FINDING 2022-003
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): Account ID 20-1892-0-1-806
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
Condition and Context
Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to
the U.S. 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
(CSLFRF). Therefore, quarterly P&E Reports were due by January 31, 2022, and the last day of the month
after the end of each quarter thereafter.
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 Grant Administrator prepared
the P&E reports, and the County Auditor reviewed them prior to submission.
Two of the four quarterly reports submitted during the audit period were selected for testing. The
County utilized the current period obligations field to document total obligations less current period
expenditures. For the reports tested, the current period obligations per the County's interpretation of the
current period obligations field were not supported by the County's records. The following errors were
noted:
Quarter 2 P&E Report (April 1, 2022 - June 30, 2022)
The current period obligations for the Revenue Replacement project were overstated by
$399,097.
Quarter 3 P&E Report (July 1, 2022 - September 30, 2022)
The current period obligations for the Prairie Creek Water Run Water Line project were
overstated by $67,773.
The current period obligations for the Parks Department - Latrine project were overstated
by $25,758.
The current period obligations for the Foraker/Southwest project were overstated by
$230,338.
The lack of effective internal controls and noncompliance were systemic issues during the audit
period.
INDIANA STATE BOARD OF ACCOUNTS
20
ELKHART COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 Project and Expenditure Report User
Guide, Appendix B - Bulk File Upload Overview, i) Project Baseline Template, states in part:
"The downloadable templates provide all information required to create the upload files. The
following table highlights the data elements required to complete the Project Baseline
Template. . . ."
Defined
Term
Definition
Required/Optional/
Conditional
List
Values
Data
Type
Max
Length
Current
Period
Obligations
Total dollar value of
obligations for this current
reporting period Required N/A Currency N/A
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 was not designed or implemented by management of the
County to ensure that policies and procedures were in place related to Reporting. 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.
INDIANA STATE BOARD OF ACCOUNTS
21
ELKHART COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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, 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 CSLFRF 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 County establish a proper system of internal controls
and develop policies and procedures over 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 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.
Auditor's Response
The County was able to provide documentation of communications with the Treasury detailing
questions and issues with the reporting portal. Included within the communications between the County
and the Treasury was the County's interpretation of the current obligations field and the Treasury's
acceptance of this interpretation. However, as specified in the Condition and Context, the current
obligations field did not follow this methodology. Furthermore, the County did not provide documentation
or communication explaining the specific differences between the data in the P&E report and what the
calculated amount should have been. We reaffirm our finding and will review the status of the finding during
our next audit.