Finding Text
Federal Program: 21.019 Coronavirus Relief Fund
Award Number and Year: C139 and C2-069
Name of Federal Agency and Pass-Through Agency: U.S. Department of the Treasury and Kentucky Department for Local Government
Compliance Requirements: Activities Allowed/Unallowed, Allowable Costs/Principles
Type of Finding: Noncompliance
Amount of Questioned Costs: $214,179
Modified Opinion: Adverse
This is a repeat finding and was included in prior year audit report as finding 2020-009. The Clark County Fiscal Court submitted payroll expenses that did not qualify for reimbursement from the U.S. Department of Treasury’s Coronavirus Relief Fund (CRF) passed through from the Commonwealth of Kentucky’s Department of Local Government (DLG). During testing, the following questioned costs were noted, totaling $214,179 for year ended June 30, 2021:
• FICA employer match calculation was incorrect on report submitted for reimbursement. When calculating FICA on the report submitted the former treasurer and finance officer did not use what was on the actual payroll summaries, but instead used a calculation in Excel. This calculation didn’t consider employe paid insurances that was not to be included in taxable wages that resulted in an overage request in reimbursement, and
• There were several instances of the wrong amount being submitted for retirement for an employee, and
• There was one month of payroll (October 2020) that was submitted for reimbursement twice.
The prior year audit, which ended June 30, 2020, determined there were questioned costs totaling $19,773 and there were $214,179 for the year ended June 30, 2021, resulting in a total of $233,952 in questioned costs for this grant.
The fiscal court did not have controls in place to ensure that staff knew the federal program requirements and did not monitor or review documentation to make sure requirements were followed.
As a result, the county submitted expenses that did not qualify for reimbursement from the Coronavirus Relief Fund administered by the Commonwealth of Kentucky’s Department for Local Government (DLG). This resulted in $214,179 of questioned costs for the year ended June 30, 2021.The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) established the Coronavirus Relief Fund (the “Fund”) and appropriated $150 billion for payments by Treasury to States, tribal governments, and certain local governments. The CARES Act provides that payments from the Fund may only be used to cover costs that— 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); 2. we’re not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021
Additionally, CFR 200.303 states: “The non-Federal entity must 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.”
We recommend the county establish and maintain effective internal control over federal awards 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. We also recommend the county contact the Department of Local Government for guidance on how to resolve this issue.