Audit 22335

2022-004 Drafting Schedule of Expenditures of Federal Awards and Related Notes Condition: Like other entities of similar size, the District requires the assistance of the auditor to prepare the schedule of expenditures of federal awards in accordance with the Uniform Guidance. Criteria: Internal controls over preparation of the schedule of expenditures of federal awards should be in place to provide reasonable assurance that a misstatement in the schedule of expenditures of federal awards would be prevented or detected. Cause: Management relies on the auditor to assist with the preparation of the schedule of expenditures of federal awards. Effect: The District's system of internal control may not prevent, detect, or correct misstatements in the schedule of expenditures of federal awards. Auditor's Recommendation: The auditor will continue to work with the District, providing information and training when necessary, to make the District?s personnel more knowledgeable about its responsibility for the schedule of expenditures of federal awards. Management Response: The control deficiency has been discussed with the District's Board and they acknowledge their responsibility for the schedule of expenditures of federal awards. The District accepts responsibility for the schedule of expenditures of federal awards. Due to the technical nature of preparing the schedule of expenditures of federal awards, and due to limited resources, the District does not anticipate the need for this assistance to change in the foreseeable future.

2022-005 Federal Procedure Manual Condition: Internal controls over federal grants should be in place to provide reasonable assurance that misstatement in the schedule of expenditures of federal awards would be prevented or detected. Criteria: Non-federal entities who receive federal or state grants or have grant programs should have documented policies and procedures in place over grants and grant expenditures. Cause: The District does not have documented policies and procedures in place over grants and grant expenditures. Effect: Without documented policies and procedures, the internal control over federal grants is low, and the risk of misstatement in the schedule of expenditures of federal and state awards is high. Auditor's Recommendation: We recommend that the District works on written policies and procedures over grants and grant expenditures. Management Response: The District will work with their auditor to develop and adopt written grant procedures that are in accordance with the Uniform Guidance.

2022-006 Late Submission of 2021 Data Collection Form with Federal Audit Clearinghouse Condition: The 2021 data collection form for the District was submitted after the prescribed nine month due date, as required by the Federal Audit Clearinghouse for the year ended December 31, 2021. Criteria: The Federal Audit Clearinghouse requires that organizations submit their annual audit and the annual data collection form within nine months after the fiscal year-end. Cause: The delay in submitting the 2021 data collection form and the 2021 annual audit was primarily due to the audit was performed late. Effect: This delay in submission may hinder timely access to accurate financial information for decision-making and reporting. Auditor's Recommendation: We recommend that the District establishes a formalized process to track regulatory filing deadlines and responsibilities and conduct periodic reviews to ensure timely compliance with regulatory requirements. Management Response: The District acknowledges the audit finding and commits to implementing the recommended actions promptly to enhance compliance with regulatory requirements regarding data collection form submissions.

2022-007 Reserve Requirement not Met for the Sewerage System Mortgage Revenue Bond Condition: The District did not meet the reserve requirement for the bond issuance during the audit period. Criteria: The Sewerage System Mortgage Revenue Bond agreement, as outlined in Resolution No. 22-02, species that the District must maintain an amount equal to the least of (a) the amount required by the District ($86,500), (b) maximum annual debt service on the Bond in any Bond Year and (c) 125% of average annual debt service on the Bond, to ensure compliance with the terms and conditions of the bond issuance. Cause: The failure to meet the reserve requirement was primarily attributed to not transferring money to the reserve account. Effect: Failure to meet the reserve requirements could result in regulatory penalties. Auditor's Recommendation: We recommend the District develops a plan to replenish the reserve to meet the bond issuance requirements, implements a robust financial monitoring system to track compliance with bond issuance terms and ensure the reserve requirement is met on an ongoing basis, and conduct a comprehensive review of financial planning processes to prevent future reserve shortfalls. Management Response: The District acknowledges the audit finding and is committed to taking corrective measures in line with the recommendations provided. We will develop a detailed action plan to replenish the reserve and enhance financial monitoring and planning processes to prevent similar issues in the future.

2022-004 Drafting Schedule of Expenditures of Federal Awards and Related Notes Condition: Like other entities of similar size, the District requires the assistance of the auditor to prepare the schedule of expenditures of federal awards in accordance with the Uniform Guidance. Criteria: Internal controls over preparation of the schedule of expenditures of federal awards should be in place to provide reasonable assurance that a misstatement in the schedule of expenditures of federal awards would be prevented or detected. Cause: Management relies on the auditor to assist with the preparation of the schedule of expenditures of federal awards. Effect: The District's system of internal control may not prevent, detect, or correct misstatements in the schedule of expenditures of federal awards. Auditor's Recommendation: The auditor will continue to work with the District, providing information and training when necessary, to make the District?s personnel more knowledgeable about its responsibility for the schedule of expenditures of federal awards. Management Response: The control deficiency has been discussed with the District's Board and they acknowledge their responsibility for the schedule of expenditures of federal awards. The District accepts responsibility for the schedule of expenditures of federal awards. Due to the technical nature of preparing the schedule of expenditures of federal awards, and due to limited resources, the District does not anticipate the need for this assistance to change in the foreseeable future.

2022-005 Federal Procedure Manual Condition: Internal controls over federal grants should be in place to provide reasonable assurance that misstatement in the schedule of expenditures of federal awards would be prevented or detected. Criteria: Non-federal entities who receive federal or state grants or have grant programs should have documented policies and procedures in place over grants and grant expenditures. Cause: The District does not have documented policies and procedures in place over grants and grant expenditures. Effect: Without documented policies and procedures, the internal control over federal grants is low, and the risk of misstatement in the schedule of expenditures of federal and state awards is high. Auditor's Recommendation: We recommend that the District works on written policies and procedures over grants and grant expenditures. Management Response: The District will work with their auditor to develop and adopt written grant procedures that are in accordance with the Uniform Guidance.

2022-006 Late Submission of 2021 Data Collection Form with Federal Audit Clearinghouse Condition: The 2021 data collection form for the District was submitted after the prescribed nine month due date, as required by the Federal Audit Clearinghouse for the year ended December 31, 2021. Criteria: The Federal Audit Clearinghouse requires that organizations submit their annual audit and the annual data collection form within nine months after the fiscal year-end. Cause: The delay in submitting the 2021 data collection form and the 2021 annual audit was primarily due to the audit was performed late. Effect: This delay in submission may hinder timely access to accurate financial information for decision-making and reporting. Auditor's Recommendation: We recommend that the District establishes a formalized process to track regulatory filing deadlines and responsibilities and conduct periodic reviews to ensure timely compliance with regulatory requirements. Management Response: The District acknowledges the audit finding and commits to implementing the recommended actions promptly to enhance compliance with regulatory requirements regarding data collection form submissions.

2022-007 Reserve Requirement not Met for the Sewerage System Mortgage Revenue Bond Condition: The District did not meet the reserve requirement for the bond issuance during the audit period. Criteria: The Sewerage System Mortgage Revenue Bond agreement, as outlined in Resolution No. 22-02, species that the District must maintain an amount equal to the least of (a) the amount required by the District ($86,500), (b) maximum annual debt service on the Bond in any Bond Year and (c) 125% of average annual debt service on the Bond, to ensure compliance with the terms and conditions of the bond issuance. Cause: The failure to meet the reserve requirement was primarily attributed to not transferring money to the reserve account. Effect: Failure to meet the reserve requirements could result in regulatory penalties. Auditor's Recommendation: We recommend the District develops a plan to replenish the reserve to meet the bond issuance requirements, implements a robust financial monitoring system to track compliance with bond issuance terms and ensure the reserve requirement is met on an ongoing basis, and conduct a comprehensive review of financial planning processes to prevent future reserve shortfalls. Management Response: The District acknowledges the audit finding and is committed to taking corrective measures in line with the recommendations provided. We will develop a detailed action plan to replenish the reserve and enhance financial monitoring and planning processes to prevent similar issues in the future.