Finding Text
2022 ? 003 Federal Agency: U.S. Department of the Treasury Federal Program: COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Period: March 3, 2021 ? December 31, 2024, liquidated by December 31, 2026 Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Reporting requirements for Coronavirus State and Local Fiscal Recovery Funds includes the following: Project and Expenditure Reports: Each recipient is required to report obligations and expenditures by project according to its corresponding Expenditure Category. The Project and Expenditure Report provides information on projects funded, expenditures, and contracts and subawards greater than or equal to $50,000, and other information required from recipients. For purposes of reporting in the SLFRF portal, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. An expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). An initial quarterly Project and Expenditure Report covered three calendar quarters from March 3, 2021 to December 31, 2021 and was required to be submitted to Treasury by January 31, 2022. Subsequent quarterly reports cover one calendar quarter and are required to be submitted to Treasury by the last day of the month following the end of the period covered. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: 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 comply 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). Condition: The supporting documentation did not agree with amounts reported for obligations, expenditures and subawards on the Project and Expenditure Reports. Context: The following reports were selected for testing: 1) Project and Expenditure Reports for the 3/31/2022 and 6/30/2022 quarters: From these reports, 17 projects were selected for testing obligations and expenditures, 2 subawards greater than $50,000 and 11 subawards less than $50,000 were selected. The following exceptions were noted: 1) Project and Expenditure Reports: o Obligations: For 8 of 17 projects reported, obligations did not agree to supporting documentation. Additionally, 3 projects were included in the supporting documentation that were not reported. o Expenditures ? For 3 of 17 projects reported, expenditures did not agree to supporting documentation. Additionally, 3 projects were included in the supporting documentation that were not reported. o Subawards greater than $50,000: For 1 of 2 subawards greater than $50,000, reported obligations did not match supporting documentation. o Subawards less than $50,000: For 6 of 11 subawards, reported obligations did not match supporting documentation. Questioned costs: Undetermined. Cause: Internal Controls were not operating effectively to ensure that Project and Expenditure Reports were submitted accurately. Effect: Obligations, expenditures, and subaward information reported to Treasury did not agree to supporting documentation. Recommendation: The County should enhance its procedures and internal controls regarding preparation of the Project and Expenditure Reports to ensure that information reported is accurate and agrees to supporting documentation. Views of responsible officials: Management agrees with the finding. New Castle County self-reported the variances in expenditures and obligations due to accruals of costs to previously reported quarters. Such variances can be common with just-in-time reporting. Regarding the omitted projects, the Reporting Portal has undergone several updates throughout the period of performance. These updates contributed to confusion in required data for projects. The omitted projects were included in the subsequent reports after the data points were known and tracked. Regarding the reporting of project obligations, Treasury?s definition of obligation is very broad, and FAQ 13.17 allows the recipient to use its discretion to determine when an obligation is incurred. Such discretion calls for the interpretation of several source documents. In each report total obligations were not less than total expenditures nor did total obligations exceed available funding.