LAKE COUNTY, COLORADO

2024-002: Material Weakness in Internal Controls over the Schedule of Federal Awards and Grants Management Federal Assistance Listing Number(s): 21.027 Program Title: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal Award Year: 2022-2023 Name of Federal Agency: U.S. Department of Treasury Name of pass-through entity: Direct, Colorado Department of Local Affairs, and various COVID-19 Program: Yes Criteria: 2 CFR 200 Section 303 in part states that the recipient of federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements. Condition: We continued to identify several material adjustments to the Federal awards that were expended during 2024 that were not accurately reported on the County’s Schedule of Expenditures of Federal Awards (SEFA). Cause: Based on our review of County’s schedule of expenditures of federal awards, grants revenue, and receivables, we identified that the County may need to implement a periodic process that will include grants reconciliation across the County (except for DHS) and a year-end closing process that will include a reconciliation of the SEFA to the County’s financial statements. Effect: Financial reporting over the SEFA caused delays in the completion of the audit and Single Audits. Repeat Finding: Yes. Recommendation: We recommend that the County create processes to identify, organize, and manage Federal awards and other grants and make sure that the grant requirements are properly maintained with effective internal controls over compliance and reporting. In addition, we recommend that the County prepares an accurate schedule of expenditures of federal awards and properly reconcile and record accruals related to grants at year-end to avoid future delays in the audit process. The current staff have made a significant effort during 2025 to improve monthly and yearly processes and address this issue. Corrective Action Plan: Reported on page 69.

2024-003: Noncompliance and Material Weakness in Internal Controls Over the Reporting Requirement Federal Assistance Listing Number(s): 21.027, 21.032 Program Title: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) and Local Assistance and Tribal Consistency Fund Federal Award Year: 2022-2023 Name of Federal Agency: U.S. Department of Treasury Name of pass-through entity: Direct, Colorado Department of Local Affairs, and various COVID-19 Program: Yes Federal Program: Coronavirus State and Local Fiscal Recovery Funds and Local Assistance and Tribal Consistency Fund Criteria: The OMB Compliance Supplement section L (Reporting) for the grant program requires that the County submits a project and expenditure report on a quarterly and annual basis. Condition: We judgmentally selected two of four quarterly reports and the annual report for the grant program for testing compliance and internal control over the reporting requirement. However, we were notified by management that several of the required quarterly and one annual report were not filed in a timely manner by the required deadline(s), which put the County out of compliance with the grant program requirements. As result, this noncompliance has identified that the County does not have proper internal controls related to reporting based on 2 CFR 200 Section 303. Cause: County did not have proper internal controls and processes in place to make sure that the reporting is satisfied on a timely basis. The County is out of compliance with the reporting requirement and indicates a lack of internal controls over reporting. Effect: The County is out of compliance with the reporting requirement and indicates a lack of internal controls over reporting. This may be a violation of the Federal award that may cause additional requirements or additional oversight over the grant award. Repeat Finding: Yes. Recommendation: We continue to recommend that the County re-evaluate the reporting processes over Federal awards at the County to be in compliance with the Federal requirements. In addition, we recommend that the County evaluate grant requirements including reporting and related internal controls to avoid future noncompliance. County’s new administration and finance staff have made significant progress in improving these processes in 2025 and subsequent to December 31, 2024. Corrective Action Plan: Reported on page 70.

Criteria: The UMB Compliance Supplement section L (Reporting) for the grant program requires that the County submits a project and expenditure report on a quarterly and annual basis. Condition: We judgmentally selected two of four quarterly reports and the annual report for the grant program for testing compliance and internal control over the reporting requirement. However, we were notified by management that several of the required quarterly and one annual report were not filed in a timely manner by the required deadline(s), which put the County out of compliance with the grant program requirements. As result, this noncompliance has identified that the County does not have proper internal controls related to reporting based on 2 CFR 200 Section 303. Cause: County did not have proper internal controls and processes in place to make sure that the reporting is satisfied on a timely basis. The County is out of compliance with the reporting requirement and indicates a lack of internal controls over reporting. Effect: The County is out of compliance with the reporting requirement and indicates a lack of internal controls over reporting. This may be a violation of the Federal award that may cause additional requirements or additional oversight over the grant award. Repeat Finding: No. Recommendation: We recommend that the County re-evaluate the reporting processes over Federal awards at the County to be in compliance with the Federal requirements. In addition, we recommend that the County evaluate grant requirements including reporting and related internal controls to avoid future noncompliance.