Finding Text
Finding Reference 2025-03 Assistance Listing Number 21.027 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency Department of Treasury Compliance Requirement Reporting Type of Finding Significant Deficiency on Internal Control and Noncompliance Condition From a sample of eight (8) expenditure reports examined, the auditors noted that five (5) reports were submitted after the due dates established by the pass-through entity. A similar finding was reported during the prior year’s single audit as finding No. 2024-04. Criteria In compliance with the reporting requirements set by the pass-through entity, the Authority must submit expenditure reports on the first and third Friday of each month to disclose expenditures under ALN 21.027. The Uniform Guidance section 200.303 regarding internal controls requires subrecipients to establish, document, and maintain effective internal control over Federal awards that provide reasonable assurance that the management of Federal awards is in compliance with Federal statutes, regulations, and terms and conditions of the Federal awards. This includes accurate financial reporting and proper segregation of duties to prevent any individual from both preparing and reviewing the same transaction or report. Cause The Authority lacks sufficient personnel assigned to oversee, review and make sure the reports are timely issued to the passthrough entity. This process is conducted by an employee without any formal oversight or review, prior to the submission to the passthrough entity. Effect The lack of management review, oversight, and late submission of the expenditure reports increases the risk of noncompliance with federal requirements and inaccuracies in reporting over federal funds. Questioned Costs None. Recommendation To resolve these issues, the Authority should consider the following actions: Strengthen Internal Controls: Implement stronger internal control procedures to ensure accurate financial reporting and supervision. This should include establishing clear protocols for the timely preparation and review of financial reports, with distinct roles assigned to different individuals to maintain segregation of duties. Staffing Issues: Take steps to address the employee shortage, either by hiring additional staff or by training existing staff to take on multiple roles, ensuring that duties can be adequately segregated even with limited personnel. Regular Training and Awareness: Conduct regular training sessions for all relevant staff on compliance with Federal program requirements and the importance of internal controls, including the need for segregation of duties in financial reporting. Views of Responsible Officials Refer to Management’s unaudited corrective action plan.