Finding Text
Significant Deficiency Finding number 2025 – 001 Federal Program 21.027 American Rescue Plan Act (ARPA) Criteria Noncompliance finding of IMRF contributions being incorrectly allocated to the grant funds and included in the annual report to the federal agency. Condition and Context The City incorrectly allocated IMRF contributions as a portion of salaries and benefits. This amount was reported on the annual report to the Department of Treasury Cause The City failed to remove the IMRF contributions amounts from total salaries and benefits when reporting that information to the third-party consultant who assists with submitting the annual report. Effect The total allocated to the ARPA funds for the fiscal year was overstated on the initial version of the schedule of expenditures of federal awards. The total salaries and benefits as allocated to the fiscal year on the annual report to the Department of Treasury was overstated. Questioned Costs 21.027 American Rescue Plan Act (ARPA) - $14,921 IMRF contributions are a percentage of eligible salaries as determined by Illinois State Statute and were incorrectly included in the total salaries and benefits for employees performing administrative duties for the federal program.Recommendation We recommended management contact their third-party consultant who assists with the annual report to the Department of Treasury for guidance on self-reporting the unallowable total. The City was advised to remove the questioned allocation from the schedule of expenditures of federal awards and record the amount as deferred revenue on the financial statements. The annual report to the Department of Treasury can not be amended or adjusted after submission, which was due prior to fiscal year ending April 30, 2025. A correction will need to be made on the next annual report, due prior to the end of the next fiscal year. Views of the responsible officials and planned corrective actions Management agreed with the recommendation from the third-party consultant. An entry was made to the financial statements to remove the dollar amount from recognized revenue, and record as deferred revenue, and costs removed from the schedule of expenditures of federal awards. The total amount of questioned costs is immaterial to the program and to the financial statements, however, management decided the entry was in the best interest of the City and should be recognized in a future year. Official Responsible for Ensuring the Corrective Action Plan is Implemented Jeff Davis, City Treasurer/Director of Finance; Stan Reno, City Manager. Planned Completion Date for the Corrective Action Plan Recommendations are considered at the issuance of the report, November 24, 2025.