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FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP0032 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context Under the COVID-19 - State and Local Fiscal Recover Funds (SLFRF), recipients may only use funds to cover costs incurred beginning March 3, 2021, and ending December 31, 2024. Of 73 claims selected for testing, 12 were incurred after the grant period ended. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.5(a) states: "In general. A recipient may only use funds for the purposes enumerated in § 35.6 (b) through (f) to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. A recipient may only use funds for the purposes enumerated in § 35.6 (g) through (h) to cover costs incurred during the period beginning December 29, 2022, and ending December 31, 2024, subject to the restrictions set forth in sections 602(c)(2), 602(c)(5)(C), 603(c)(2), and 603(c)(6)(B) of the Social Security Act, as applicable." 31 CFR 35.3 states in part: ". . . Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3)." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF TERRE HAUTE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The grant period ended on December 31, 2024; however, the cost of 12 invoices selected for testing occurred in 2025. There was no contract or any documentation stating that the projects with the vendors started before the end of the grant period. Effect Without the proper implementation of an effectively designed system of internal controls, payment was made on claims that occurred after the period of performance. Noncompliance with the provisions of federal statues, regulations, and terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs Questioned costs totaling $74,698 were identified. Recommendation We recommended that management of the City establish a system of internal controls and develop policies and procedures to ensure the SLFRF funds are used appropriately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.