LACLEDE COUNTY

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: COVID-19 ? Coronavirus Relief Fund Pass-through Entity Identifying Number: 253-00198 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. 2 CFR 200.303 requires non-federal entities to ?establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Condition: We reviewed a sample of 62 disbursements of federal funds from the County?s CARES Fund. The rationale for the allowability of certain economic impact payments was not always clearly stated in the application file as they pertained to interruption due to voluntary or required closure or due to decreased customer demand as a result of the COVID-19 public health emergency. For example, one reimbursement reviewed was to an auto paint shop which was incorporated in February 2020 and had not opened for business prior to the pandemic. The County stated that this was awarded due to decreased customer demand resulting from the COVID-19 pandemic; however, this explanation was not noted in the application files or Commission minutes. Our review of the County?s budgets and remittances of sales tax from the Missouri Department of Revenue noted year-over-year sales tax receipts were up approximately 7%, which would be indicative of increased levels of consumer spending and higher consumer demand overall. A carte blanche presumption that the COVID-19 pandemic resulted in decreased consumer demand or resulted in economic hardship is not consistent with other indicators of economic activity. Additional inquiries were made during the audit to determine the basis for economic support payments, and we determined these payments were allowable. Treasury Guidance regarding awards to school districts states that up to $500 per student may be presumed to be allowable as an administrative convenience without a need to document specific uses of funds up to that amount. We were initially unable to determine the County?s methodology used to determine the allowability of school district awards from the Fund. The September 17, 2020 Commission minutes state the Commission was working to establish guidelines to distribute 15% of the County?s Fund to schools. However, we noted the awards made to school districts exceeded 15% of the Fund, and this decision did not address compliance with Treasury requirements. It was noted in some school district application files that the Presiding Commissioner had asked superintendents to provide head count data. However, student enrollment was not documented in the application files, nor was it evident this was examined during the application review process to document compliance with allowable uses of the Fund. Upon further inquiry of the County, we determined these payments were for allowable uses of the Fund. Awards were made to Laclede County school districts as follows: ("See Schedule of Findings and Questioned Costs for chart/table" The award to Gasconade C-4 exceeded $500 per student by $1,500. The reimbursement spreadsheet for Gasconade C-4 indicated allowable expenses based on invoices provided of $38,585, which is less than the amount awarded based on the $500 per student administrative convenience. A determination of invoices being reimbursed in addition to the $500 per student allowance was not documented in the application file. Cause: The decision-making process to determine the amount of school district awards and justification for certain small business economic support payments was not adequately documented in order to explain how the payments satisfied the Treasury criteria. Effect: Without all of the factors going into the County?s award decisions being documented in the application files for all payments made with CARES Act funding, we were not able to determine that the County adequately reviewed the allowability of the request against the Treasury guidance. Recommendation: We recommend the County ensure that all considerations that go into making decisions regarding the allowability of costs and amounts awarded be adequately documented in application files.

Finding Reference Number: 2020-003 Federal Agency: N/A Program Name: N/A CFDA Number: N/A Responsible Official: County Commission Views of Responsible Individuals: It is with complete assurance to all parties involved that each awarded expenditure was arduously considered, and evaluated by the standards that were presented to the County based on the information we had from Treasury.