FINDING 2023-002
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 2023
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Repeat Finding
This is a repeat finding from the immediately prior audit report. The prior audit finding number was
2022-004.
Condition and Context
The County had not properly designated 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. A single employee prepared and submitted reports without a documented review
or oversight process in place to prevent, or detect and correct, errors.
Recipients are required to submit quarterly or annual 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 the 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 State and Local Fiscal Recovery Funds (SLFRF). 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 are
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.
INDIANA STATE BOARD OF ACCOUNTS
18
BOONE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
The County submitted three P&E reports during the audit period. No report was submitted for the
period of October 1, 2022 to December 31, 2022, although there was activity during this time period. For
the three reports submitted, all activity for the reporting period was not included, and the reports were not
fairly presented. Errors identified included the following:
Quarter 1 report (January 1, 2023 to March 31, 2023)
Total Cumulative Obligations and Total Cumulative Expenditures were understated by
$399,741.
Current Period Obligations and Current Period Expenditures were understated by $58,730.
Quarter 2 report (April 1, 2023 to June 30, 2023)
Total Cumulative Obligations and Current Period Expenditures were understated by
$968,137.
Current Period Obligations and Current Period Expenditures were understated by
$558,396.
Quarter 3 report (July 1, 2023 to September 30, 2023)
Total Cumulative Obligations and Total Cumulative Expenditures were understated by
$1,325,566.
Current Period Obligations and Current Period Expenditures were understated by
$357,429.
The lack of internal controls and noncompliance were systemic issues throughout the audit period.
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). . . ."
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, . . ."
INDIANA STATE BOARD OF ACCOUNTS
19
BOONE COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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. . . ."
Cause
A proper system of internal controls over the P&E reports was not designed by management of the
County. The County was unable to provide documentation that a proper review of the P&E reports showing
a reconciliation between amounts reported and amounts expended from federal funds was done prior to
submission of the report.
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
County cannot ensure reports are filed and that filed reports accurately report their SLFRF activity. As
such, the County's SLFRF obligations and expenditures were not appropriately reported to the Treasury.
In addition to not meeting the SLFRF reporting requirements, this increases the likelihood that the public
will not have access to transparent and accurate information regarding expenditures of federal awards.
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.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the County design and implement a proper system of
internal controls to ensure that all reports are filed with the Treasury. Additionally, management should
develop policies and procedures to ensure that information provided to the Treasury is complete and
accurate.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.