Finding Text
Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds / HOME Investment Partnership Program Federal Financial Assistance Listing Number.: 21.027 / 14.239 Federal Grantor: U.S. Department of the Treasury / U.S. Department of Housing and Urban Development Award Number and Year: Affects all grant awards included under assistance listing 14.239 and 21.027 on the Schedule of Expenditures of Federal Awards. Compliance Requirement: Other – Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal awards Type of Finding: Material Weakness in Internal Control over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the City) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. §200.331 of the Uniform Guidance states the City is responsible for making case-by-case determinations to determine whether the entity receiving the Federal funds is a subrecipient. In addition, §200.303 of the Uniform Guidance states that the City must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA we noted the following: • The City did not properly identify the amount expended for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL No. 21.027. The expenditures reported by the City were understated by $176,324. • The City did not properly identify the amount of Federal funding passed through to subrecipients for the COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL No. 21.027. The amount passed through to subrecipients reported by the City was understated by $418,183. • The City did not properly identify the amount of Federal funding passed through to subrecipients for the Home Investment Partnerships Program, AL No. 14.239. The amount passed through to subrecipients reported by the City was overstated by $2,591,181. Cause: As a result, the City lacked adequate internal controls to ensure the SEFA is completely and accurately stated. Specifically, the City’s processes for recording and tracking expenditures of Federal awards are not designed so that expenditures are identified when incurred. In addition, the City’s processes for identifying and reporting subrecipients are not designed to ensure appropriate reporting on the SEFA. Effect: Adjustments to the SEFA were required. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Program expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Finding from Prior Year: No. Recommendation: The City, including all its reporting departments, should follow existing policies, procedures and internal controls to ensure all expenditures and amounts passed through to subrecipients are accurately tracked and reported on the SEFA. Personnel knowledgeable of federal expenditures should review amounts coded to federal programs for completeness and accuracy. The SEFA should be prepared and reviewed in a timely manner and reconciled to underlying records as well as the basic financial statements. Views of Responsible Officials and Planned Corrective Action: See separate corrective action plan.