COUNTY OF MERCER

Finding 2024-002 – Reporting U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) – ALN 21.027 Reporting Condition: The internal control system to ensure that the Project and Expenditure Report submitted to Treasury was accurate was not operating effectively. The County elected to not apply expenditures related to a project to the CSLFRF funds for approximately $150,000 that were previously reported to Treasury as a use of these funds. As a result of the errors, the cumulative expenditures on the Project and Expenditure Report, which are considered to be key line items being reported, are not accurate. Criteria: Quarterly reports are required to be accurate and include all activity of the reporting period, supported by the applicable accounting records and fairly presented in accordance with Treasury requirements. The reports are to include the current period expenditures, as well as the cumulative expenditures related to the projects. Cause: Internal controls in place to ensure that the quarterly reports were completed accurately were not adequate. Effect: The quarterly reports submitted to Treasury do not contain information supported by the accounting records of the County. Questioned Costs: None. Identification as a Repeat Finding: This is not a repeat finding from the prior audit. Recommendation: We recommend the County ensure proper correction of previously submitted reports. Management’s Response: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2023-002 – Reporting U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) – ALN 21.027 Reporting Condition: The internal control system to ensure that the Project and Expenditure Report submitted to Treasury was accurate was not operating effectively. During the 2022 reporting year, the County reported expenses on the fourth quarter report that had already been included on previous reports. In addition, the County elected to not apply expenditures related to a project to the CSLFRF funds for approximately $720,000 that were previously reported to Treasury as a use of these funds. As a result the errors in 2022, the cumulative expenditures on the Project and Expenditure Report, which are considered to be key line items being reported, are not accurate. Criteria: Quarterly reports are required to be accurate and include all activity of the reporting period, supported by the applicable accounting records and fairly presented in accordance with Treasury requirements. The reports are to include the current period expenditures, as well as the cumulative expenditures related to the projects. Cause: Internal controls in place to ensure that the quarterly reports were completed accurately were not adequate. Effect: The quarterly reports submitted to Treasury do not contain information supported by the accounting records of the County. Questioned Costs: Unknown. Identification as a Repeat Finding: This is a repeat finding from the prior audit. See Finding 2022-002. Recommendation: We recommend the County ensure proper correction of previously submitted reports. Management’s Response: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2022-001 ? Internal Control over Financial Reporting and Account Adjustments Condition: Internal controls were not in place to ensure accuracy of financial statements, which resulted in material adjustments that were identified by the auditors in order for the financial statements to be prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjustments were identified as being required based on the auditor?s review of the trial balance information provided for audit. Adjustments identified to management included: recording of intergovernmental revenues, balancing of interfund transactions, accruing accounts payable, recording of taxes receivable, and balancing pension funds. Material adjustments noted include those required to major federal programs Emergency Rental Assistance Program (ALN 21.023) and Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027). These adjustments were necessary to properly reflect current year operations and balances as of the year-end. Management does review and accept the financial statements prior to their final issuance, and adjustments required were provided to the auditors based on preliminary identification by the auditors and subsequent discussions with management. Criteria: Auditing standards place emphasis on determining an entity?s ability to fully prepare their own external financial statements, including the posting of all adjustments necessary to present GAAP financials and evaluating the need for all necessary financial statement disclosures. Reliance on auditors to ensure comprehensive financial reporting is considered to be an internal control deficiency. Cause: Internal controls were not in place to ensure that the County of Mercer (County) reconciled some of its balance sheet accounts, including interfund accounts, accounts payable, unearned revenues, taxes receivable, and pension accounts, to the general ledger and did not post necessary adjustments for balances to be recorded in accordance with GAAP. Effect: Significant adjustments were required to be recorded in order for the financial statements to be prepared in accordance with GAAP. Recommendation: We recommend that management evaluate their internal controls over the financial reporting process and ensure that an individual is assigned to reconcile balance sheet accounts on a monthly, quarterly, and annual basis. We also recommend that a second individual be assigned to review the reconciliations and ensure that the financial statements are prepared in accordance with GAAP. Management?s Response: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2022-002 ? Reporting U.S. Department of Treasury COVID-19 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ? ALN 21.027 Reporting Condition: The internal control system to ensure that the Project and Expenditure Report submitted to Treasury was accurate was not operating effectively. The County reported expenses on the fourth quarter report that had already been included on previous reports. In addition, the County elected to not apply expenditures related to a project to the CSLFRF funds for approximately $720,000 that were previously reported to Treasury as a use of these funds. Criteria: Quarterly reports are required to be accurate and include all activity of the reporting period, supported by the applicable accounting records and fairly presented in accordance with Treasury requirements. The reports are to include the current period expenditures, as well as the cumulative expenditures related to the projects. Cause: Internal controls in place to ensure that the quarterly reports were completed accurately were not adequate. Effect: The quarterly reports submitted to Treasury do not contain information supported by the accounting records of the County. Questioned Costs: Unknown. Identification as a Repeat Finding: This is not a repeat finding from the prior audit. Recommendation: We recommend the County implement a procedure to ensure that all required quarterly reports are completed accurately and verify that the cumulative expenditures agree to the previously submitted quarterly current period expenditures. In addition, we recommend that the County ensure proper correction of previously submitted reports. Management?s Response: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2019-001 ? Activities Allowed and Eligibility Federal Agency: Department of Health and Human Services Pass-through Agency: Pennsylvania Department of Human Services Program: Foster Care ? Title IV-E ? CFDA #93.658 Condition: The County of Mercer (County) did not have adequate internal control procedures in place to ensure that it made IV-E reimbursement claims only for eligible children. As a result, the County did not correctly determine eligibility for two of the 25 children selected for testing. For one child, the child?s mother was employed in the eligibility month, but her income was not considered in her determination. The lack of eligibility documentation resulted in an immaterial overclaim that was subsequently credited to the Commonwealth of Pennsylvania (Commonwealth) for services provided to the ineligible child. In addition, the County requested reimbursement the day of discharge for one child, resulting in an immaterial overpayment from the Commonwealth. Criteria: In accordance with the federal compliance requirements for Foster Care ? Title IV-E, foster care benefits may be paid on behalf of a child only if certain requirements are met. Accordingly, funds may be expended for foster care maintenance payments on behalf of eligible children. Cause: Procedures in place to ensure the County is only providing services to eligible children who qualify for reimbursement from the Commonwealth are not adequate. Effect: The failure to maintain eligibility documentation resulted in unallowed payments. Repeat Finding: Not a repeat finding. Recommendation: We recommend that the County implement procedures to ensure that all required documentation is maintained that supports the services were adequately provided to eligible individuals for the noted period of time in which the individual was receiving services. Questioned Costs: None Views of Responsible Official and Planned Corrective Action: Management agrees with the finding. See separate correction action plan.

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