Finding Text
2022-005 WATERSMART GRANT - MATCHING Federal Program Information Funding agency: U.S. Department of Interior, Bureau of Reclamation Title: Reclamation States Emergency Drought Relief ALN: 15.514 Award Year: 2021 Questioned Costs: None Type of Finding: Material Weakness, Material Non-Compliance Condition The grant agreement contained a cost-sharing requirement that the $748,980 Federal share not be expended in advance of the Village?s $825,920 non-Federal share of allowable costs. It was expected that expenditure of Federal and non-Federal funds, based upon estimated cost share percentages, would occur concurrently. The Village was entitled to be reimbursed for costs incurred after July 1, 2020, but prior to the date of the agreement. The Village incurred $248,174 in such pre-award costs and other non-Federal share costs concurrent with the Federal share during fiscal year 2022. However, the entire Federal share of $748,980 was incurred and drawn down during fiscal year 2022, in violation of the above cost-sharing requirement. The Village has been awarded two grants for Special Appropriation Program funds from the New Mexico Environment Department, which are sufficient to meet the matching requirements, and have obligated all such funding to the grant project. Construction related to these funds has experienced delays and is still ongoing after fiscal year 2022 year-end and the end of the period of performance. Project closeout for these grants are expected to be completed soon, within the next quarter based on provided milestones. Criteria The Federal government may require the recipient to provide contributions to cover a portion of that program?s operations, and may stipulate in the grant agreement if this should be required to be performed proportionately throughout the grant period. A system of internal control needs to provide reasonable assurance that objectives of internal control over compliance requirements relating to compliance with the terms and conditions of Federal awards will be achieved. Effect The Village is not in compliance with federal grant matching requirements. As matching funds have only been obligated but not necessarily expended, it is possible that matching requirements may not ultimately be met at the end of the project, in which case a portion of federal funding may need to be returned. Cause Due to turnover within the Village?s finance department, the Village was unaware of the grant requirements. The Village lacks controls over compliance in this area.