Finding 573031 (2024-008)

2024 – 008 Reporting Federal Agency: Department of the Treasury Department of Interior Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds (ARPA) Outdoor Recreation Acquisition, Development and Planning ALN: 21.027 15.916 Pass-Through Agency: Coronavirus State and Local Fiscal Recovery Funds (ARPA) N/A Outdoor Recreation Acquisition, Development and Planning Arizona State Park Trails Pass-Through Number(s): Coronavirus State and Local Fiscal Recovery Funds (ARPA) N/A Outdoor Recreation Acquisition, Development and Planning 04-007-652304 Award Number and Period: Coronavirus State and Local Fiscal Recovery Funds (ARPA) 1505-0271 3/3/2021 – 12/31/2024 Outdoor Recreation Acquisition, Development and Planning 04/18/2022-12/31/24 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per the Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (SLFRF) Version 5.2, 2. Annual Reporting: The following recipients are required to submit annual Project and Expenditure Reports: • Tribal governments that are allocated less than $30 million in SLFRF funding • Metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding and NEUs that are allocated less than $10 million in SLFRF funding For these recipients, the initial Project and Expenditure Report covered from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30. 3. Required Information: The following information is required in Project and Expenditure Reports for both quarterly and annual reporting: Projects: Provide information on all SLFRF funded projects. Projects are defined as a grouping of closely related activities that together are intended to achieve a specific goal or are directed toward a common purpose. These activities can include new or existing eligible government services or investments funded in whole or in part by SLFRF funding. For each project, the recipient is required to enter the project name, identification number (created by the recipient), project expenditure category (see Appendix 1), description, and status of completion. Project descriptions must describe the project in sufficient detail to provide an understanding of the major activities that will occur, and must be between 50 and 250 words. Project descriptions for the emergency relief from natural disasters eligible use category must describe the natural disaster the recipient is responding to, including the type of event, and how the emergency relief is related to and reasonably proportional to the natural disaster. a. Projects should be defined to include only closely related activities directed toward a common purpose. Recipients should review the Required Programmatic Data described in 3.g. below and define their projects at a sufficient level of granularity. Note: For each project, the recipient is asked to select the appropriate Expenditure Category based on the scope of the project (see Appendix 1). Projects should be scoped to align to a single Expenditure Category. For select Expenditure Categories, the recipient also is asked to provide additional programmatic data. Condition: The following is a summary results for each audited program. Coronavirus State and Local Fiscal Recovery Funds (ARPA) - Audit procedures included testing the SLFRF Compliance Report. During the testing of the Compliance report, it was noted that the report’s key line items below were not properly supported:  Current period expenditure  Cumulative expenditure Current period expenditures per the Compliance Report $0 and per the expenditure details provided $907,419 creating a difference of $907,419. Cumulative expenditure per Compliance Report $6,714,003 and per the expenditure detail provided $4,264,421 creating a difference of $2,449,582. Outdoor Recreation Acquisition, Development and Planning - Audit procedures included selection and testing of two quarterly reports. Two out of two of the quarterly reports tested contained no separate reviewer/approver support. Questioned costs: Unknown Context: See “Condition.” Cause: Current internal controls over the review and approval of prepared reports are not at an effective precision level to detect errors in the figures, answers, and explanations reported prior to submission. Effect: The City is not in compliance with Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds Version 5.2, 2.grant guidance requirements related to reporting. Repeat Finding: Yes. See 2023-007 Recommendation: The City of Nogales should enhance and/or modify existing controls over the review and approval of reporting to in order to prevent reporting noncompliance and ensure adherence to all grant guidance requirements. Views of responsible officials: See corrective action plan. Corrective action plan: See corrective action plan.