Finding Text
2024-003 U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds - ALN 21.027 Material Weakness in Internal Controls Over Compliance and Compliance Finding Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. An obligation is an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. Condition: As of the March 31, 2024, reporting date, the Town’s Project and Expenditure report had reported cumulative expenditures that were understated by approximately $148,000 and cumulative obligations were overstated by approximately $3,505,000. Additionally, the Project and Expenditure report for the period ending March 31, 2024, was not filed until March 25, 2025. Cause: The Town did not reconcile the Project and Expenditure report with the Town’s general ledger before submitting. Additionally, the Town had a lack of formal review process to make sure the report was filed in a timely manner. Effect: The Town did not properly report grant expenditures and obligations in the Project and Expenditure report that was filed nearly eleven months after the deadline. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The Town should implement procedures to reconcile the financial information in the Project and Expenditure reports to the Town’s general ledger and contract files within a timely manner of reporting deadline. Views of Responsible Official: Management agrees with the finding.