Finding 1235950 (2024-001)

2024-001 Inaccurate Project and Expenditure Reporting Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Recipients of ARPA/SLFRF funding are required to submit complete and accurate Project and Expenditure (P&E) Reports to the U.S. Department of the Treasury. Reported expenditures should agree to the recipient's underlying accounting records and be reported in the proper reporting period. Condition and Context The Town is required to submit annual P&E reports for its ARPA/SLFRF program expenditures. During testing of the annual P&E report, we compared reported expenditures to the Town's general ledger and identified the following reporting discrepancies: • Expenditures totaling $1.9M were incurred during the applicable reporting period and recorded in the general ledger but were not included on the P&E report. • Expenditures totaling $428K were incurred during the reporting period but were incorrectly reported on the FY2023 P&E report rather than the applicable reporting period. • Expenditures totaling $131 were reported on the FY2022 P&E report; however, no corresponding expenditure could be identified in the general ledger for the reporting period. As a result, the expenditures reported to Treasury did not agree to the Town's accounting records and were not reported in the appropriate reporting period. Cause The Town did not maintain adequate controls to ensure that expenditure amounts reported in the annual P&E report were reconciled to the general ledger and reviewed for completeness and accuracy prior to submission. Effect or Potential Effect The Town submitted inaccurate expenditure information to the U.S. Department of the Treasury. Consequently, Treasury and other users of the report may have relied on incomplete or inaccurate information regarding the Town's use of ARPA/SLFRF funds. Questioned Costs No questioned costs are reported as the underlying costs tested during the year were allowable and the reporting requirement is administrative in nature. Identification as a Repeat Finding This is a repeat of finding 2023-001. Recommendation Management should perform a formal reconciliation of expenditures reported on the P&E report to the general ledger prior to submission and establish effective supervisory review procedures to verify the completeness, accuracy, and reporting period of expenditures included in the report. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.