Finding Text
2023-004 - Inadequate Controls Over Federal Grant Reporting and Record Retention Finding Type: Material weakness in internal control over compliance. Federal Award: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Criteria: The Uniform Guidance (2 CFR 200.302) requires a non-Federal entity’s financial management system and supporting records to be sufficient to permit the preparation of required federal reports, provide accurate, current, and complete financial information, and trace federal funds to a level sufficient to demonstrate compliance with applicable requirements. Additionally, 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over federal awards. The applicable SLFRF Award Terms and Conditions require recipients to comply with Treasury’s reporting requirements and maintain financial records and supporting documentation sufficient to demonstrate compliance. Such records are required to be retained for five years after all award funds have been expended or returned to Treasury, whichever is later. Treasury’s reporting guidance also requires recipients to submit applicable project, expenditure, capital expenditure, contractor, subaward, and other programmatic information. Condition/Finding: During the audit, we noted that the Organization had not established and implemented sufficient controls over the preparation, review, submission, and retention of required SLFRF reports. Specifically, the Organization could not provide sufficient documentation demonstrating that: • Financial and programmatic information included in required reports was reconciled to the underlying accounting and project records; • All applicable reporting elements, including capital expenditures and contractor or subaward information, were evaluated for completeness; • Reports were reviewed and approved by appropriate personnel before certification and submission; • Reports were submitted by the applicable deadlines and evidence of submission was retained; and • Corrections or resubmissions were appropriately documented and supported. Additionally, records necessary to substantiate reported financial and programmatic information were not consistently maintained and retained. Cause: The Organization had not established written policies or a standardized reporting process identifying the responsibilities, documentation, review, submission, and record-retention requirements applicable to federal grant reporting. Consequently, the required reporting controls were not consistently performed and documented. Effect: The absence of appropriately designed and implemented controls creates a reasonable possibility that materially inaccurate, incomplete, or untimely federal reports could be submitted and not be prevented, or detected and corrected, on a timely basis. Inadequate supporting records may also prevent the Organization from substantiating reported information and demonstrating compliance during an audit, monitoring review, or other grantor examination. Recommendation: We recommend that management establish written federal grant reporting and record-retention procedures and implement a standardized reporting calendar and checklist. The procedures should assign responsibility for preparing, reconciling, reviewing, approving, and submitting each required report. Management should retain the underlying accounting and programmatic records, documented reconciliations and approvals, submission confirmations, and support for any corrections or resubmissions for the required retention period. View of Responsible Officials (Corrective Action): See corrective action plan