FAC Explorer

Audit 315317

FY End
2023-12-31
Total Expended
$960,314
Findings
2
Programs
5
Organization: City of Deer River (MN)
Year: 2023 Accepted: 2024-07-17
Auditor: Sterle & CO LTD

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
478686 2023-001 Significant Deficiency Yes P
1055128 2023-001 Significant Deficiency Yes P

Programs

ALN Program Spent Major Findings
10.760 Water and Waste Disposal Systems for Rural Communities $809,850 Yes 1
21.019 Coronavirus Relief Fund $57,939 - 0
66.458 Capitalization Grants for Clean Water State Revolving Funds $42,287 - 0
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $41,162 - 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $9,076 - 0

Contacts

Name Title Type
KJGGYUQAL8Y4 Mark Box Auditee
2182468195 Jeff Sterle Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presenations Accounting Policies: see attached De Minimis Rate Used: N Rate Explanation: de minimus cost rate note used The accompanying schedule of expenditures of federal awards includes the federal award activity of the City under programs of the federal government for the year ended December 31,2023. The information in this schedule is presented in accordance with the requirements of Title 2 U.S Code of Audit Requirements for Federal Awards (Uniform Guidance). Because this schedule presensts only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City.
Title: Summary of Significant Accounting Policies Accounting Policies: see attached De Minimis Rate Used: N Rate Explanation: de minimus cost rate note used 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 alllowed or are limited as to reimbusement.
Title: Indirect Cost Rate Accounting Policies: see attached De Minimis Rate Used: N Rate Explanation: de minimus cost rate note used The City has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance.
Title: COVID 19 -American Rescue Plan - Coronavirus Relief Fund Accounting Policies: see attached De Minimis Rate Used: N Rate Explanation: de minimus cost rate note used The City received $101,632 in funds in prior years. During the current year, the City expended $57,939 of these funds as refelcted in the accompanying Schedule of Federal Awards Expended. The City has $43,696 of the funds remaining of which are restricted in the City's capital projects fund set aside for the City's Walking Trail project for completion in the upcoming year
Title: MN Public Facilities Authority Loan Program Accounting Policies: see attached De Minimis Rate Used: N Rate Explanation: de minimus cost rate note used The City drew $42,287 on the Clean Water SRD loan program (ALN #66.458) during the year for expenditures incurrred related to the ity infrastructure project. The outstanding balance as of December 31, 2023 on the loan is $852,638

Finding Details

Finding 2023-001
Lack of segregation of duties - significant deficiency Criteria - For an effetive control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performng their assigned duties. No one individual should have more than one duty related to approval, custody of assets, record keeping, and reconciliation functions. Condition - The City does not have enough staff to adequately separate duties in all financial transactions. Context - The lack of segreation of duties exists within the City as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Cause - Limited number of staff available to appropriately divide duties. Effect - Errors or misapporpirations could occur and go undetected for a period of time. Questioned costs - Not applicable Recommendation - The City's council members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of the bank activity as well as general ledger and journal entries. The council members should also periodically perform on site inspections of assets and financial records. View of Responsible Officials and Corrective Actions - The City agrees with the recommendations and continues to provide oversight as needed.
Finding 2023-001
Lack of segregation of duties - significant deficiency Criteria - For an effetive control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performng their assigned duties. No one individual should have more than one duty related to approval, custody of assets, record keeping, and reconciliation functions. Condition - The City does not have enough staff to adequately separate duties in all financial transactions. Context - The lack of segreation of duties exists within the City as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Cause - Limited number of staff available to appropriately divide duties. Effect - Errors or misapporpirations could occur and go undetected for a period of time. Questioned costs - Not applicable Recommendation - The City's council members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of the bank activity as well as general ledger and journal entries. The council members should also periodically perform on site inspections of assets and financial records. View of Responsible Officials and Corrective Actions - The City agrees with the recommendations and continues to provide oversight as needed.