NORTHWEST COLORADO COUNCIL OF GOVERNMENTS

Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grants Assistance Listing Number: 14.228 Federal Award Identification Number and Year: B-21-DC-08-0001 2021 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number: F20CDBG20630 Award Period: April 1, 2020 – March 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter

Criteria or Specific Requirement: In accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), the Council should report all federal expenditures in the schedule of expenditures of federal awards (SEFA) each fiscal year. Additionally, per 2 CFR section 200.502(a)-(d), the determination of when a federal award is expended must be based on when the activity related to the federal award occurs, including the value of new loans made during the audit period.

Condition: In reviewing the expenditure detail and supporting documentation for the 2023 SEFA, the Council included $150,000 of excess federal expenditures that were not disbursed in 2023.

Questioned Costs: None

Context: The inclusion of excess expenditures to be reported in 2024 was identified during completeness testing of the current year major program.

Cause: SEFA expenditures for the CDBG program were not reconciled to loan disbursements in 2023. Management misinterpreted the loan amount report provided by NLF’s loan management software. One loan for $150,000 was disbursed during 2023 and another $150,000 loan was disbursed to the same borrower in 2024. However, all $300,000 was initially reported on the 2023 SEFA.

Effect: The 2023 SEFA was initially overstated by $150,000, and was subsequently adjusted.

Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-003.

Recommendation: We recommend that the Council record federal expenditures on the SEFA under the program in the year upon which the loan disbursement occurs using the proper report from NLF’s loan management software.

Views of Responsible Officials: There is no disagreement with the audit finding.

Federal Agency: Department of Energy Federal Program Title: Weatherization Assistance for Low-income Persons Assistance Listing Number: 81.042 Federal Award Identification Number and Year: DEEE0007908-2017 2019 Pass-Through Agency: Colorado Energy Office Pass-Through Number: GAE 20-2019 Award Period: July 1, 2019 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter

Criteria or Specific Requirement: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award requires charges to federal awards for salaries and wages be based on records that accurately reflect the work performed. These records must be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.

Condition: One hourly employee’s wages were overpaid and charged to the grant when compared to the hours per the approved timesheet.

Questioned Costs: $46

Context: For one employee, and one pay period tested, the hourly employee’s gross wages overpaid and overcharged to the grant by $46 based on two hours that were improperly included in the final payroll run.

Cause: Entering payroll into QuickBooks using the approved timesheet for hourly employees was a manual process. For this individual, the timesheet reported a total of 92 hours of regular pay. However, when the time sheet hours were summed, it was noted there were only 90 hours reported on the time sheet, thus 2 hours were improperly included on the payroll run as hour totals were not verified.

Effect: For the February 15, 2023, pay period, the employee was overpaid, and the grant was overcharged a total of $46.

Repeat Finding: The finding is a repeat of a finding in the 2021 fiscal. Prior year finding number was 2021-002.

Recommendation: We recommend the Council review its payroll procedures over hourly employees to ensure all hours are properly accounted for by pay code in the final payroll.

Views of Responsible Officials: There is no disagreement with the audit finding.