Finding 623489 (2022-003)

2022-003 Project and Expenditure Special Report Prior Year Finding Number: N/A Repeat Finding Since: N/A Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLT0790, 2021; E-20-MW-27-0003, 2020 Pass-Through Agency: Minnesota Department of Health Criteria: Title 2 U.S. Code of Federal Regulations ? 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: While testing the fourth quarter Project and Expenditure Special Report, the completeness of the Subawards Section could not be determined. The supporting documentation was not maintained in a manner that supported the amounts in the report. Data for some elements of the section could be obtained by reperforming work but that took significant time. Immaterial differences were also identified in other sections of the report. Questioned Costs: None. Context: The U.S. Treasury uses the subawards section to report ?contracts, grant, loans, direct payments, and other,? which is a broader definition than that used by the Code of Federal Regulations. The City has several projects, and payments within these projects, that need to be tracked in different ways for reporting in the Project and Expenditure Special Report. The documentation for some projects showed the approved contract amounts but did not document that no expenditures had been applied to the contracts yet. Effect: Completeness of the subawards section of the fourth quarter Project and Expenditure Special Report could not be determined. In addition, immaterial differences were identified in the reported amounts for the Subawards, Expenditures for Awards more than $50,000, and Payments to Individuals sections of the report. Cause: The City uses tracking files and queries from the general ledger system for reporting but does not have a process to determine completeness for subawards compared to expenditures. Also, the report instructions are updated each quarter by the U.S. Treasury providing further instructions and clarifications of previous instructions. Recommendation: We recommend the City review the process to accumulate data reported for the Project and Expenditure Special Report to ensure documentation is complete and accurately reflects activity for the period. View of Responsible Official: Concur