Finding 43579 (2022-004)

Significant Deficiency
Requirement
L
Questioned Costs
-
Year
2022
Accepted
2023-02-20
Audit: 47974
Organization: City of Covington, Kentucky (KY)
Auditor: Rfh PLLC

AI Summary

  • Core Issue: The City failed to report approximately $6,102,000 in expenditures for the Replace Lost Revenue category in the quarterly report for June 30, 2022.
  • Impacted Requirements: The City is required to file accurate quarterly Project and Expenditure reports detailing all expenditures funded by the Coronavirus State and Local Fiscal Recovery Funds.
  • Recommended Follow-Up: Improve internal controls and processes for completing reports, ensuring reconciliation with actual expenditures in the ARPA fund.

Finding Text

Criteria: The City is required to file quarterly Project and Expenditure reports that detail financial data, projects funded, expenditures, and contracts and subawards over $50,000, that were paid with the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). Condition: The Project and Expenditure report filed by the City for the quarter ended June 30, 2022, reported that there were no current or cumulative expenditures in the Replace Lost Revenue category. The City recognized $3,554,003 in expenditures to Replace Lost Revenue during the year ended June 30, 2022, and $2,547,800 in expenditures to Replace Lost Revenue during the year ended June 30, 2021. Cause: A deficiency in the operation of internal controls resulted in the City not reporting expenditures in the Replace Lost Revenue category on their Project and Expenditure report. Effect: As a result, total expenditures in the CSLFRF grant were understated on the June 30, 2022, Project and Expenditure report by approximately $6,102,000. Recommendation: We recommend that the City improve its process for completing and approving the Project and Expenditure reports. The total expenditures on the Project and Expenditure reports should be reconciled to current and cumulative expenditures reported by the City in the ARPA fund. Management?s Response: Management acknowledges that there have been deficiencies in processes. The City intends to enhance its internal controls over ARPA reporting. These efforts will be accomplished through improved internal communication and training of staff to ensure proper reporting of the Replace Lost Revenue category.

Corrective Action Plan

Recommendation: We recommend that the City improve its process for completing and approving the Project and Expenditure reports. The total expenditures on the Project and Expenditure reports should be reconciled to current and cumulative expenditures reported by the City in the ARPA fund. Action Taken: Management acknowledges that there have been deficiencies in processes. The City intends to enhance its internal controls over ARPA reporting. These efforts will be accomplished through improved internal communication and training of staff to ensure proper reporting of the Replace Lost Revenue category. Person(s) Responsible for Implementing: Steve Webb, Finance Director, City of Covington. Implementation Date: June 30, 2023

Categories

Subrecipient Monitoring Reporting Internal Control / Segregation of Duties

Other Findings in this Audit

  • 620021 2022-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $6.58M
14.239 Home Investment Partnerships Program $973,185
14.871 Section 8 Housing Choice Vouchers $598,667
14.218 Community Development Block Grants/entitlement Grants $469,634
21.019 Coronavirus Relief Fund $300,663
16.922 Equitable Sharing Program $254,003
97.056 Port Security Grant Program $248,796
20.205 Highway Planning and Construction $217,150
20.600 State and Community Highway Safety $20,225
15.904 Historic Preservation Fund Grants-in-Aid $16,140
16.607 Bulletproof Vest Partnership Program $15,128
16.738 Edward Byrne Memorial Justice Assistance Grant Program $13,160
14.900 Lead-Based Paint Hazard Control in Privately-Owned Housing $7,869