Finding 33326 (2022-002)

B. Internal Control Over Compliance 2022-002 Review of Reports U.S. Department of the Treasury ALN 21.027 ? COVID-19 Coronavirus State and Local Fiscal Recovery Funds Contract No. Y5314 (2021) 2022 Funding Criteria: 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls to ensure compliance with grant requirements. Internal controls over compliance should include controls related to financial reporting required by the grantor. Reports should be subject to independent review to verify completeness, validity and timeliness of the submission. Condition: There was no documentary evidence of the City Manager?s review of the quarterly reports submitted. Cause of condition: The City does not have a specific policy for retention of documentary evidence of review and approval of grant reporting. Potential effect of condition: A report might be submitted that was not reviewed by the City Manager and may contain incorrect or incomplete information. Questioned Costs: None noted. Perspective (Context): This is a documentation issue related to the review of quarterly reports. Approval of the reports by the City Manager was being provided verbally. Three quarterly reports were applicable to the current audit period, all of which were submitted timely. Reports included information over construction projects. Recommendation: We recommend the City retain documentation of the review of the quarterly reports required by the grantor. This can be accomplished through the use of an email from the City Manager indicating that his review has been completed and that the report has been approved for release to the grantor. Management?s Response and Planned Corrective Action: The City recognizes the requirement to document review of the quarterly reports and has implemented a new process to ensure compliance with this requirement in the future.