FAC Explorer

Audit 319467

FY End
2023-12-31
Total Expended
$1.42M
Findings
4
Programs
4
Organization: City of Lead (SD)
Year: 2023 Accepted: 2024-09-12
Auditor: Ketel Thorstenson LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
496656 2023-001 Material Weakness - L
496657 2023-004 Significant Deficiency - B
1073098 2023-001 Material Weakness - L
1073099 2023-004 Significant Deficiency - B

Programs

ALN Program Spent Major Findings
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $760,000 Yes 2
21.027 Coronavirus State and Local Fiscal Recovery Funds $263,144 - 0
20.600 State and Community Highway Safety $20,686 - 0
15.904 Historic Preservation Fund Grants-in-Aid $1,580 - 0

Contacts

Name Title Type
YU27VA6WJBK3 Billie Jo Inhofer Auditee
6055841401 Traci Hanson Auditor
No contacts on file

Notes to SEFA

Title: Note 1 Accounting Policies: Note 1 - Basis of Presentation and Summary of Significant Accounting Policies The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") 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 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 City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. Expenditures reported on the Schedule are reported on the modified cash 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. De Minimis Rate Used: N Rate Explanation: Note 2 - Indirect Cost Rate The City has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Basis of Presentation and Summary of Significant Accounting Policies The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") 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 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 City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. Expenditures reported on the Schedule are reported on the modified cash 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.
Title: Note 2 Accounting Policies: Note 1 - Basis of Presentation and Summary of Significant Accounting Policies The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") 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 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 City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. Expenditures reported on the Schedule are reported on the modified cash 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. De Minimis Rate Used: N Rate Explanation: Note 2 - Indirect Cost Rate The City has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. The City has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance.

Finding Details

Finding 2023-001
Federal Program Affected: Community Development Block Grants (CDBG) (AL #14.228) Compliance Requirement: Reporting Questioned Costs: None. Condition and Cause: We were requested to draft the audited modified cash basis financial statements, Schedule of Expenditures of Federal Awards, and related footnote disclosures as part of our regular audit services. Auditing standards require auditors to communicate this situation to the City Commission as an internal control deficiency. Ultimately, it is management’s responsibility to provide for the preparation of the City’s statements and footnotes, and the responsibility of the auditor to determine the fairness and presentation of those statements. From a practical standpoint, we do both for the City at the same time in connection with our audit. This is not unusual for cities of your size. Criteria and Effect: It is our responsibility to inform the City Commission that this deficiency could result in a material misstatement to the financial statements and/or SEFA that would not have been prevented or detected by the City’s management. Repeat Finding from Prior Year: Yes, revised prior year finding 2022-001. Recommendation: We have instructed management to review a draft of the auditor prepared financials in detail for accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the City’s financial statements. We are satisfied that the appropriate steps have been taken to provide the City with the completed financial statements. It is the responsibility of management and the City Commission to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Views of Responsible Officials: See City’s Corrective Action Plan.
Finding 2023-004
Federal Program Affected: Community Development Block Grant (ALN #14.228) Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: The City does not have written policies for Uniform Guidance. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies. Not properly maintaining such policies leads to noncompliance. Repeat Finding from Prior Year: No. Recommendation: The City should create written policies in accordance with Uniform Guidance. Response/Corrective Action Plan: The City is in agreement with the finding. See City’s Corrective Action Plan.
Finding 2023-001
Federal Program Affected: Community Development Block Grants (CDBG) (AL #14.228) Compliance Requirement: Reporting Questioned Costs: None. Condition and Cause: We were requested to draft the audited modified cash basis financial statements, Schedule of Expenditures of Federal Awards, and related footnote disclosures as part of our regular audit services. Auditing standards require auditors to communicate this situation to the City Commission as an internal control deficiency. Ultimately, it is management’s responsibility to provide for the preparation of the City’s statements and footnotes, and the responsibility of the auditor to determine the fairness and presentation of those statements. From a practical standpoint, we do both for the City at the same time in connection with our audit. This is not unusual for cities of your size. Criteria and Effect: It is our responsibility to inform the City Commission that this deficiency could result in a material misstatement to the financial statements and/or SEFA that would not have been prevented or detected by the City’s management. Repeat Finding from Prior Year: Yes, revised prior year finding 2022-001. Recommendation: We have instructed management to review a draft of the auditor prepared financials in detail for accuracy; we have answered any questions they might have, and have encouraged research of any accounting guidance in connection with the adequacy and appropriateness of classification and disclosure in the City’s financial statements. We are satisfied that the appropriate steps have been taken to provide the City with the completed financial statements. It is the responsibility of management and the City Commission to make the decision whether to accept the degree of risk associated with this condition because of cost or other considerations. Views of Responsible Officials: See City’s Corrective Action Plan.
Finding 2023-004
Federal Program Affected: Community Development Block Grant (ALN #14.228) Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: None Condition and Cause: The City does not have written policies for Uniform Guidance. Criteria and Effect: Uniform Guidance specifically requires entities to maintain written policies. Not properly maintaining such policies leads to noncompliance. Repeat Finding from Prior Year: No. Recommendation: The City should create written policies in accordance with Uniform Guidance. Response/Corrective Action Plan: The City is in agreement with the finding. See City’s Corrective Action Plan.