Finding Text
2024-007 Reporting Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP3474, 2021 Pass-Through Agency: N/A – Federal Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.510(b) states that the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502, basis for determining federal awards expended. In addition, the U.S. Department of the Treasury requires recipients of funds to submit Project and Expenditure reports that include, by project, current period obligations, cumulative obligations, current period expenditures, and cumulative expenditures. The frequency of reporting is dependent on the size of the entity and amount of funding received. Condition: During 2024, McLeod County identified an additional $1,302,426 in COVID-19 – Coronavirus State and Local Fiscal Recovery Funds expenditures that were not included in the County’s original SEFA nor in the original population of expenditures provided for audit. In addition, expenditures documented in the County’s annual Project and Expenditure report through March 31, 2025, were understated by $1,515,400, and expenditures documented in the County’s annual Project and Expenditure report through March 31, 2024, were understated by $374,095. Questioned Costs: None. Context: The U.S. Department of the Treasury relies on accurate reporting of program costs to ensure grant funds are spent in accordance with program requirements. McLeod County is required to submit annual Project and Expenditure reports; the County submitted annual reports in both April 2024 and April 2025. Effect: Federal expenditures provided to the auditors were not fairly reported in the SEFA. In addition, the County did not accurately report expenditures on its Project and Expenditure reports as of March 31, 2025, and March 31, 2024. Cause: Due to human error, the County reported funds as obligated instead of expended because of additional projects that are ongoing. Recommendation: We recommend the County implement controls that ensure proper identification of federal expenditures in accordance with program requirements and that federal program reports are accurate. We also recommend the County submit revised Project and Expenditure reports as of March 31, 2025, and March 31, 2024. View of Responsible Official: Concur