,809. The lack of internal controls was systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF RIDGEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause Since the Clerk-Treasurer was in her first few months in office when the P&E report was prepared and submitted, she was inexperienced with reporting the Town's grant expenditure information. Internal controls established were not followed by management of the Town to ensure the Town provided the Treasury with complete and accurate information related to the SLFRF awards. Effect Without proper execution of internal controls, the P&E report that was submitted included the errors identified in the Condition and Context. The SLFRF reporting requirements were not met, which increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. The lack of proper reporting could result in the Town not receiving future federal fundings or reduction in current federal funding. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town develop policies and procedures to ensure the accurate reporting of expenditures in the correct reporting period for each report submitted to provide the Treasury with complete and accurate information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.