Finding Text
Finding Reference: 2024-004 – Inappropriate Allocation of Expenses Federal Agency: U.S. Department of Treasury Pass-Through Entity: Commonwealth Financing Authority Federal Program: Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Compliance Requirement: Allowable Costs / Cost Principles Type of Finding: Compliance and Material Weakness in Internal Control over Compliance Criteria: Per 2 CFR §200.403 and §200.405, costs charged to a federal award must be allowable, allocable, and not reimbursed by another federal source. Internal controls should ensure that expenses are properly reviewed and approved prior to being charged to federal programs. Condition: During our audit, we noted that the Borough initially charged expenses to the COVID-19 ARPA H20 PA grant that were also being reimbursed under a separate federal grant. This resulted in duplicate reimbursement requests for the same costs, rendering the original charges to the COVID-19 ARPA H20 PA grant unallowable. Cause: The Borough’s internal controls over compliance did not detect that the same expenses were being submitted for reimbursement under multiple federal programs. This indicates a lack of adequate review procedures to prevent duplicate claims. Possible Asserted Effects: Although the expenses were ultimately not reimbursed twice, the initial submission of unallowable costs could have resulted in questioned costs and noncompliance with federal requirements. Upon identification by the auditors, the Borough communicated with the grantor agency and received approval to substitute allowable expenses under the grant. Questioned Costs: None noted. The Borough corrected the issue prior to final grant closeout, and no federal funds were improperly expended. Context: All grant expenditures were tested. Repeat Finding: Not Applicable Recommendations: We recommend that the Borough strengthen its internal control procedures over grant expense allocations, including implementing a cross-check process to ensure expenses are not submitted to multiple grants simultaneously. Views of responsible officials and planned corrective actions: After the review of the audit findings, the Borough has implemented additional oversight to include the review/validation of expenses prior to grant payment processing and/or grant closeout. The process and implementation are further detailed on the separate corrective action plan.