Finding Text
2023-002 - Reporting – Internal Control and Compliance over Reporting (Material Weakness)
Identification of the Federal Programs:
Assistance Listing Number: 21.027
Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds
Federal Agency: Department of Treasury
Pass-Through Entity: N/A
Federal Award Number and Award Year: 1505-0271
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
Pursuant to 2 CFR 200.303(a), 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 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). These would include
segregation of duties over report preparation and submission to ensure compliance with deadline
requirements.
Further, per State and Local Fiscal Recovery Funds (“SLRF”) requirements, the recipients are also
required to obligate funds incurred related to revenue replacement under “provision of government
services” sub-expenditure category.
Condition:
The City did not have proper segregation of duties in place for the preparation, approval and
submission of the American Rescue Plan Act (“ARPA”) -related reportorial requirements to the U.S.
Department of Treasury. Further, the audit team noted that the City did not properly obligate the
funds related to revenue replacement category on its annual project and expenditures report
resulting to incorrect reporting. Subsequently, the City corrected the obligation of funds
during the March 2024 annual reporting.
Cause:
There was no policy and procedure in place to enhance the internal control over the report
submission. In addition, the City was not familiar with the obligation requirement.
Effect or Potential Effect:
Failure to implement proper segregation of duties, and failure to report correct expended amounts
under provision of government services in the annual report resulted in non
liance requirements. Not
obligating the fund timely could potentially lose the funding.
Questioned Costs:
None.
Context:
See condition above for the context of the finding. Identification as a Repeat Finding, If
Applicable: Yes. See prior year finding 2022-001.
Recommendation:
We recommend that the City strengthen their report submission process and procedures to
ensure all required reports are properly reviewed and approved and submitted. Further, we
recommend the City to have in depth staff training with regard to the grant compliance
requirements in order to avoid misinterpretation of the necessary requirements.
Views of Responsible Officials:
Management concurs the finding.