Finding Text
Finding Reference 2023-002
Federal Agency: U.S. Department of Treasury
Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027)
Compliance
Requirement: Reporting (L)
Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC)
Statement of Condition In our Reporting Test, we evaluated two (2) Project and Expenditure Reports submitted to the U.S. Department of Treasury during fiscal year 2022-2023. The first one corresponded to the quarter from January to March 2023, identified as Q1 2023. The second one corresponded to the quarter from April to June 2023, identified as Q2 2023.
The report Q1 2023 discloses the cumulative information of thirteen (13) projects. Of the total of thirteen (13) projects, four (4) have expenditures reported as incurred between January through March 2023. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system for one (1) of the four (4) projects.
The report Q2 2023 discloses the cumulative information of eighteen (18) projects of which seven (7) have expenditures reported as incurred between April through June 2023. During our audit procedures, we identified differences between the amounts reported as current period expenditures, and the amounts recognized in the accounting system for one (3) of the seven (7) projects.
Criteria The Coronavirus State and Local Fiscal Recovery Funds - Compliance and Reporting Guidance, Part I, Section 10 (d), states 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. Appropriate accounting records must be maintained for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.
In addition, where appropriate, controls need to be established to ensure the completion and timely submission of all mandatory performance and/or compliance reporting.
Cause of Condition The working papers used as source document to prepare the quarterly reports had mathematical errors. The program administrators identified the situation and made improvements to the working papers to have more control in the accuracy and completeness of the information. Also, they have been correcting the errors in the subsequent reports to properly present the actual funds spent.
Effect of Condition The expenses reported in the Project and Expenditure Reports do not agree with the accounting records.
Recommendation We recommend the Program to establish monitoring procedures to ensure the accuracy of accounting records and the correct completion of the Project and Expenditure Reports. The Program fiscal area ensures that accounting records are updated at the end of each month in order to prepare accurate reports for the federal agency.
Questioned Cost None
Views of Responsible Officials and Planned Corrective Action We concur with the finding. During the quarters from January to March and April to June 2023, there were differences between the reports submitted to the Treasury Department and the accounting reports of the SIMA system. This happened because obligations that were cancelled were included in the submitted reports and not corrected within the corresponding quarter. The personnel assigned to work on the quarterly reports became aware of these situations after the submission of the reports. As a corrective measure, an internal work sheet was created where monthly cancellations and adjustments are verified. In this way, the quarterly report submitted to the Treasury Department will agree with the accounting system. Before submitting the reports, a meeting is held to validate that the worksheet is in accordance with the accounting system. After validating the accuracy of the worksheet, the report is submitted to the Treasury Department with information consistent with the accounting system. As of today, the differences identified have been corrected in subsequent quarters.
Implementation Date: Fiscal Year 2023-2024.
Responsible Person: Bárbara Castro Viruet, Accountant