FAC Explorer

Audit 2345

FY End
2023-03-31
Total Expended
$797,000
Findings
6
Programs
1
Organization: Township of Pointe Aux Barques (MI)
Year: 2023 Accepted: 2023-11-06
Auditor: Nietzke & Faupel PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1236 2023-001 Significant Deficiency - ABFGIL
1237 2023-002 Significant Deficiency - ABFGIL
1238 2023-003 Significant Deficiency - ABFGIL
577678 2023-001 Significant Deficiency - ABFGIL
577679 2023-002 Significant Deficiency - ABFGIL
577680 2023-003 Significant Deficiency - ABFGIL

Programs

ALN Program Spent Major Findings
10.760 Water and Waste Disposal Systems for Rural Communities $797,000 Yes 3

Contacts

Name Title Type
Y5JCR1ZW6LX5 Patricia Gotfredson Auditee
9897386402 Brian Hazard Auditor
No contacts on file

Notes to SEFA

Title: Note 1 - Basis of Presentation Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursements. Negative amounts (if any) shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The Township of Pointe Aux Barques has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the "schedule") includes the federal award activity of the Township of Pointe Aux Barques under programs of the federal government for the year ended March 31, 2023. The information in this schedule is presented in accordance with the requirements of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the Township of Pointe Aux Barques, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Township of Pointe Aux Barques. The Township does not qualify for low-risk auditee status. Management has utilized the United States Department of Agriculture (Rural Development) in preparing the Schedule of Expenditures of Federal Awards. The Township does not pass through federal funds.
Title: Note 2 - Summary of Significant Accounting Policies Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursements. Negative amounts (if any) shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The Township of Pointe Aux Barques has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursements. Negative amounts (if any) shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The Township of Pointe Aux Barques has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.
Title: Note 3 - Reconciliation to the Financial Statements Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursements. Negative amounts (if any) shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The Township of Pointe Aux Barques has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The federal expenditures reconcile to the amounts reported in the Township's financial statements as follows: See the Notes to the SEFA for chart/table
Title: Note 4 - Adjustments Accounting Policies: Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursements. Negative amounts (if any) shown on the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The Township of Pointe Aux Barques has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Adjustments were made to expenditures of federal awards due to rounding of USDA draws to the nearest hundred.

Finding Details

Finding 2023-001
Year-End Accounting Procedures Criteria: It is the responsibility of management to perform the year-end closing procedures and to prepare the appropriate year-end closing entries in order to ensure that the year-end financial statements are not materially misstated. Also, the year-end closing procedures should be supervised and reviewed by Township officials that have an adequate knowledge of the Township’s activities during the fiscal year. Condition: The auditors of the financial statements assisted the Township’s management with the basic year-end accounting procedures that were necessary to prepare the accounting records for financial reporting and audit purposes. This included the preparation of several year-end adjusting entries that were necessary to keep the financial statements from being misstated. Cause: Management does not have the expertise necessary to prepare the year-end adjusting entries or other procedures so that the accounting records are ready for financial reporting and audit purposes. Effect: This situation could allow the misstatement of the financial statements. Perspective: Although this finding is considered to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. The Township has engaged the financial statement auditors to perform year-end closing procedures which is a nonattest service. This is a systemic problem that is likely to continue due to the small size of the Township and an overall lack of resources. Recommendation: We recommend that the Township acquire the expertise necessary to complete the year-end accounting procedures and to prepare the Township’s accounting records needed for the audit. Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. However, due to the cost of implementing this recommendation, the Township Board believes the cost of obtaining the necessary expertise would out-weigh the benefit. Therefore, the Township will continue to request assistance from its financial statement auditors with its year-end account closing procedures.
Finding 2023-002
Preparation of the U.S. GAAP Basis Financial Statements Criteria: The responsibility of the Township’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles rests with the management of the Township. Management is also responsible for the system of internal accounting controls used to ensure that the financial statements are not materially misstated. Condition: Along with assisting with the year-end closing procedures to the Township’s accounting records, the financial statement auditors also assisted the Township by preparing the annual financial statements (including related notes). Cause: Management does not have the expertise necessary to prepare the financial statements in accordance with U.S. generally accepted accounting principles. Effect: This situation could allow the misstatement of the financial statements. Perspective: Although this finding is considered to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. The Township has engaged the financial statement auditors to prepare financial statements in accordance with U.S. generally accepted accounting principles which is a nonattest service. This is a systemic problem that is likely to continue due to the small size of the Township and an overall lack of resources. Recommendation: We recommend that the Township acquire the expertise necessary to prepare the annual financial statements including the required disclosures in accordance with U.S. generally accepted accounting principles. Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. However, due to the cost of implementing this recommendation, the Township Board believes the cost of obtaining the necessary expertise would out-weigh the benefit. Therefore, the Township will continue to request assistance from its external auditors with the preparation of its annual financial statements.
Finding 2023-003
Internal Control Over Financial Reporting and Compliance Criteria: Management is responsible for the internal controls that address the assertions related to financial reporting and compliance requirements related to the Township’s federal award programs. Management is responsible for designing and implementing a system of internal controls which include written policies and procedures for how various accounting and transaction reporting will be performed and documented for financial reporting and compliance purposes. Condition: Although the Township appears to have a system of internal controls in place, the Township does not have written policies and procedures that outline how accounting and transaction reporting will be performed and documented for cash disbursements, cash receipts, federal award programs, etc. This is a requirement of the Uniform Guidance. Cause: Due to the small size of the Township, a complex system of internal controls has not appeared necessary. This has resulted in management not taking the time to document written policies and procedures over significant internal control areas. Effect: This situation could allow noncompliance with the Uniform Guidance and federal regulations to occur. Perspective: While we consider this finding to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. This is a systemic problem caused by a lack of experience within the Township related to the Uniform Guidance. The Township is actively working to remedy the situation. Recommendation: We recommend that the Township implement written policies and procedures over significant internal control areas. Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. The Board of Trustees is working to implement written policies and procedures over significant internal control areas including federal award programs.
Finding 2023-001
Year-End Accounting Procedures Criteria: It is the responsibility of management to perform the year-end closing procedures and to prepare the appropriate year-end closing entries in order to ensure that the year-end financial statements are not materially misstated. Also, the year-end closing procedures should be supervised and reviewed by Township officials that have an adequate knowledge of the Township’s activities during the fiscal year. Condition: The auditors of the financial statements assisted the Township’s management with the basic year-end accounting procedures that were necessary to prepare the accounting records for financial reporting and audit purposes. This included the preparation of several year-end adjusting entries that were necessary to keep the financial statements from being misstated. Cause: Management does not have the expertise necessary to prepare the year-end adjusting entries or other procedures so that the accounting records are ready for financial reporting and audit purposes. Effect: This situation could allow the misstatement of the financial statements. Perspective: Although this finding is considered to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. The Township has engaged the financial statement auditors to perform year-end closing procedures which is a nonattest service. This is a systemic problem that is likely to continue due to the small size of the Township and an overall lack of resources. Recommendation: We recommend that the Township acquire the expertise necessary to complete the year-end accounting procedures and to prepare the Township’s accounting records needed for the audit. Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. However, due to the cost of implementing this recommendation, the Township Board believes the cost of obtaining the necessary expertise would out-weigh the benefit. Therefore, the Township will continue to request assistance from its financial statement auditors with its year-end account closing procedures.
Finding 2023-002
Preparation of the U.S. GAAP Basis Financial Statements Criteria: The responsibility of the Township’s annual financial statements prepared in accordance with U.S. generally accepted accounting principles rests with the management of the Township. Management is also responsible for the system of internal accounting controls used to ensure that the financial statements are not materially misstated. Condition: Along with assisting with the year-end closing procedures to the Township’s accounting records, the financial statement auditors also assisted the Township by preparing the annual financial statements (including related notes). Cause: Management does not have the expertise necessary to prepare the financial statements in accordance with U.S. generally accepted accounting principles. Effect: This situation could allow the misstatement of the financial statements. Perspective: Although this finding is considered to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. The Township has engaged the financial statement auditors to prepare financial statements in accordance with U.S. generally accepted accounting principles which is a nonattest service. This is a systemic problem that is likely to continue due to the small size of the Township and an overall lack of resources. Recommendation: We recommend that the Township acquire the expertise necessary to prepare the annual financial statements including the required disclosures in accordance with U.S. generally accepted accounting principles. Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. However, due to the cost of implementing this recommendation, the Township Board believes the cost of obtaining the necessary expertise would out-weigh the benefit. Therefore, the Township will continue to request assistance from its external auditors with the preparation of its annual financial statements.
Finding 2023-003
Internal Control Over Financial Reporting and Compliance Criteria: Management is responsible for the internal controls that address the assertions related to financial reporting and compliance requirements related to the Township’s federal award programs. Management is responsible for designing and implementing a system of internal controls which include written policies and procedures for how various accounting and transaction reporting will be performed and documented for financial reporting and compliance purposes. Condition: Although the Township appears to have a system of internal controls in place, the Township does not have written policies and procedures that outline how accounting and transaction reporting will be performed and documented for cash disbursements, cash receipts, federal award programs, etc. This is a requirement of the Uniform Guidance. Cause: Due to the small size of the Township, a complex system of internal controls has not appeared necessary. This has resulted in management not taking the time to document written policies and procedures over significant internal control areas. Effect: This situation could allow noncompliance with the Uniform Guidance and federal regulations to occur. Perspective: While we consider this finding to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. This is a systemic problem caused by a lack of experience within the Township related to the Uniform Guidance. The Township is actively working to remedy the situation. Recommendation: We recommend that the Township implement written policies and procedures over significant internal control areas. Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. The Board of Trustees is working to implement written policies and procedures over significant internal control areas including federal award programs.