FINDING 2023-001
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): CY 2023
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Other Matters
INDIANA STATE BOARD OF ACCOUNTS 13
CITY OF BUTLER
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
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 City was classified as a metropolitan city with a population below 250,000 residents that
received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery
Funds (SLFRF) award funds. As such, the initial P&E report, covering the period from March 3, 2021 to
March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual
reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year.
The City submitted one P&E report during the audit period; however, the report was submitted
without a review or oversight process in place to prevent, or detect and correct, errors. As a result, errors
in reporting were identified. The cumulative obligations and current period obligations were understated by
$104,988. The cumulative obligations and current period obligations reported was the total amount of grant
funds expended through December 31, 2022, instead of the amount of funds expended through March 31,
2023.
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). . . ."
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 com-piling 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, . . ."
INDIANA STATE BOARD OF ACCOUNTS 14
CITY OF BUTLER
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(Continued)
Cause
A proper system of internal controls over the P&E report was not implemented by the management
of the City to ensure that complete and accurate information related to the SLFRF awards was provided to
the Treasury. The City incorrectly reported the cumulative obligations and current period obligations due
to abstracting and reporting data through the end of the year, instead of the end of March 2023 as required.
Effect
Without the proper implementation of an effectively designed system of internal controls, including
policies and procedures that provide segregation of duties and additional oversight as needed, the internal
control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance.
As such, errors, as identified in the Condition and Context, occurred, and inaccurate information
was provided to the Treasury.
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 City. In addition, not meeting the
SLFRF 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 City design and implement a proper system of internal
controls that would provide for segregation of duties to ensure appropriate reviews, approvals, and
oversight are taking place. Additionally, management should develop policies and procedures to ensure
that the City abstracts and reports on the correct time frame for each report submitted to provide the
Treasury with complete and accurate information.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
INDIANA STATE