Finding Text
2025-003: Lack of Controls in Federal Financial Reporting Grant: 21.027 Coronavirus State and Local Fiscal Recovery Funds Criteria: In accordance with 2 CFR §200.302, recipients are required to maintain effective internal controls over financial reporting to ensure that expenditures reported on Federal Financial Reports (FFRs) are accurate, supported, and based on actual allowable expenditures. Condition: During testing, the City was not able to provide documentation that provided evidence of a separate preparer and reviewer for the Arthur Street grant reporting. Cause: The individuals responsible for reporting during the applicable period were no longer employed by the City and search of available files and email records did not identify the supporting documentation. Context: The Aruthur Street reporting was handled by the Community and Economic Development Department and the associated individuals are no longer employed by the City. Questioned Cost: None Effect or potential effect: Inaccurate reporting could occur without detection. Recommendation: We recommend the City strengthen its internal controls over federal reporting by implementing and maintaining documented review procedures for all Federal Financial Reports prior to submission. View of responsible officials and planned corrective actions: Management concurs with the finding. Management will strengthen its internal controls over federal financial reporting by implementing procedures requiring the preparation and independent review of all Federal Financial Reports (FFRs) prior to submission. The preparer and reviewer will verify reported expenditures against the City's accounting records and supporting grant documentation. The reviewer will document approval through a dated email or written sign-off confirming that the report and supporting documentation have been reviewed. Federal Financial Reports will not be submitted until the review is completed and documented. The City will maintain centralized electronic files for federal grant reporting, including submitted reports, reconciliations, supporting documentation, and evidence of supervisory review. Procedures will also be implemented to ensure that grant reporting records, reporting deadlines, and outstanding responsibilities are transferred to designated personnel when employees leave or change positions.