FAC Explorer

Audit 304092

FY End
2022-09-30
Total Expended
$1.32M
Findings
4
Programs
1
Organization: The Water Works and Gas Board of the City of Red Bay (AL)
Year: 2022 Accepted: 2024-04-22
Auditor: The Sparks CPA Firm PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
393930 2022-005 Significant Deficiency - I
393931 2022-006 Material Weakness - C
970372 2022-005 Significant Deficiency - I
970373 2022-006 Material Weakness - C

Programs

ALN Program Spent Major Findings
66.468 Capitalization Grants for Drinking Water State Revolving Funds $1.32M Yes 2

Contacts

Name Title Type
U9XQGWHFXJ63 Cynthia Fowler Auditee
2563568622 Dicky H. Sparks Auditor
No contacts on file

Notes to SEFA

Title: Note 1 – Basis of Presentation Accounting Policies: Note 1 – Basis of Presentation - The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of The Water Works and Gas Board of the City of Red Bay under programs of the federal government for the year ended September 30, 2022. The information in this Schedule is presented in accordance with the requirements of 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 Water Works and Gas Board of the City of Red Bay, it is not intended to and does not present the financial position, changes in net position or cash flows of The Water Works and Gas Board of the City of Red Bay. Note 2 – Summary of Significant Accounting Policies - Expenditures reported on the Schedule are reported on the modified 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 reimbursement. Negative amounts show on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Note 3 – Indirect Cost Rate - The Water Works and Gas Board of the City of Red Bay has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Indirect costs were not applicable to grant. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of The Water Works and Gas Board of the City of Red Bay under programs of the federal government for the year ended September 30, 2022. The information in this Schedule is presented in accordance with the requirements of 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 Water Works and Gas Board of the City of Red Bay, it is not intended to and does not present the financial position, changes in net position or cash flows of The Water Works and Gas Board of the City of Red Bay.
Title: Note 2 – Summary of Significant Accounting Policies Accounting Policies: Note 1 – Basis of Presentation - The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of The Water Works and Gas Board of the City of Red Bay under programs of the federal government for the year ended September 30, 2022. The information in this Schedule is presented in accordance with the requirements of 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 Water Works and Gas Board of the City of Red Bay, it is not intended to and does not present the financial position, changes in net position or cash flows of The Water Works and Gas Board of the City of Red Bay. Note 2 – Summary of Significant Accounting Policies - Expenditures reported on the Schedule are reported on the modified 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 reimbursement. Negative amounts show on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Note 3 – Indirect Cost Rate - The Water Works and Gas Board of the City of Red Bay has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Indirect costs were not applicable to grant. Expenditures reported on the Schedule are reported on the modified 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 reimbursement. Negative amounts show on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.
Title: Note 3 – Indirect Cost Rate Accounting Policies: Note 1 – Basis of Presentation - The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of The Water Works and Gas Board of the City of Red Bay under programs of the federal government for the year ended September 30, 2022. The information in this Schedule is presented in accordance with the requirements of 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 Water Works and Gas Board of the City of Red Bay, it is not intended to and does not present the financial position, changes in net position or cash flows of The Water Works and Gas Board of the City of Red Bay. Note 2 – Summary of Significant Accounting Policies - Expenditures reported on the Schedule are reported on the modified 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 reimbursement. Negative amounts show on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Note 3 – Indirect Cost Rate - The Water Works and Gas Board of the City of Red Bay has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: N Rate Explanation: Indirect costs were not applicable to grant. The Water Works and Gas Board of the City of Red Bay has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2022-005
2022-005 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management I – Procurement Significant Deficiency Criteria: Per 2 CFR section 200.318(c) entities are required to have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Condition: The entity has no written standards of conduct per 2 CFR section 200.318(c). Context: The Water Works and Gas Board of the City of Red Bay does not have a written policy for standards of conduct. Effect: The entity is not in compliance with 2 CFR section 200.318(c). Cause: The entity failed to adopt a written standard of conduct. Repeat Finding: No Recommendation: The entity should adopt written standards of conduct to cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Board’s Response: The Water Works and Gas Board of the City of Red Bay will maintain a written standards of conduct and comply with all State laws in relation the Board members and employees in regard to their relationship with vendors and contractors.
Finding 2022-006
2022-006 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management C – Cash Management Material Weakness and Noncompliance Criteria: The SRF Loan program is a reimbursable grant administered by ADEM. When non-Federal entities are funded under the reimbursement method, the entity they request reimbursement for expenses paid that are allowable to the grant under (2CFR section 200.305(b)(3)) and Section 2.2(b) of the Special Conditions Loan Agreement. Condition: During test work, instances were noted where The Water Works and Gas Board of the City of Red Bay did not pay the cost of the invoices prior to requesting reimbursement. The expenditures were allowable and approved by Alabama State Department of Environmental Management for reimbursement, but the invoices were not paid prior to requesting the reimbursement from Alabama State Department of Environmental Management. Context: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to submitting them for reimbursement to Alabama State Department of Environmental Management. Effect: The entity is not in compliance with 2 CFR section 200.305(b)(3) and Section 2.2(b) of the Special Conditions Loan Agreement. Cause: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to requesting reimbursement. Repeat Finding: No Recommendation: The Water Works and Gas Board of the City of Red Bay should ensure that invoices are paid prior to requesting reimbursement from the pass-through entity. Board’s Response: The Water Works and Gas Board of the City of Red Bay will ensure payments under reimbursable grants are made prior to reimbursement requests.
Finding 2022-005
2022-005 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management I – Procurement Significant Deficiency Criteria: Per 2 CFR section 200.318(c) entities are required to have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Condition: The entity has no written standards of conduct per 2 CFR section 200.318(c). Context: The Water Works and Gas Board of the City of Red Bay does not have a written policy for standards of conduct. Effect: The entity is not in compliance with 2 CFR section 200.318(c). Cause: The entity failed to adopt a written standard of conduct. Repeat Finding: No Recommendation: The entity should adopt written standards of conduct to cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Board’s Response: The Water Works and Gas Board of the City of Red Bay will maintain a written standards of conduct and comply with all State laws in relation the Board members and employees in regard to their relationship with vendors and contractors.
Finding 2022-006
2022-006 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management C – Cash Management Material Weakness and Noncompliance Criteria: The SRF Loan program is a reimbursable grant administered by ADEM. When non-Federal entities are funded under the reimbursement method, the entity they request reimbursement for expenses paid that are allowable to the grant under (2CFR section 200.305(b)(3)) and Section 2.2(b) of the Special Conditions Loan Agreement. Condition: During test work, instances were noted where The Water Works and Gas Board of the City of Red Bay did not pay the cost of the invoices prior to requesting reimbursement. The expenditures were allowable and approved by Alabama State Department of Environmental Management for reimbursement, but the invoices were not paid prior to requesting the reimbursement from Alabama State Department of Environmental Management. Context: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to submitting them for reimbursement to Alabama State Department of Environmental Management. Effect: The entity is not in compliance with 2 CFR section 200.305(b)(3) and Section 2.2(b) of the Special Conditions Loan Agreement. Cause: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to requesting reimbursement. Repeat Finding: No Recommendation: The Water Works and Gas Board of the City of Red Bay should ensure that invoices are paid prior to requesting reimbursement from the pass-through entity. Board’s Response: The Water Works and Gas Board of the City of Red Bay will ensure payments under reimbursable grants are made prior to reimbursement requests.