Finding 555585 (2023-009)

Material Weakness
Requirement
L
Questioned Costs
-
Year
2023
Accepted
2025-04-21
Audit: 354071
Organization: City of Espanola (NM)
Auditor: Cordova CPAS LLC

AI Summary

  • Core Issue: The City failed to submit the required Project and Expenditures Report for the Coronavirus State and Local Fiscal Recovery Fund on time due to management turnover.
  • Impacted Requirements: Compliance with federal reporting requirements, specifically the submission deadline of April 30 each fiscal year (2 CFR 200.328 & 31 CFR section 35.4(c)).
  • Recommended Follow-Up: Ensure multiple staff members are responsible for report submissions to maintain compliance during management changes, as implemented by the Finance Department.

Finding Text

Federal Program Information: Funding Agency: Department of the Treasury Title: Coronavirus State and Local Fiscal Recovery Fund Program Assistance Listing Number: 21.027 Compliance Requirement: Reporting Award Year: July 1, 2022 to June 30, 2023 Condition: During our audit, we noted that the Project and Expenditures Report was not submitted to the Department of the Treasury in a timely manner. Criteria: The City must fill out and submit the Project and Expenditures Report by April 30 of each fiscal year that they receive Coronavirus State and Local Fiscal Recovery Funds (2 CFR 200.328 & 31 CFR section35.4(c)). Effect: The City did not submit its required annual report for the fiscal year 2023. Questioned Costs: None Cause: The City had turnover in its upper management that handled this duty during the time that the report was due to be submitted and so it was never completed. Auditors’ Recommendation: We recommend that the City ensure that it has more than one position responsible for submitting these annual reports to the federal government to ensure that they are always completed even if one position is vacant. Agency’s Response: The City of acknowledges the audit finding regarding the untimely submission of the Project Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. The report for fiscal year 2023 was not submitted due to turnover in upper management and the grants manager position, resulting in the report being neither completed nor submitted during that time. Since taking office in fiscal year 2024, the current Finance Director has prioritized compliance with federal reporting requirements. As of fiscal year 2025, all required project and expenditures reporting has been completed and submitted in accordance with U.S. Department of Treasury guidelines. To prevent future occurrences, the Finance Department has implemented internal controls ensuring multiple staff members are responsible for federal reporting. Specifically, both the Finance Director and the Financial Analyst now share the responsibility and authority to complete and submit these annual reports. This new process ensures continuity in reporting, even in the event of staff turnover, and strengthens the City’s commitment to compliance with federal funding requirements. In addition, The City’s Procurement officer now maintains responsibility for grants from award to reversion date. A tracking file is maintained for all active grants at the point it is awarded, expended, and reimbursement received to ensure this process is properly managed. Additionally, the Finance Director oversees this responsibility so there are now multiple controls to ensure timely completion. Responsible Parties: The Director of Finance. Timeline: June 30, 2025

Corrective Action Plan

2023‐009 Reporting Annual Project and Expenditures Report (Material Weakness): The City did complete the Project and Expenditures Report but just not timely as a result of staff turnover during the actual fiscal year. Since taking office in fiscal year 2024, the current Finance Director has prioritized compliance with federal reporting requirements. As of fiscal year 2025, all required project and expenditures reporting has been completed and submitted in accordance with U.S. Department of Treasury guidelines. To prevent future occurrences, the Finance Department has implemented internal controls ensuring multiple staff members are responsible for federal reporting. Specifically, both the Finance Director and the Financial Analyst now share the responsibility and authority to complete and submit these annual reports. This new process ensures continuity in reporting, even in the event of staff turnover, and strengthens the City’s commitment to compliance with federal funding requirements. In addition, The City’s Procurement officer now maintains responsibility for grants from award to reversion date. A tracking file is maintained for all active grants at the point it is awarded, expended, and reimbursement received to ensure this process is properly managed. Additionally, the Finance Director oversees this responsibility so there are now multiple controls to ensure timely completion.

Categories

Reporting Procurement, Suspension & Debarment Cash Management

Other Findings in this Audit

  • 555575 2023-007
    Material Weakness Repeat
  • 555576 2023-007
    Material Weakness Repeat
  • 555577 2023-007
    Material Weakness Repeat
  • 555578 2023-007
    Material Weakness Repeat
  • 555579 2023-007
    Material Weakness Repeat
  • 555580 2023-008
    - Repeat
  • 555581 2023-008
    - Repeat
  • 555582 2023-008
    - Repeat
  • 555583 2023-008
    - Repeat
  • 555584 2023-008
    - Repeat
  • 555586 2023-010
    Material Weakness
  • 1132017 2023-007
    Material Weakness Repeat
  • 1132018 2023-007
    Material Weakness Repeat
  • 1132019 2023-007
    Material Weakness Repeat
  • 1132020 2023-007
    Material Weakness Repeat
  • 1132021 2023-007
    Material Weakness Repeat
  • 1132022 2023-008
    - Repeat
  • 1132023 2023-008
    - Repeat
  • 1132024 2023-008
    - Repeat
  • 1132025 2023-008
    - Repeat
  • 1132026 2023-008
    - Repeat
  • 1132027 2023-009
    Material Weakness
  • 1132028 2023-010
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.23M
16.710 Public Safety Partnership and Community Policing Grants $457,465
16.034 Coronavirus Emergency Supplemental Funding Program $96,044
95.001 High Intensity Drug Trafficking Areas Program $88,827
45.312 National Leadership Grants $13,749