FINDING 2022-001
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): FY2022
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
INDIANA STATE BOARD OF ACCOUNTS
13
CITY OF CRAWFORDSVILLE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Condition and Context
The City had not properly designed or implemented a system of internal controls, which would
include appropriate segregation of duties that would likely be effective in preventing, or detecting and
correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure
(P&E) reports to the Department of Treasury (Treasury). The reporting periods, as well as the respective
due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount.
Information to be reported includes projects funded, expenditures, and contracts for the appropriate
reporting period.
The City was classified as a metropolitan city with a population below 250,000 residents that
received an allocation of less than $10 million in State and Local Fiscal Recovery Funds (SLFRF). As such,
the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be
submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar
year and must be submitted to the Treasury by April 30 each year.
The City submitted one P&E report during the audit period; however, a single employee prepared
and submitted the P&E report without a review or oversight process in place to prevent, or detect and
correct, errors.
In addition, the P&E report was not properly supported by the City's records. All items were
reported under the Eligible Use Category of "Administrative Expenses." However, the City's expenditures
during the audit period consisted of assistance to business and households, remote work recruiting, sewer
infrastructure, and tourism support, none of which qualified as Administrative Expenses. Furthermore, the
City reported that it was electing to take the Revenue Loss Standard Allowance, but the amount reported
as Revenue Loss was $0.
Criteria
2 CFR 200.303 states in part:
"The Non-Federal entity must:
(a) 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 be in compliance 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). . . ."
Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance,
page 10, states in part:
". . . 10. Reporting. 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. Your organization should appropriately maintain accounting records for compiling and
reporting accurate, compliant financial data, in accordance with appropriate accounting
standards and principles. . . ."
INDIANA STATE BOARD OF ACCOUNTS
14
CITY OF CRAWFORDSVILLE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of
performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the
uses of funds, . . ."
Cause
A proper system of internal controls over the P&E report was not designed by management of the
City, which would include segregation of key functions to ensure the City provided the Treasury with
complete and accurate information related to the SLFRF awards. Embedded within a properly designed
and implemented internal control system should be internal controls consisting of policies and procedures.
Policies reflect the City's management of what should be done to effect internal control, and procedures
should consist of actions that would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls, including
policies and procedures that provide segregation of duties and additional oversight as needed, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions
of the federal award could result in the loss of future federal funding to the City.
In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public
will not have access to transparent and accurate information regarding expenditures of federal awards.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the City design and implement a proper system of internal
controls that would provide a segregation of duties for the preparation and review of federal reports to
ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should
develop policies and procedures to ensure that the City provides the Treasury with complete and accurate
information for the P&E report.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.