Finding Text
Section III ? Findings and Questioned Costs for Federal Awards: 2022-003:U.S. Department of the Treasury COVID-19: Coronavirus State and Local Fiscal Recovery Funds, Assistance Listing #21.027 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Grant Award Number: Affects all grant awards included under Assistance Listing 21.027 on the Schedule of Expenditures of Federal Awards. Criteria: The OMB Compliance Supplement requires that reports submitted to the federal awarding agency include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with governing requirements. The City of Sparks (the City) must submit quarterly Project and Expenditure Reports that contain costs incurred during the covered period. Critical information includes: o Obligations and Expenditures o Current period obligation o Cumulative obligation o Current period expenditure o Cumulative expenditure o Subawards o Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient that are greater than $50,000. For amounts less than $50,000, the recipient must report in the aggregate for these same categories of loans issued; contracts and grants awarded; transfers made to other government entities and direct payments made by the recipient. Condition: Expenditure information was reported inaccurately. Cause: The City of Sparks did not have adequate internal controls to ensure Project and Expenditure Reports were prepared in accordance with governing requirements. Effect: Inaccurate information was reported to the federal awarding agency. Questioned Costs: None Context/Sampling: The entire population of two Project and Expenditure Reports submitted during the year was selected for testing. The cumulative impact is as follows: Period Ended December 31, 2021 Originally Reported Actual Obligations and Expenditures: Cumulative expenditures $10,240,156 $240,156 Period Ended March 31, 2022 Originally Reported Actual Obligations and Expenditures: Cumulative expenditures $10,440,302 $5,003,131 Repeat Finding from Prior Year: No Recommendation: We recommend the City enhance internal controls to ensure Project and Expenditure Reports are prepared in accordance with governing requirements. Views of Responsible Officials: The City of Sparks partially agrees with this finding. Financial Services Staff accurately reported current period expenditures on the Project and Expenditure Report for the periods ended December 31, 2021 and March 31, 2022. The City elected the $10 million allowance to replace lost public sector revenue as the U.S. Department of Treasury?s guidance stated recipients must choose one of two options and cannot switch between these approaches after an election is made. In consideration that the City had only received the first tranche of $8.1 million during the reporting period, the full $10 million was included in the cumulative expenditures total for revenue replacement. The City believed this was the correct approach to reporting with the guidance available at the time. Upon receiving subsequent Federal guidance that clarified the reporting requirements, cumulative expenditures were updated and properly reported on the Project and Expenditure Report for the period ended June 30, 2022 that was submitted July 25, 2022.