Finding Text
2025-004 Improve Compliance and Controls Over Reporting Federal Program Information Federal Agency: U.S. Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: Not applicable Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards to ensure compliance with Federal statutes, regulations, and terms and conditions. For SLFRF funds, the Treasury Compliance and Reporting Guidance requires recipients to submit accurate and complete Project and Expenditure Reports (P&E Reports), including both current period and cumulative expenditures. Condition and Context During our testing of SLFRF expenditures reported in the 2025 Project and Expenditure (P&E) Report, we noted that the Town’s underlying accounting records and supporting detail did not agree to the amounts reported to Treasury. Specifically, current period and cumulative expenditures per the general ledger and supporting schedules differed from the amounts reported in the P&E Report. No formal reconciliation was performed or documented between the Town’s accounting records and the submitted federal report prior to submission. Cause The discrepancy was caused by the Town’s lack of a formal control requiring reconciliation and detailed review of SLFRF report data to underlying accounting records before submission. In addition, reporting was prepared using manually compiled schedules outside of the general ledger, increasing the risk of error. Effect or Potential Effect Reporting discrepancies noted above increase the risk of noncompliance with federal reporting requirements. Questioned Costs No questioned costs are reported as this requirement is administrative in nature and costs were ultimately deemed allowable. Identification as a Repeat Finding This is not a repeat of a prior finding. Recommendation The Town should implement a formal reconciliation process requiring agreement of current period and cumulative expenditures to the general ledger prior to submission of reports and retain such documentation. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.