Finding 1170827 (2024-003)

Finding 2024-003 (Significant Deficiency) AL# 21.027: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, U.S. Department of Treasury Condition: During testing of the quarterly CSLFRF Project and Expenditure Report submitted by the City for the period ending June 30, 2024, we noted that the revenue loss information and certain key line items were not reported accurately. Criteria: Per the U.S. Department of Treasury’s CSLFRF Compliance and Reporting Guidance, recipients are required to report revenue loss and key line item figures correctly in each required periodic Project and Expenditure Report and ensure all submitted information is complete, accurate, and supported by the City’s accounting records. Questions Costs: None Context: During the year, the City performed a re-calculation of their revenue loss amount which slightly changed amounts previously reported. With how the report portal works, the prior year amounts cannot be updated. The City inadvertently dropped in the total of all years into the current year revenue loss. The report then totaled all years, which duplicated the total revenue loss reported. The City’s actual revenue loss is more than funding received and only a portion of funding received was allocated to the revenue loss category. The revenue loss amount used by the City for internal tracking and compliance was correct. During our review of two of the four CSLFRF quarterly reports, we identified variances between amounts reported in certain key line items. These variances were not consistent throughout the report; however, the total discrepancies were not material to the overall CSLFRF financial information presented. The sample size was determined based upon guidelines provided by the AICPA which is not a statistically valid sample. Cause: The inaccurate reporting for revenue loss resulted from a misunderstanding of how the report portal worked. The City believed they were updating the total revenue loss amount to the correct balance. Review controls did not identify that the total revenue loss on the report got duplicated. The inaccurate reporting for key line items could not be fully determined. Effect: Submitting inaccurate reporting information increases the risk of potential noncompliance with Treasury reporting requirements. For key line items, although the variances were not material and did not impact overall compliance with CSLFRF requirements, inconsistent reporting increases the risk of inaccurate reporting in future periods and may reduce the reliability of information submitted to the U.S. Treasury. Recommendation: We recommend the City correct the revenue loss reported value and verify all supporting documentation agrees to the reports prior to submitting required reports. Views of Responsible Officials (Unaudited): The City concurs with the finding. While the City’s internally calculated revenue loss amount used for compliance and funding allocation purposes was accurate, errors occurred in the amounts reported in the CSLFRF Project and Expenditure Report due to a misunderstanding of how the Treasury reporting portal calculated and aggregated revenue loss across reporting periods. In addition, certain key line items reported did not agree to the underlying supporting documentation retained by the City. The City has reviewed its CSLFRF reporting process and implemented additional procedures to ensure that reported amounts agree to supporting documentation and the City’s accounting records prior to submission. Beginning with the 12/31/2025 reporting period, the City will ensure that revenue loss and key line-item amounts reported in the Treasury portal are supported by documentation that reconciles to the portal calculations and reflects the intended reporting period. Additional review controls have been incorporated to verify the accuracy and completeness of reported amounts before submission, including review of portal totals to prevent duplication and confirmation that reported figures align with internal tracking records.