Finding 573312 (2023-003)

Significant Deficiency
Requirement
H
Questioned Costs
-
Year
2023
Accepted
2025-08-12
Audit: 364102
Organization: City of Needles (CA)

AI Summary

  • Core Issue: $13,834 in expenditures were incurred before the allowable start date of March 3, 2021, violating Treasury guidelines.
  • Impacted Requirements: Expenditures must align with the period of performance as defined by the U.S. Department of Treasury under the CSLFRF program.
  • Recommended Follow-Up: Strengthen grant management by training staff, enhancing internal controls, and consulting federal grant administrators to ensure compliance.

Finding Text

Federal Program Information: Federal Assistance Listing Number: 21.027 Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Federal Agency: U.S. Department of Treasury Federal Award Number: None Federal Award Year: March 3, 2021 to December 31, 2024 Criteria: The American Rescue Plan Act (ARPA) specifies that eligible expenditures must align with the period of performance requirements established by the U.S. Department of the Treasury (Treasury). According to Treasury guidelines, the period of performance for CLSFRF begins on March 3, 2021, meaning recipients may only use funds to cover costs incurred during the period beginning on March 3, 2021, pursuant to the Final Rule at 31 CFR section 35.5(a). Condition: During the audit of CSLFRF expenditures, we identified $13,834 in costs that were incurred before March 3, 2021, which is outside the allowable period of performance established under the Treasury guidelines. Cause and Effect: The CSLFRF program, introduced under ARPA in 2021, presented new grant management and reporting challenges for the City, which had no prior experience navigating these requirements. As a result, $13,834 in expenditures incurred before March 3, 2021, were misclassified, falling outside the allowable performance period defined by Treasury guidelines. However, the City has since identified and allocated other eligible expenditures to appropriately replace the $13,834. The City attempted to update the expenditures report filed with the Treasury Department but was unsuccessful. Questioned Cost: None. Recommendation: To ensure compliance with Treasury guidelines, the City should strengthen its grant management procedures by verifying that expenditures align with the approved period of performance before reporting. Staff training on CSLFRF requirements will help improve accuracy, while enhanced internal controls, including independent expenditure reviews, will reduce the risk of misclassification. Lastly, establishing a process for consulting federal grant administrators when needed will ensure clarity and compliance in expenditure reporting. Views of Responsible Officials and Planned Corrective Action: Consistent with Management’s Response to Audit Finding SA 2023-002, the City’s grant processes have been updated to ensure that grants administration and reporting are compliant with individual grant requirements and that there is interdepartmental coordination to ensure appropriate monitoring, reviews, and reporting. Training will also be provided to all departmental managers and Finance staff involved in grants administration, accounting, and reporting. Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026

Corrective Action Plan

Consistent with Management’s Response to Audit Finding SA 2023-002, the City’s grant processes have been updated to ensure that grants administration and reporting are compliant with individual grant requirements and that there is interdepartmental coordination to ensure appropriate monitoring, reviews, and reporting. Training will also be provided to all departmental managers and Finance staff involved in grants administration, accounting, and reporting. Responsible Personnel Name and Position: Jill Taura, Interim Finance Director Expected Implementation Date of Corrective Action Plan: Fiscal year 2026

Categories

Period of Performance Subrecipient Monitoring Reporting

Other Findings in this Audit

  • 573311 2023-002
    Significant Deficiency
  • 1149753 2023-002
    Significant Deficiency
  • 1149754 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
20.205 Highway Planning and Construction $1.14M
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.04M
15.507 Watersmart (sustain and Manage America’s Resources for Tomorrow) $212,826
20.509 Formula Grants for Rural Areas and Tribal Transit Program $62,366
14.218 Community Development Block Grants/entitlement Grants $7,896