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2023-006 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – IMPROPER AND UNTIMELY REPORTING OF EXPENDITURES & OBLIGATIONS – ALN 21.027 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE FINDING TYPE: MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Finding 2023-005 Federal Program: FAIN: CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS SLFRP4360, 2023 ALN: 21.027 Year(s): 2023 Federal Agency: U.S. Department of Treasury Questioned Cost: $0 Condition Mercer County did not properly report total cumulative and current period expenditures and obligations on the March 31, 2023, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total reported cumulative expenditures and obligations were overstated by $37,577 and $484,435. The total reported current period expenditures were understated by $345,365, and the total current period obligations were overstated by $780,000. In addition, the 2023 report was submitted on May 15, 2023, roughly two weeks after the April 30, 2023 deadline. Effect The amounts reported as cumulative and current expenditures and obligations on the March 31, 2023, Project and Expenditure Report were inaccurate. Cause Mercer County did not ensure that all expenditures and obligations were in agreement with their ledger when completing reporting for the March 31, 2023 Project and Expenditure Report. Criteria Page 19 of the Coronavirus State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide Version 12 (September 30, 2024) states: • 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). • An obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. An obligation also means a requirement under federal law or regulation or provision of the award terms and conditions to which a recipient becomes subject as a result of receiving or expending funds. 2 CFR 200.303 states that the non-Federal entity must 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. Page 22 of the U.S. Department of the Treasury Compliance and Reporting Guidance over the Coronavirus State and Local Fiscal Recovery Funds program states that for "metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding.....the initial Project and Expenditure Report covered from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports cover one calendar year and must be submitted to Treasury by April 30." Context As stated in the SLFRF Compliance and Reporting Guidance, for counties allocated less than $10 million with a population below 250,000 residents such as Mercer, "the initial Project and Expenditure Report covered the period from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30 each year." Therefore, each year after March 31, 2022, Mercer County must then submit an annual P&E report for the period covering April 1 202X - March 31, 202Y. Mercer County did not submit the 2023 (period covering April 1, 2022-March 31, 2023) report by April 30, 2023, and did not properly include the current and cumulative expenses and obligations on the 2023 P&E report. Repeat Finding No. Recommendation We recommend Mercer County review and comply with all reporting requirements of the Coronavirus State and Local Fiscal Recovery Funds program by properly reporting all expenditures and obligations in the Project and Expenditure Reports. We also recommend Mercer County ensure that the Project and Expenditure Reports are submitted on or before the April 30th deadline. Mercer County’s Response See Corrective Action Plan.