MISSOULA COUNTY

Finding 2024-02 – 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 total expenditures on the Quarter 2 2024 Project and Expenditure Report of $10,850,317 and total expenditures on the Quarter 2 2023 Project and Expenditure Report of $6,861,504 and therefore indicated 2024 fiscal year expenditures were $3,988,813 and reported expenditures on the 2024 SEFA of $5,535,797. 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 a repeat finding of 2023-003 and 2022-003. Recommendation: We recommend the County implement a procedure to ensure that all required quarterly reports are completed accurately and verify that the expenditures agree to the amounts reported in the general ledger and SEFA. In addition, we recommend that the County ensure proper correction of previously submitted reports. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2024-02 – 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 total expenditures on the Quarter 2 2024 Project and Expenditure Report of $10,850,317 and total expenditures on the Quarter 2 2023 Project and Expenditure Report of $6,861,504 and therefore indicated 2024 fiscal year expenditures were $3,988,813 and reported expenditures on the 2024 SEFA of $5,535,797. 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 a repeat finding of 2023-003 and 2022-003. Recommendation: We recommend the County implement a procedure to ensure that all required quarterly reports are completed accurately and verify that the expenditures agree to the amounts reported in the general ledger and SEFA. In addition, we recommend that the County ensure proper correction of previously submitted reports. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2023-003 – 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 total expenditures on the Quarter 2 2023 Project and Expenditure Report of $6,861,504 and total expenditures on the Quarter 2 2022 Project and Expenditure Report of $4,196,958 and therefore indicated 2023 fiscal year expenditures were $2,664,546 and reported expenditures on the 2023 SEFA of $4,173,433. 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 of 2022-003. Recommendation: We recommend the County implement a procedure to ensure that all required quarterly reports are completed accurately and verify that the expenditures agree to the amounts reported in the general ledger and SEFA. In addition, we recommend that the County ensure proper correction of previously submitted reports. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2022-003 – 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 total expenditures on the Quarter 2 2022 Project and Expenditure Report of $4,196,958 and reported expenditures on the schedule of expenditures of federal awards of $4,909,868. 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 expenditures agree to the amounts reported in the general ledger and schedule of expenditures of federal awards. In addition, we recommend that the County ensure proper correction of previously submitted reports. Views of Responsible Officials and Planned Corrective Actions: Management agrees with this finding. See separate Corrective Action Plan.

Finding 2022-004 – Subrecipient Monitoring U.S. Department of Homeland Security Montana Department of Disaster and Emergency Services BRIC: Building Resilient Infrastructure and Communities – ALN 97.047 Subrecipient Monitoring Condition: There is no internal control system to perform subrecipient monitoring. The County has one subrecipient under this award and the total subaward is $832,156. The County did not comply with the subrecipient monitor requirements including: identify the award and applicable requirements to the subrecipient, evaluate the subrecipient’s risk of noncompliance for purpose of determining the appropriate subrecipient monitoring, and monitor the subrecipient. Criteria: In accordance with 2 CFR 200.332,a pass-through entity (PTE) must: 1) clearly identify to the subrecipient the award and applicable requirements, 2) evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward, and 3) monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. In addition to procedures identified as necessary based upon the evaluation of the subrecipient risk or subrecipient monitoring, activities must include: a) reviewing financial and programmatic reports required by the PTE, b) following-up and ensuring the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal awards provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means and c) issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE. Cause: The County does not have formal policies in place for subrecipient monitoring. Effect: A failure to perform subrecipient monitoring could result in noncompliance with federal statutes, regulations, and the terms and conditions of the subaward, as well as adjustments to the County’s own records. Questioned Costs: Unknown Identification as a Repeat Finding: This is not a repeat finding from the prior audit. Recommendation: The County should adopt formal policies and procedures for subrecipient monitoring in accordance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding. See separate corrective action plan.

2021-003 CFDA #21.019 Coronavirus Relief Fund ? COVID-19 ? Allowable Costs and Activities and Subrecipient Monitoring Criteria: Controls should be in place and operating effectively to ensure compliance with federal award requirements over allowable costs and activities and subrecipient monitoring. Condition: We identified noncompliance over allowable costs and activities and subrecipient monitoring in accordance with Uniform Guidance for the Coronavirus Relief Fund. Context: As a result of our audit procedures, we noted multiple instances where the County did not ensure compliance with allowable costs and activities: The County submitted total expenditures of $24,078,455 to the Montana State Department of Administration the (DOA) for reimbursement through the Coronavirus Relief Fund (CRF) grant. The DOA adjusted a total of $4,731,832 of the expenditures submitted by the County due to lack of supporting documentation, miscalculations, and ineligible expenses. The County submitted $111,765 in expenditures on behalf of a subrecipient for reimbursement from the DOA through the CRF grant. The DOA approved and reimbursed the County for the expenditures; however, as a result of our audit procedures, it was determined that the $111,765 of expenditures were not allowable under the CRF grant. The County subsequently submitted $111,765 in allowable costs that were approved by the DOA. The County approved and reimbursed four subrecipients $3,718,584 through the CRF grant. However, the DOA determined that only $2,978,858 of the expenditures were allowable in compliance with the CRF grant and reimbursed the County this amount. Consequently, the County over paid the four recipients in the amount of $739,726. In addition, the County did not have processes in place to ensure compliance with the following subrecipient monitoring requirements: As noted above, the County did not properly monitor that amounts submitted by subrecipients for reimbursement were for allowable costs and activities in compliance with the CRF grant and did not have controls in place to track amounts reimbursed by the DOA for the subrecipients. Subaward agreements were not provided to subrecipients as required by Uniform Guidance 2 CFR section 200.331(a). The County did not verify whether subrecipients were required to be audited and follow up on findings, if applicable, in accordance with Uniform Guidance 2 CFR section 200.33(f). Cause: The County was not familiar with the allowable costs and activities and subrecipient monitoring requirements in accordance with Uniform Guidance and was not aware of the FAQs issued by the Treasury for the CRF grant. Effect: The County is not in compliance with Uniform Guidance compliance requirements for allowable costs and activities and subrecipient monitoring. Questioned Costs: $106,562 Recommendation: We recommend the County train all employees who administer federal awards on compliance with Uniform Guidance and require them to read the Compliance Supplement, grant agreements, and FAQs, as applicable, for all federal awards received. Client Response: Missoula County has begun a detailed training program on Uniform Guidance for all individuals associated with grants, and require departments receiving grants to provide the Compliance Supplement, grant agreements, and FAQ?s related to all federal grants received in Missoula County.

2020-001 Reporting ? Late Audit Submission Funding Agency: All applicable funding agencies Title: All applicable federal programs CFDA Number: All applicable CFDA numbers Criteria or Specific Requirement: As required by the Federal Register notice dated June 26, 2007, auditees are required to submit a completed Form SF-SAC, along with one complete reporting package to the Federal Audit Clearinghouse on/before the earlier of 30 days after receipt of the auditor's report or nine months after the end of the audit period. During 2020, this requirement was extended by six months for audits due March 31, 2021. Condition: An SF-SAC report was not timely filed. Context: Due to the COVID-19 pandemic and other extenuating circumstances, the audit was unable to be submitted to the Federal Audit Clearinghouse in a timely manner. Questioned Costs: To be determined by grantor. Effect: The County is at risk of jeopardizing the continued funding provided by the federal agency. Cause: Limited administrative support makes completing the administrative tasks onerous including ensuring interentity transactions get entered in both sets of financial data. Auditor's Recommendations: We recommend that the County implement processes to ensure tasks are being completed timely and ready to be presented for audit within a timeframe that allows for the audit to be completed timely. View of Responsible Official: Management agrees with the finding has begun to implement processes in order to meet the applicable reporting requirement.