• This page, MCAD Did Not Notify the Office of the Comptroller of the Commonwealth of the Receipt of Coronavirus Aid, Relief, and Economic Security Act Funds or Update Its Internal Control Plan., is   offered by
  • Office of the State Auditor

MCAD Did Not Notify the Office of the Comptroller of the Commonwealth of the Receipt of Coronavirus Aid, Relief, and Economic Security Act Funds or Update Its Internal Control Plan.

Since CTR was not notified of the receipt of funds, it could not create the special accounts planned to track CARES Act funds.

Table of Contents

Overview

During the audit period, MCAD did not notify the Office of the Comptroller of the Commonwealth (CTR) of the receipt of $75,000 in Coronavirus Aid, Relief, and Economic Security (CARES) Act funds on May 26, 2020. In addition, although it did create a number of process changes in response to the COVID-19 pandemic, MCAD neither drafted a separate “COVID-19 Pandemic Response Plan Appendix” to its internal control plan (ICP) to include CARES Act requirements nor updated its ICP. MCAD’s ICP was last updated in 2014.

Since CTR was not notified of the receipt of funds, it could not create the special accounts planned to track CARES Act funds. This increased the risk that CARES Act funds could be mixed with non–CARES Act funds. Further, not updating the ICP annually or creating an appendix with COVID-19-related changes could leave MCAD vulnerable to risks.

Authoritative Guidance

CTR’s “COVID-19 Revenue and Grants” policy states,

Departments are responsible for notifying CTR as soon as they are aware that they will be receiving COVID-19 related [funds] or other federal cost share revenue.

This is required so that CTR can establish a separate account to track these funds and prevent commingling of COVID-19-related funds with other funds.

CTR’s “COVID-19 Pandemic Response Internal Controls Guidance” issued April 1, 2020 states,

Department internal control plans must be based on risk assessments and updated annually, or when significant changes occur. Because the COVID-19 Pandemic has affected all departments, the Comptroller, in consultation with the State Auditor’s Office, is providing two options for updating internal controls.

  1. If the impact to your department is such that it can be reflected in your Internal Control Plan (ICP), then update the ICP as you would for any other mid-year changes.

2.   Departments experiencing a significant impact, and requiring the accumulation of substantial documentation (e.g. changes to business processes, requirements of federal and state specific laws or guidance, new funds or new programs), can draft a separate COVID-19 Pandemic Response Plan Appendix to the ICP as an organized set (hard or soft copies) of emails, documents, risk assessments, policies and procedures.

Reasons for Issues

MCAD officials told us they did not originally assess the funds in question as CARES Act funds, based on discussions with HUD, and therefore did not implement CTR’s requirements, including the requirement of notifying CTR. They indicated that the reason they did not update the ICP annually and draft the organized appendix was the limited number of fully trained staff members to amend and approve policies.

Recommendations

  1. MCAD should notify CTR when it receives any CARES Act funds.
  2. MCAD should draft a “COVID-19 Pandemic Response Plan Appendix,” incorporate it into its ICP, and annually review and update the ICP and appendix with any changes necessary.

Auditee’s Response

The agency agrees with the auditor’s findings and will work to implement the auditor’s recommendations. It should be noted that HUD required an application detailing the need, and use, for CARES Act funding. HUD also required the MCAD to regularly report on the use of CARES Act funding to ensure those funds were being used for their intended purpose.

Auditor’s Reply

Based on its response, MCAD is taking measures to address our concerns on this matter.

Date published: April 4, 2022

Help Us Improve Mass.gov  with your feedback

Please do not include personal or contact information.
Feedback