Finding 499112 (2023-002)

2023-002 Reporting Prior Year Finding Number: 2022-002 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP1336; 2022 Pass-Through Agency: N/A – Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must maintain internal control over federal programs that provides reasonable assurance that the auditee is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, the U.S. Department of the Treasury requires an annual Project and Expenditure Report submitted for Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) that includes current period expenditures. Condition: The County incorrectly reported the full CSLFRF award amount of $6,484,839 as expenditures on the annual Project and Expenditure Report submitted to the U.S. Department of the Treasury for 2023 when they should have reported $615,436. The annual Project and Expenditure Report due in April 2023 was for the reporting period ending March 31, 2023. Questioned Costs: $5,869,403. Context: The County opted to spend the CSLFRF’s award under the Revenue Replacement category which allows spending on broader types of government services. Effect: Noncompliance with federal reporting requirements. Cause: County staff responsible for completing and submitting the Annual Project and Expenditure report misinterpreted the guidance and reported planned expenditures versus actual expenditures under revenue replacement. Recommendation: We recommend the County review U.S. Department of the Treasury guidance and form instructions to ensure the County is correctly reporting CSLFRF activity. View of Responsible Official: Concur