Finding Text
Criteria: Based on 2 CFR Part 200 Subpart F which governs Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, stipulates that recipients must maintain accurate financial records and ensure proper accounting of federal funds. Entities should implement control activities to ensure the complete, accurate and timely recording of financial transactions in their accounting records. Condition: After examining the records of the City, it was identified that that a receipt of American Rescue Plan Act (ARPA) funds amounting $18,189,922 was not recorded in the City’s general ledger at the time of receipt. Although the Treasurer’s office tracked the receipt in its subsystem and provided supporting documentation, the amount was not properly interfaced into the general ledger due to accounting system upgrade issues. As a result, the general ledger initially did not reflect this significant transaction until it was subsequently corrected. Cause of Condition: The interruption in proper recording resulted from technical upgrade challenges within the City’s accounting system, specifically a failure of the data interface linking the Treasurer’s subsystem to the general ledger. Additionally, the absence of effective reconciliation procedures delayed detection and correction of the unrecorded transaction. Effect: This can result in improper financial reporting, difficulties in tracking and managing ARPA funds, and potential non-compliance with federal regulations. Recommendation: Implement controls to ensure all ARPA fund receipts are accurately and
promptly recorded in the general ledger upon receipt, regardless of subsystem or accounting
software changes. Establish formal reconciliation procedures between the Treasurer’s subsystem
(or any other sub-ledgers) and the general ledger on a monthly or quarterly basis to promptly
identify and resolve any discrepancies.
Questioned Cost: $ 0
Views of Responsible Official: The City partially agrees with this finding. The ARPA funds in
question were received and recorded by the Treasurer’s Office, and documentation of the receipt
was submitted to the auditors. However, due to technical limitations stemming from a system
upgrade during the fiscal year, the transaction was not interfaced properly with the general ledger
side of the City’s accounting system.
To address this issue, the City is:
Working with the current software provider to resolve the integration problem;
Performing a full reconciliation of Treasurer records and general ledger entries for all
ARPA funds;
Exploring the implementation of a more robust and user-friendly financial system to
ensure proper recording and reporting in the future.
Additionally, we are developing standard operating procedures to ensure manual entries are
logged and reconciled during system outages or migration periods.