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FINDING 2023-003 Subject: COVID-19 - Emergency Rental Assistance Program - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Emergency Rental Assistance Program Assistance Listings Number: 21.023 Federal Award Number and Year (or Other Identifying Number): ERA-0359 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 22 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County received a federal Emergency Rental Assistance (ERA) Program grant, that was created during the COVID-19 pandemic, to help provide financial and housing stability assistance to eligible households to help prevent eviction and ensure stable housing. Recipients had a period of performance to incur costs that was between the start of the grant until September 30, 2022, for the Emergency Rental Assistance Program 1 (ERA1) and could be extended until December 29, 2022, if the recipient received reallocated funds from the Department of the Treasury. The County did receive reallocated funds from the Department of the Treasury; therefore, the County had until December 29, 2022, to incur costs for the ERA1 program. The costs that were incurred during the period of performance then had a liquation date of April 28, 2023. The County did not have internal controls in place to ensure costs were incurred within the grant period of performance and those costs incurred were properly paid by the liquidation date. Five out of seven of the expenditures tested, totaling $124,787, were for costs incurred after the period of performance. One expenditure included a December obligation to a subrecipient of $31,026, which was within the period of performance. But, the County did not pay the subrecipient by the liquidation date, so a total of $155,813 was paid after the liquidation date. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3)." Cause Due to turnover in the Economic Development Department and lack of knowledge of the period of performance dates of the ERA1 program, noncompliance went undetected by the County. Effect Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award resulted in the request by the Department of the Treasury for the County to refund $154,945. INDIANA STATE BOARD OF ACCOUNTS 23 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs We identified $155,813 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the County establish a system of internal controls to ensure compliance with period of performance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.