Finding Text
Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 303(a) 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 statues, 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). These would include segregation of duties over report preparation and submission to ensure compliance with deadline requirements. Additionally, per the ?Compliance and Reporting Guidance ? State of Local Fiscal Recovery Funds? published by the U.S. Department of Treasury, the Interim Report is required to be submitted by August 31, 2021, while the Project and Expenditure Report is required to be submitted by April 30, 2022 and then annually thereafter. Condition During our assessment of the control activities for the American Rescue Plan Act of 2021 (ARPA), we observed that the City did not have a control in place to ensure proper segregation of duties between report preparation, approval and submission to the US. Department of Treasury, as well a control to ensure timely submission of ARPA reports. As such, the required Project and Expenditure report was not submitted on a timely basis. Questioned Costs None Context The City is required to submit an Interim Report and also a Project and Expenditure Report. For the Interim Report, there was no control in place to ensure segregation of duties between the report preparer and the report reviewer, although we did not note any exceptions in the data submitted by the City and the report was submitted timely. For the Project and Expenditure Report, there also was no control in place to ensure segregation of duties between the report preparer and the report reviewer, with the City not submitting the report (which had a due date of April 2022) until January 2023. However, we did not note any exceptions in the data submitted by the City in the Project and Expenditure Report. Effect Failure to implement sufficient internal controls to ensure the timely filing of reports in accordance with federal regulations could result in the program being noncompliant with federal statutes, regulations and the terms and conditions of the federal awards. Cause The City did not implement an effective control to ensure reports had proper segregation of duties and that reports were submitted timely. In addition, the City wasn?t aware that a Project and Expenditure was required to be submitted. Identification as a Repeat Finding, if Applicable N/A Recommendation We recommend the City revisit its control design and revise its procedures to ensure proper controls over preparation, review and submission of ARPA reports and also ensure the timely submission of all reports. Views of Responsible Officials and Planned Corrective Actions See Corrective Action Plan.