FINDING 2024-002
Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting
Federal Agency: Department of the Treasury
Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds
Assistance Listings Number: 21.027
Federal Award Number and Year (or Other Identifying Number): ARP Act
Compliance Requirement: Reporting
Audit Findings: Material Weakness, Modified Opinion
Condition and Context
Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to
the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates,
are based upon type of recipient and its population, as well as the recipient's allocation amount. Information
to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period.
The City was classified as a city with a population below 250,000 residents that received an
allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds.
The quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last
day of the month following the end of the period covered.
The City submitted all required P&E reports during the audit period. The internal controls in place
were not effective and did not prevent, or detect and correct, errors in the P&E reports prior to submission.
All four quarterly reports submitted contained errors; obligations and expenditures were understated by the
following amounts:
Current Current
Period Cumulative Period Cumulative
Obligation Obligation Expenditure Expenditure
2023 Q4 P&E Report $ 79,009 $ 89,009 $ 79,009 $ 89,009
2024 Q1 P&E Report 379,005 89,009 379,005 468,014
2024 Q2 P&E Report 1,331,499 79,009 1,331,499 468,014
2024 Q3 P&E Report 2,208,957 79,009 2,208,957 468,014
Criteria
2 CFR 200.303 states in part:
"The non-Federal entity must:
(a) 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). . . ."
2 CFR 200.328 states:
"Unless otherwise approved by OMB, the Federal awarding agency must solicit only the
OMB-approved governmentwide data elements for collection of financial information (at time
of publication the Federal Financial Report or such future, OMB-approved, governmentwide
data elements available from the OMB-designated standards lead. This information must be
collected with the frequency required by the terms and conditions of the Federal award, but no
less frequently than annually nor more frequently than quarterly except in unusual
circumstances, for example where more frequent reporting is necessary for the effective
monitoring of the Federal award or could significantly affect program outcomes, and preferably
in coordination with performance reporting. The Federal awarding agency must use
OMB-approved common information collections, as applicable, when providing financial and
performance reporting information."
31 CFR 35.4(c) states:
"During the period of performance, recipients shall provide to the Secretary or her delegate, as
applicable, periodic reports providing detailed accounting of the uses of funds, modifications to
a State or Territory's tax revenue sources, and such other information as the Secretary or her
delegate, as applicable, may require for the administration of this section. In addition to regular
reporting requirements, the Secretary may request other additional information as may be
necessary or appropriate, including as may be necessary to prevent evasions of the
requirements of this subpart. False statements or claims made to the Secretary may result in
criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and
penalties, debarment from participating in Federal awards or contracts, and/or any other
remedy available by law."
Cause
The City's management did not have effective internal controls in place to ensure proper amounts
were reported prior to submission.
Effect
Without the proper implementation of an effectively designed system of internal controls, the
internal control system cannot be capable of effectively preventing, or detecting and correcting, material
noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and
conditions of the federal award could result in the loss of federal funding to the City.
Questioned Costs
There were no questioned costs identified.
Recommendation
We recommended that management of the City strengthen its system of internal controls over the
preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are
effective in preventing, or detecting and correcting, noncompliance.
Views of Responsible Officials
For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.