ERIE COUNTY GAMING REVENUE AUTHORITYLocal Government

Finding: 2026-001 - Internal Control over Financial Reporting - Allowable Costs U.S. Department of Treasury Passed Through the County of Erie COVID-19: Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027 Allowable Costs Condition: During our testing of disbursements charged to the major program, we noted that disbursements totaling approximately $540,000 out of approximately $1,526,000 of Educator Retention Awards were not formally approved by the Board in accordance with the Authority's established control procedures. Although the disbursements tested appeared to meet the applicable compliance requirements, the required Board approval did not occur. Criteria: A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement on a timely basis. In addition, costs charged to a federal award must be necessary and reasonable for the performance of the federal award, conform to applicable limitations, be consistently treated, and be adequately documented. In accordance with 2 CFR 200.303, the Authority is required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the Authority is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the award. The Authority's established control procedures require formal Board approval of disbursements. Cause: The control requiring formal Board review and approval of disbursements did not operate consistently during the year. Management did not ensure that evidence of approval was obtained and retained for all applicable disbursements charged to the major program. Effect: Because formal approval was not documented for a significant portion of disbursements, the Authority lacked evidence that disbursements charged to the major program were reviewed and approved in accordance with established control procedures. This increased the risk that unallowable or otherwise noncompliant costs could be charged to the major program and not be prevented, or detected and corrected, on a timely basis. We did not identify questioned costs, as the disbursements tested appeared to meet the applicable compliance requirements. Questioned Costs: None Repeat Finding: No Recommendation: We recommend that management implement procedures to ensure all disbursements charged to federal programs are formally reviewed and approved by the Board, or by a properly designated approver, and that such approval is evidenced in writing and maintained with the supporting disbursement documentation. Management should also implement a monitoring procedure to identify any disbursements processed without timely approval and ensure corrective action is taken. Views of Responsible Official and Planned Corrective Action: Management agrees with the finding. See separate Corrective Action Plan.