FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of 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): SLT-3157 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-005. Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population that exceeds 250,000 residents. As such, the County was required to submit quarterly P&E reports in 2025. The amounts submitted were not supported by the County's records and contained the following errors: • The 2024 Quarter 4 P&E report period and cumulative expenditures were overstated by $229,125 and understated by $520,330, respectively. • The 2025 Quarter 1 P&E report period and cumulative expenditures were understated by $2,388,734 and $2,909,064, respectively. • The 2025 Quarter 2 P&E report period and cumulative expenditures were understated by $7,726,388 and $9,568,969, respectively. • The 2025 Quarter 3 P&E report period and cumulative expenditures were understated by $11,401,926 and $20,970,894, respectively. Additionally, the current period obligations amounts reported in all quarterly reports could not be verified as supporting documentation was not provided for audit. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 awards 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). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: "10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, . . ." Cause All quarterly P&E reports were prepared and submitted by a consultant without an oversight or review process in place to prevent, or detect and correct, errors prior to submission. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management establish a proper system of internal controls that would ensure compliance with the Reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.