Finding 23496 (2022-002)

Significant Deficiency
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2023-03-30

AI Summary

  • Core Issue: Reports submitted for federal funds had discrepancies between reported obligations and actual accounting records.
  • Impacted Requirements: Compliance with financial reporting standards as outlined in federal guidance, specifically regarding accurate and consistent reporting of expenditures.
  • Recommended Follow-Up: Implement procedures to verify report amounts against multiple accounting sources to ensure accuracy and compliance.

Finding Text

FEDERAL PROGRAM (ALN 21.027) CORONAVIRUS STATE AND LOCAL RECOVERY FUNDS U.S. DEPARTMENT OF TREASURY AWARD NUMBER NOT AVAILABLE COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY CRITERIA Per the Compliance and Reporting Guidance ? Part I: General Guidance ? Section D: Uniform Administrative Requirements ? Section 10: Reporting: establishes that: 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. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. STATEMENT OF CONDITION During the performance of our audit procedures regarding reporting, we obtained copies of the reports submitted for the periods of March to December 2021, January to March 2022 and April to June 2022 for the evaluation of the reporting requirements. Due to that the reports presented accumulated information, we selected the report for the period of April to June 2022 for reporting requirement evaluation. After the evaluation of the report and its supporting documentation we noticed the following situations: 1. In one of the projects the total amount of current period and cumulative obligations does not agree with the total amounts of obligations recognized in the accounting system for the same project and period. 2. In one of the projects the total current period and cumulative expenditures does not agree with the total amounts of expenditures recognized in the accounting system for the same project and period.. QUESTIONED COSTS Not Determined. PERSPECTIVE INFORMATION Condition 1: This was an isolated case in the accounting system were the purchase order balance does not reflect the expenditures incurred. No additional information was required when preparing the report to validate the reason because the purchase order balance was the same as originally reported although expenditures were incurred during the period related to the same project. In a subsequent report the total amount of obligations will be updated. Condition 2: For the next period report the involuntary error was identified and properly corrected to reflect the correct amounts in the report in accordance with the accounting records. STATEMENT OF CAUSE Condition 1: The personnel in charge of preparing the report used a worksheet to analyze the information to include in the report and by an error of the accounting system the purchase order balance at the end of the period was the same as originally reported. When the expenditures for the period were entered in the worksheet they were considered as new obligations and not as a reduction to the original purchase order amount.Condition 2: The personnel in charge of preparing the report used a worksheet to analyze the information to include in the report and by an involuntary error entered as total expenditures the total amount of obligations for the project causing that the amount reported as expenditures be greater than the amount in the accounting system. POSSIBLE ASSERTED EFFECT The information included in the reports does not agree with the Municipality accounting records. IDENTIFICATION OF REPEAT FINDING This is not a repeated Finding. RECOMMENDATIONS We recommend that the Municipality establish an adequate procedure to verify and trace the amounts included in the report to the amounts in the accounting records of the Municipality, by using more than one type of report from the accounting system so the personnel in charge of preparing the report can trace to more than one source of information that the amounts reported are in accordance with the accounting records.

Corrective Action Plan

Management concurs with the finding. The year-end closing process has improved significantly over the past years and we will continue to strengthen controls over financial reporting to reduce the time required to perform year-end analyses and the closing process. Specifically, analyses and adjustments to contract obligations and purchase orders will be performed on a quarterly basis to complete the reconciliation of year-end balances and transactions in July, within the time constraint. In addition, the Municipality immediately implemented a three-step quality control to the quarterly report?s submission (Preparer / Reviewer / Approval) to ensure that the amounts reported are in accordance with the accounting records. IMPLEMENTATION DATE Ongoing Process RESPONSIBLE PERSON Finance Department

Categories

Procurement, Suspension & Debarment Reporting Significant Deficiency

Other Findings in this Audit

  • 23495 2022-001
    Significant Deficiency
  • 599937 2022-001
    Significant Deficiency
  • 599938 2022-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $10.28M
14.871 Section 8 Housing Choice Vouchers $7.92M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $5.63M
93.356 Head Start Disaster Recovery $1.85M
93.600 Head Start $1.38M
66.458 Capitalization Grants for Clean Water State Revolving Funds $929,005
21.019 Coronavirus Relief Fund $850,565
10.558 Child and Adult Care Food Program $798,413
14.218 Community Development Block Grants/entitlement Grants $622,149
14.239 Home Investment Partnerships Program $555,801
11.307 Economic Adjustment Assistance $552,525
84.287 Twenty-First Century Community Learning Centers $516,942
20.507 Federal Transit_formula Grants $455,505
97.067 Homeland Security Grant Program $306,078
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $268,941
20.526 Buses and Bus Facilities Formula, Competitive, and Low Or No Emissions Programs $257,200
20.527 Public Transportation Emergency Relief Program $166,293
14.231 Emergency Solutions Grant Program $139,774
93.575 Child Care and Development Block Grant $111,956
84.002 Adult Education - Basic Grants to States $109,780
14.879 Mainstream Vouchers $75,020
93.053 Nutrition Services Incentive Program $65,299
94.006 Americorps $65,059
16.575 Crime Victim Assistance $63,605
16.835 Body Worn Camera Policy and Implementation $58,251
16.034 Coronavirus Emergency Supplemental Funding Program $39,281
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $34,475
93.044 Special Programs for the Aging_title Iii, Part B_grants for Supportive Services and Senior Centers $24,485
93.558 Temporary Assistance for Needy Families $16,936
20.600 State and Community Highway Safety $11,530
93.671 Family Violence Prevention and Services/domestic Violence Shelter and Supportive Services $7,697
20.616 National Priority Safety Programs $4,574