City of Costa Mesa

Federal Agency: U.S. Department of Treasury CFDA No.: 21.027 Federal Program: Coronavirus State and Local Fiscal Recovery Funds Federal Award Year: 2021 Control Category: Reporting Questioned Costs: $0 Condition The City submitted their Interim Report of Coronavirus State and Local Fiscal Recovery Funds (?CSLFRF?) for the period March 3, 2021 through July 31, 2021. The City reported expenditures of $4,200,298. However, based on changes in the Treasury guidelines, the City subsequently modified the use of the funding adding additional costs of $8,913,547 in costs for the period March 3, 2021 through June 30, 2021. These additional costs were not reported on the Interim Report. Criteria 2 CFR 200.302, Financial Management, states, in part: ??(b) The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Similarly, a pass-through entity must not require a subrecipient to establish an accrual accounting system and must allow the subrecipient to develop accrual data for its reports on the basis of an analysis of the documentation on hand. (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation?? Cause The City correctly applied eligible costs through July 31, 2021 and reported the amount in the Interim Report. Because the Treasury Department updated the CSLFRF compliance and reporting guidelines after the Interim Report due date, the City revised its application of the CSLFRF, and included additional eligible costs, resulting in under reporting eligible costs on the Interim Report. Effect The Interim Report, as it is currently stated, doesn?t represent the actual costs that the City used the funding on. Questioned Costs There were no questioned costs. Recommendation We recommend that the City reflect revised cost information on subsequent Project and Expenditure Reports.

The ARPA Report due January 31, 2022 reflects revised cost information, which includes expenditures reported in the 2021 Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021.