DEKALB COUNTY, MISSOURILocal Government

2020-003: Internal Controls over Allowability of CARES Act Expenditures Federal Grantor: U.S. Department of the Treasury Pass-Through Grantor: Missouri State Treasurer?s Office Federal CFDA Number: 21.019 Program Title: Coronavirus Relief Funds Pass-through Entity Identifying Number: 253-01905 Award Year: 2020 Questioned Costs: None Criteria: The CARES Act provides that payments from the Fund may only be used to cover costs that: 1) are necessary expenditures incurred due to the public health emergency with respect to COVID-19; 2) were not accounted for in the budget most recently approved as of March 27, 2020 for the state or government; and 3) were incurred during the period that begins on March 1, 2020 and ends on December 31, 2020. Treasury FAQ #58 related to the CARES Act guidance states that, ?a government must (i) determine that it is not able to meet the need arising from the public health emergency in a cost-effective manner by leasing property or equipment or by improving property already owned and (ii) maintain documentation to support this determination. Likewise, an improvement, such as installation of modifications to permit social distancing, would need to be determined to be necessary to address the COVID-19 public health emergency.? Condition: The County?s documentation was not always sufficient to support that adequate internal controls were in place to review the allowability of expenditures paid with CARES Act funding against the allowability criteria mentioned above or to document reasons for denying applications or paying partial amounts. Entities wishing to receive CARES Act funding from the County submitted invoices for reimbursement which were reviewed by the County Commission, however, a justification of how the expenses were related to the COVID-19 emergency (and whether the expense was accounted for in the budget in the case of governmental entities) was not required to be provided. For example, one school district requested $18,692 to build a permanent structure for an outdoor classroom, however, no justification supporting that it was not able to meet the need in a cost effective manner with a temporary solution was required to be provided by the County. We requested further justification for eleven out of 25 expenses selected for testing during our audit, which was subsequently provided by the requesting entities and all costs were found to be allowable. The County reimbursed entities on the basis of individual invoices that were submitted for payment. However, the County did not have any tracking system in place to determine whether any invoices were submitted for reimbursement more than once. No instances of duplicate payments were noted during the audit. Cause: The County had entities sign an agreement stating that CARES Act funds would be used for allowable purposes and if determined not allowable by external auditors or the State, the entity must return the funds to the County. The County also did not believe it is necessary to document their decision if they decided not to pay the applicants. Effect: Deficiencies in internal controls and documentation may increase the risk that federal funds are used for unallowable purposes. Recommendation: We recommend that the County ensure that proper documentation of the allowability of costs paid with federal funds are obtained and that the review of costs for allowability and reasons for disallowing any costs are properly documented.