Finding 969028 (2021-004)

Finding 2021-004 – Noncompliance with Allowable Costs and Reporting Material Noncompliance and Material Weakness Department of the Treasury passed through the Alabama Department of Finance COVID-19 Coronavirus Relief Fund Assistance Listing 21.019 Criteria: The Department of Department of the Treasury provided terms and conditions associated with the Coronavirus Relief Fund (CRF). Those terms and conditions outlined the usages of the CRF distributions received, specifically related to expenses. CRF distributions should only be used to prevent, prepare for, and respond to the coronavirus that have not been reimbursed from other sources or that other sources are not obligated to reimburse. Management should have effectively designed controls to review, approve, prevent, or detect and correct, material noncompliance with major federal programs. Condition: The Authority submitted expenses to the Alabama Department of Finance that did not meet the criteria of allowable expenditures in accordance with the terms and conditions and lacked related controls over compliance with major federal programs. Context and Questioned Costs: A sample of 8 payroll expenditures and 17 non-payroll expenditures were selected and tested. The sample of 8 payroll expenditures were tested and identified $6,566 of questioned cost expenditures in the population to not be in compliance. The sample of 17 non-payroll expenditures were tested and identified $304,854 of questioned cost expenditures in the non-payroll population to not be in compliance. The sample was not and was not intended to be statistically valid. Effect: The Authority overstated the expenses submitted through the Alabama Department of Finance for the period of availability, resulting in material noncompliance. Cause: A control was not in place to review, approve, prevent, or detect and correct, ineligible expenditures from being identified and reported as qualifying expenditures for the Coronavirus Relief Funds. Qualifying expenditures should have been determined based on the terms and conditions associated with the CRF. Identification of Prior Year Audit Findings: N/A Recommendation: Effective controls over compliance and financial reporting should be implemented to ensure payroll and non-payroll expenses are accumulated in accordance with the terms and conditions prior to claiming such expenditures as being allowable and being submitted to the Department of the Treasury. Views of responsible officials: Management agrees with the findings and has put in to place a process to review all qualifying expenses monthly moving forward. See Management’s Corrective Action Plan.