Finding Text
FINDING 2022-002
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): FY 2022
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
The County had not properly 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 the 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 County was classified as a metropolitan county with a population below 250,000 residents that
received an allocation of more than $10 million in Coronavirus State and Local Fiscal Recovery Funds
(SLFRF) funding. As such, the initial P&E Report, covering three calendar quarters from March 3, 2021 to
December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent
quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day
of the month following the end of the period covered.
The County submitted four quarterly P&E Reports during the audit period. The County's process
for the completion and submission of the P&E Reports was that the County Attorney prepared each P&E
Report based on a spreadsheet prepared by the Board of County Commissioners Executive-Administrative
Assistant, and then the Chair of the Board of County Commissioners reviewed and submitted the reports.
One of the four quarterly reports was not properly supported by the County's records. For the final
quarterly report in 2022, the County did not include an expenditure of $1,500,000 as it was not included on
the spreadsheet prepared by the Board of County Commissioners Executive-Administrative Assistant.
INDIANA STATE BOARD OF ACCOUNTS 17
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The lack of internal controls and noncompliance were isolated to the final quarterly report in 2022.
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. . . ."
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
County to ensure the County 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 County's management statements
of what should be done to effect internal controls, and procedures should consist of actions that
would implement these policies.
Effect
Without the proper implementation of an effectively designed system of internal controls 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 County.
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.
INDIANA STATE BOARD OF ACCOUNTS
18
JOHNSON COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Recommendation
We recommended that management of the County design and implement a proper system of
internal controls, including policies and procedures to ensure that the County 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.