Finding 386997 (2023-001)

Program: Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing Number 21.027, U.S. Department of Treasury, Direct Program. Criteria: Per the State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, Performance and Expenditure Reports required by the program include providing cumulative obligations and expenditures. Internal controls over reporting compliance should ensure accurate, complete, and timely submission of all required reports. Condition: During the audit of the program, we noted that the City reported in their Performance and Expenditure Report (Report) submitted to the United States Department of the Treasury that all Coronavirus State and Local Fiscal Recovery Funds had been expended prior to March 30, 2022. However, the City had not yet spent the grant funds at that time. Cause: The City did not know the Cumulative Expenditures line item in the Report was for expenditures and was distinct from the Expenditure Category line item of Revenue Replacement when submitting the Performance and Expenditure Report. Effect: The City did not accurately report expenditures for the program in the Performance and Expenditure Report. Questioned Costs: None. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the City update policies and procedures over reporting, such as including additional independent reviews to ensure accurate completion. Management Response: Department of Treasury reporting requirements. The SLFRF Compliance Report was submitted with revenue replacement selected as the Project Name. Staff was reporting based off guidance that treasury has incorporated a “Standard Allowance” option into the final rule. A recipient may choose to use the standard allowance, which under the final rule is set at $10 million. The Final Rule states that “Treasury intends to amend its reporting forms to provide a mechanism for recipients to make a one-time, irrevocable election to utilize either the revenue loss formula or the standard allowance. The $10 million level is based on average revenue loss across state and local governments, taking into consideration potential variation in revenue types and losses and continued uncertainty faced by many recipients regarding revenue shortfalls”. The City of Lathrop selected the “Standard Allowance” for revenue replacement and submitted the completed report. The City of Lathrop Finance Staff is committed to maintaining full compliance with the requirements of the Single Audit Act.