Finding Text
2022-003: Compliance and Significant Deficiency in Internal Control over Compliance with Reporting (Financial Reporting) Federal agency: Department of Treasury Pass-through agency: None Title: Emergency Rental Assistance, including Covid-19 CFDA Number: 21.023 Award Year: 2022 Award Number: ERA-2101123809 & ERA2-0213 Criteria: As indicated in the April 2022, OMB Compliance Supplement, recipients of Emergency Rental Assistance (ERA) awards are required to submit the Federal Financial Report, SF-425, each quarter. Recipients of ERA1 (awarded pursuant to section 501 of the Consolidated Appropriations Act, 2021) and ERA2 (awarded pursuant to section 3201 of the Consolidated appropriations act) funds must submit separate quarterly reports for each ERA award. The requirement to upload the SF-425 form ended with the quarter ended March 31, 2022, and recipients were directed to submit financial reporting data directly into the ERA portal. Condition and perspective: We selected for testing the quarterly reports submitted for the periods ended September 30, 2021 and December 31, 2021. During our testing, it was noted that the City did not have effective internal controls in place to ensure accurate and complete reporting. Applicable backup documentation provided by management did not support the amounts included in each of the submitted reports included in our testing. Cause: The City did not ensure that the individuals preparing and approving financial reports for the ERA program were knowledgeable of how to accurately complete the required financial form. Effect: The City did not have effective internal controls in place to ensure that financial reports were accurate, complete, and sufficiently reviewed prior to submission. This lack of ineffective controls resulted in incomplete and inaccurate reporting. Questioned Cost: No questioned costs identified. Recommendation: We recommend the City design and implement controls that allow for the accurate preparation and adequate approval of financial reporting information prior to its submission. -12- CITY OF BIRMINGHAM, ALABAMA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) YEAR ENDED JUNE 30, 2022 Management?s response: Management in the Finance and Community Development Departments will work together to ensure that appropriate training is provided to all individuals responsible for the preparation and approval of financial reporting information.