Finding Text
2025-008 – Material Weakness and Noncompliance, Reporting U.S. Department of Treasury Passed through the State of Connecticut Office of Policy and Management Assistance Listing Number: 21.027 Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Criteria: Per terms and conditions of the award, quarterly project and expenditure reports (1505-0271). For purposes of reporting in the SLFRF portal, an expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). Condition: Three of four quarterly SLFRF project and expenditure reports tested included encumbrances in amounts reported as expenditures. Encumbrances represent committed but not yet incurred costs and do not meet the SLFRF definition of an expenditure. The fourth‑quarter report tested did not include encumbrances and reflected correction of this issue. Cause: The condition occurred because the application of SLFRF expenditure definitions was interpreted differently during preparation of the quarterly reports. At the time, the Town did not have documented procedures to guide reporting or a formal review process to confirm alignment with reporting requirements. Management subsequently clarified reporting expectations and corrected the issue in the fourth quarter. Effect: As a result, three quarterly SLFRF reports submitted to the U.S. Department of the Treasury were inaccurate and did not fully comply with federal reporting requirements. Questioned costs: None. Context: Of the four quarterly SLFRF reports tested, three included encumbrances in amounts reported as expenditures. The fourth‑quarter report tested reflected management’s corrective action and excluded encumbrances. Identification as a repeat finding if applicable: 2024-008 Recommendation: We recommend that the Town continue to apply the corrected reporting methodology and formalize procedures requiring reconciliation of reported expenditures to underlying general ledger detail to ensure that only incurred costs are reported in the SLFRF portal. View of responsible officials: We agree with the finding. See corrective action plan.