FAC Explorer

Audit 320046

FY End
2023-12-31
Total Expended
$1.35M
Findings
8
Programs
1
Organization: Rochester Area Joint Sewer Authority (PA)
Year: 2023 Accepted: 2024-09-19
Auditor: Holsinger PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
497337 2023-001 Significant Deficiency Yes P
497338 2023-002 Material Weakness Yes P
497339 2023-001 Significant Deficiency Yes P
497340 2023-002 Material Weakness Yes P
1073779 2023-001 Significant Deficiency Yes P
1073780 2023-002 Material Weakness Yes P
1073781 2023-001 Significant Deficiency Yes P
1073782 2023-002 Material Weakness Yes P

Programs

ALN Program Spent Major Findings
66.458 Clean Water State Revolving Fund $41,212 Yes 2

Contacts

Name Title Type
QBQHNHBMJGE3 John Auditee
7247742550 Tom Krahe 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 cash basis of accounting. Such expenditures are recognized when paid following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Loan balances are reported on the Schedule in accordance with Uniform Guidance 2 CFR 200.502, which states federal loans are considered expended when: 1) The new loans are received during the audit period; plus 2) Beginning of the audit period balance loans from previous years for which the Federal Government imposes continuing compliance requirements; plus 3) Any interest subsidy, cash, or administrative cost allowance received. Prior loan and loan guarantees (loans) – Loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part when the Federal statutes, regulations, and the terms and conditions of Federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans. EPA Clean Water State Revolving Fund (ALN 66.458). The EPA has stated in the 2024 Compliance Supplement (Section IV. Other Information) that subrecipients receiving loans under this program (66.458) should only report project expenditures incurred because it considers it a subaward, not direct federal loan. For this program, the loan reporting requirements of 2 CFR sections 200.502(b) or (d) do not apply when calculating the amount of federal funds expended. Therefore, loan balances are not reported in the SEFSA calculation. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The schedule of expenditures of federal and state awards (the “Schedule”) includes the federal award activity of the Authority 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 (“CFR”), 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 Authority, it is not intended to and does not present the statement of net position, statement of revenues, expenses and changes in net position, or cash flows of the Authority for the year ended December 31, 2023.
Title: Note 4 – Capitalization Grants for Clean Water State Revolving Funds Loan Program Accounting Policies: Expenditures reported on the Schedule are reported on the cash basis of accounting. Such expenditures are recognized when paid following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Loan balances are reported on the Schedule in accordance with Uniform Guidance 2 CFR 200.502, which states federal loans are considered expended when: 1) The new loans are received during the audit period; plus 2) Beginning of the audit period balance loans from previous years for which the Federal Government imposes continuing compliance requirements; plus 3) Any interest subsidy, cash, or administrative cost allowance received. Prior loan and loan guarantees (loans) – Loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part when the Federal statutes, regulations, and the terms and conditions of Federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans. EPA Clean Water State Revolving Fund (ALN 66.458). The EPA has stated in the 2024 Compliance Supplement (Section IV. Other Information) that subrecipients receiving loans under this program (66.458) should only report project expenditures incurred because it considers it a subaward, not direct federal loan. For this program, the loan reporting requirements of 2 CFR sections 200.502(b) or (d) do not apply when calculating the amount of federal funds expended. Therefore, loan balances are not reported in the SEFSA calculation. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The Authority has established two revolving loan funds through the Clean Water State Revolving Funds program. Each loan has a 1% interest rate and required principal payments. The balance of each loan outstanding was as follows: The debt will mature according to the following schedule, which is subjected to changes based on principal forgivingness or any additional draws.
Title: Note 5 – Subrecipients Accounting Policies: Expenditures reported on the Schedule are reported on the cash basis of accounting. Such expenditures are recognized when paid following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Loan balances are reported on the Schedule in accordance with Uniform Guidance 2 CFR 200.502, which states federal loans are considered expended when: 1) The new loans are received during the audit period; plus 2) Beginning of the audit period balance loans from previous years for which the Federal Government imposes continuing compliance requirements; plus 3) Any interest subsidy, cash, or administrative cost allowance received. Prior loan and loan guarantees (loans) – Loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part when the Federal statutes, regulations, and the terms and conditions of Federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans. EPA Clean Water State Revolving Fund (ALN 66.458). The EPA has stated in the 2024 Compliance Supplement (Section IV. Other Information) that subrecipients receiving loans under this program (66.458) should only report project expenditures incurred because it considers it a subaward, not direct federal loan. For this program, the loan reporting requirements of 2 CFR sections 200.502(b) or (d) do not apply when calculating the amount of federal funds expended. Therefore, loan balances are not reported in the SEFSA calculation. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. Of the federal expenditures presented in the Schedule, the Authority did not provide federal awards to a subrecipient.
Title: Note 6 – Budgetary Data Accounting Policies: Expenditures reported on the Schedule are reported on the cash basis of accounting. Such expenditures are recognized when paid following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Loan balances are reported on the Schedule in accordance with Uniform Guidance 2 CFR 200.502, which states federal loans are considered expended when: 1) The new loans are received during the audit period; plus 2) Beginning of the audit period balance loans from previous years for which the Federal Government imposes continuing compliance requirements; plus 3) Any interest subsidy, cash, or administrative cost allowance received. Prior loan and loan guarantees (loans) – Loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part when the Federal statutes, regulations, and the terms and conditions of Federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans. EPA Clean Water State Revolving Fund (ALN 66.458). The EPA has stated in the 2024 Compliance Supplement (Section IV. Other Information) that subrecipients receiving loans under this program (66.458) should only report project expenditures incurred because it considers it a subaward, not direct federal loan. For this program, the loan reporting requirements of 2 CFR sections 200.502(b) or (d) do not apply when calculating the amount of federal funds expended. Therefore, loan balances are not reported in the SEFSA calculation. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The Authority passed and had approved by the appropriate agency, budgets for the year ended December 31, 2023 for the federal programs.
Title: Note 7 – Contingency Accounting Policies: Expenditures reported on the Schedule are reported on the cash basis of accounting. Such expenditures are recognized when paid following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Loan balances are reported on the Schedule in accordance with Uniform Guidance 2 CFR 200.502, which states federal loans are considered expended when: 1) The new loans are received during the audit period; plus 2) Beginning of the audit period balance loans from previous years for which the Federal Government imposes continuing compliance requirements; plus 3) Any interest subsidy, cash, or administrative cost allowance received. Prior loan and loan guarantees (loans) – Loans, the proceeds of which were received and expended in prior years, are not considered Federal awards expended under this part when the Federal statutes, regulations, and the terms and conditions of Federal awards pertaining to such loans impose no continuing compliance requirements other than to repay the loans. EPA Clean Water State Revolving Fund (ALN 66.458). The EPA has stated in the 2024 Compliance Supplement (Section IV. Other Information) that subrecipients receiving loans under this program (66.458) should only report project expenditures incurred because it considers it a subaward, not direct federal loan. For this program, the loan reporting requirements of 2 CFR sections 200.502(b) or (d) do not apply when calculating the amount of federal funds expended. Therefore, loan balances are not reported in the SEFSA calculation. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. The federal award amounts received and expensed are subjected to audit and adjustment. If any expenditures are disallowed by the funding agency as a result of such an audit, any claim for reimbursement to the funding agency would become a liability of the Authority. In the opinion of management, all federal award expenditures are in compliance with the terms of the funding agreements and applicable federal laws and regulations.

Finding Details

Finding 2023-001
2023-001 Significant Deficiency – Segregation of Duties Condition: Responsibility for approving, executing, and recording transactions and custody of the resulting asset arising from the transaction should be assigned to different individuals. Criteria: Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions and custody of the resulting asset arising from the transaction. Cause: Responsibilities of approval, execution, recording, and custody are not distributed among the office staff to the best degree possible. Effect: Because of the failure to segregate duties, internal control structure elements do not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by management in the normal course of performing assigned functions. Recommendation: Responsibilities of approval, execution, recording and custody be distributed among individuals to the degree possible. We recommend that management and the Board of Directors should remain involved in the financial affairs of the Authority to provide oversight and independent review functions and to continue exercising due diligence and professional skepticism in relation to the Authority’s financial operations. Views of Responsible Officials and Planned Corrective Actions: We will continue segregating duties among the Authority Manager, Board, and Accounting Manager. An individual other than the Accounting Manager will review cancelled checks to ensure payment amount and payee agreed with what was approved by the board. In late 2023, the Office Manager and Accounting Manager decided to leave their current role to pursue other opportunities. The Authority Manager acted swiftly to fill those positions with the hiring of a new Office Manager and Accounting Manager in August 2023 and October 2023, respectively. Both new employees are being trained on the accounting processes to allow for 1.) redundancy in personnel and 2.) assist in improving controls specific to the segregation of duties for recordkeeping, custody, and authorization. The Authority follows the following federal award reimbursements requests and payment approval process: Federal Award Reimbursement & Contractor Payment: 1. A licensed independent Engineer detail reviews all invoices/pay applications and signs and certifies the work completed before providing to the Authority. 2. After the Engineer approves invoices/pay applications, they are sent to the Office Manager who begins data entry into PENNVEST’s online request portal. The Office Manager then prepares the payment request packets for the upcoming board meeting and QuickBooks entries for federal award tracking. 3. The Board reviews the submittal packets in detail and provides approval to submit the request for reimbursement to PENNVEST. 4. After Board approval, the Accounting Manager submits the request and corresponding invoice/pay application support to PENNVEST’s online portal. 5. PENNVEST reviews the request for disbursements. Once approved, they wire funds to the Authority’s bank account. 6. After the Authority receives the funds from PENNVEST, they begin the process to pay the Contractors. 7. Payment to contractors occurs through written check or ACH after approval and at minimum two signatures are obtained from the Board and the Authority Manager. All paper checks require two signatures. ACH payments to contractors require a board member approval in the form of a signature on the ACH printout prepared by the Accounting Manager. 8. The Office Manager performs the bank reconciliation process within QuickBooks and clears any outstanding checks on the reconciliation module. 9. The Accounting Manager reviews the bank statement reconciliation and any outstanding account payables.
Finding 2023-002
2023-002 Material Weakness – Preparation of Schedule of Expenditures of Federal and State Awards (“SEFSA”) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee’s responsibility to prepare the Schedule of Expenditures of Federal and State Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate Schedule of Expenditures of Federal and State awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate Schedule of Expenditures of Federal and State awards financial statement for major program compliance. For CFDA #66.458, the SEFSA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFSA. Uniform Guidance states that SEFSA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2023. Recommendation: Procedures should be implemented to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFSA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFSA.
Finding 2023-001
2023-001 Significant Deficiency – Segregation of Duties Condition: Responsibility for approving, executing, and recording transactions and custody of the resulting asset arising from the transaction should be assigned to different individuals. Criteria: Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions and custody of the resulting asset arising from the transaction. Cause: Responsibilities of approval, execution, recording, and custody are not distributed among the office staff to the best degree possible. Effect: Because of the failure to segregate duties, internal control structure elements do not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by management in the normal course of performing assigned functions. Recommendation: Responsibilities of approval, execution, recording and custody be distributed among individuals to the degree possible. We recommend that management and the Board of Directors should remain involved in the financial affairs of the Authority to provide oversight and independent review functions and to continue exercising due diligence and professional skepticism in relation to the Authority’s financial operations. Views of Responsible Officials and Planned Corrective Actions: We will continue segregating duties among the Authority Manager, Board, and Accounting Manager. An individual other than the Accounting Manager will review cancelled checks to ensure payment amount and payee agreed with what was approved by the board. In late 2023, the Office Manager and Accounting Manager decided to leave their current role to pursue other opportunities. The Authority Manager acted swiftly to fill those positions with the hiring of a new Office Manager and Accounting Manager in August 2023 and October 2023, respectively. Both new employees are being trained on the accounting processes to allow for 1.) redundancy in personnel and 2.) assist in improving controls specific to the segregation of duties for recordkeeping, custody, and authorization. The Authority follows the following federal award reimbursements requests and payment approval process: Federal Award Reimbursement & Contractor Payment: 1. A licensed independent Engineer detail reviews all invoices/pay applications and signs and certifies the work completed before providing to the Authority. 2. After the Engineer approves invoices/pay applications, they are sent to the Office Manager who begins data entry into PENNVEST’s online request portal. The Office Manager then prepares the payment request packets for the upcoming board meeting and QuickBooks entries for federal award tracking. 3. The Board reviews the submittal packets in detail and provides approval to submit the request for reimbursement to PENNVEST. 4. After Board approval, the Accounting Manager submits the request and corresponding invoice/pay application support to PENNVEST’s online portal. 5. PENNVEST reviews the request for disbursements. Once approved, they wire funds to the Authority’s bank account. 6. After the Authority receives the funds from PENNVEST, they begin the process to pay the Contractors. 7. Payment to contractors occurs through written check or ACH after approval and at minimum two signatures are obtained from the Board and the Authority Manager. All paper checks require two signatures. ACH payments to contractors require a board member approval in the form of a signature on the ACH printout prepared by the Accounting Manager. 8. The Office Manager performs the bank reconciliation process within QuickBooks and clears any outstanding checks on the reconciliation module. 9. The Accounting Manager reviews the bank statement reconciliation and any outstanding account payables.
Finding 2023-002
2023-002 Material Weakness – Preparation of Schedule of Expenditures of Federal and State Awards (“SEFSA”) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee’s responsibility to prepare the Schedule of Expenditures of Federal and State Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate Schedule of Expenditures of Federal and State awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate Schedule of Expenditures of Federal and State awards financial statement for major program compliance. For CFDA #66.458, the SEFSA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFSA. Uniform Guidance states that SEFSA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2023. Recommendation: Procedures should be implemented to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFSA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFSA.
Finding 2023-001
2023-001 Significant Deficiency – Segregation of Duties Condition: Responsibility for approving, executing, and recording transactions and custody of the resulting asset arising from the transaction should be assigned to different individuals. Criteria: Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions and custody of the resulting asset arising from the transaction. Cause: Responsibilities of approval, execution, recording, and custody are not distributed among the office staff to the best degree possible. Effect: Because of the failure to segregate duties, internal control structure elements do not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by management in the normal course of performing assigned functions. Recommendation: Responsibilities of approval, execution, recording and custody be distributed among individuals to the degree possible. We recommend that management and the Board of Directors should remain involved in the financial affairs of the Authority to provide oversight and independent review functions and to continue exercising due diligence and professional skepticism in relation to the Authority’s financial operations. Views of Responsible Officials and Planned Corrective Actions: We will continue segregating duties among the Authority Manager, Board, and Accounting Manager. An individual other than the Accounting Manager will review cancelled checks to ensure payment amount and payee agreed with what was approved by the board. In late 2023, the Office Manager and Accounting Manager decided to leave their current role to pursue other opportunities. The Authority Manager acted swiftly to fill those positions with the hiring of a new Office Manager and Accounting Manager in August 2023 and October 2023, respectively. Both new employees are being trained on the accounting processes to allow for 1.) redundancy in personnel and 2.) assist in improving controls specific to the segregation of duties for recordkeeping, custody, and authorization. The Authority follows the following federal award reimbursements requests and payment approval process: Federal Award Reimbursement & Contractor Payment: 1. A licensed independent Engineer detail reviews all invoices/pay applications and signs and certifies the work completed before providing to the Authority. 2. After the Engineer approves invoices/pay applications, they are sent to the Office Manager who begins data entry into PENNVEST’s online request portal. The Office Manager then prepares the payment request packets for the upcoming board meeting and QuickBooks entries for federal award tracking. 3. The Board reviews the submittal packets in detail and provides approval to submit the request for reimbursement to PENNVEST. 4. After Board approval, the Accounting Manager submits the request and corresponding invoice/pay application support to PENNVEST’s online portal. 5. PENNVEST reviews the request for disbursements. Once approved, they wire funds to the Authority’s bank account. 6. After the Authority receives the funds from PENNVEST, they begin the process to pay the Contractors. 7. Payment to contractors occurs through written check or ACH after approval and at minimum two signatures are obtained from the Board and the Authority Manager. All paper checks require two signatures. ACH payments to contractors require a board member approval in the form of a signature on the ACH printout prepared by the Accounting Manager. 8. The Office Manager performs the bank reconciliation process within QuickBooks and clears any outstanding checks on the reconciliation module. 9. The Accounting Manager reviews the bank statement reconciliation and any outstanding account payables.
Finding 2023-002
2023-002 Material Weakness – Preparation of Schedule of Expenditures of Federal and State Awards (“SEFSA”) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee’s responsibility to prepare the Schedule of Expenditures of Federal and State Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate Schedule of Expenditures of Federal and State awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate Schedule of Expenditures of Federal and State awards financial statement for major program compliance. For CFDA #66.458, the SEFSA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFSA. Uniform Guidance states that SEFSA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2023. Recommendation: Procedures should be implemented to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFSA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFSA.
Finding 2023-001
2023-001 Significant Deficiency – Segregation of Duties Condition: Responsibility for approving, executing, and recording transactions and custody of the resulting asset arising from the transaction should be assigned to different individuals. Criteria: Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions and custody of the resulting asset arising from the transaction. Cause: Responsibilities of approval, execution, recording, and custody are not distributed among the office staff to the best degree possible. Effect: Because of the failure to segregate duties, internal control structure elements do not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by management in the normal course of performing assigned functions. Recommendation: Responsibilities of approval, execution, recording and custody be distributed among individuals to the degree possible. We recommend that management and the Board of Directors should remain involved in the financial affairs of the Authority to provide oversight and independent review functions and to continue exercising due diligence and professional skepticism in relation to the Authority’s financial operations. Views of Responsible Officials and Planned Corrective Actions: We will continue segregating duties among the Authority Manager, Board, and Accounting Manager. An individual other than the Accounting Manager will review cancelled checks to ensure payment amount and payee agreed with what was approved by the board. In late 2023, the Office Manager and Accounting Manager decided to leave their current role to pursue other opportunities. The Authority Manager acted swiftly to fill those positions with the hiring of a new Office Manager and Accounting Manager in August 2023 and October 2023, respectively. Both new employees are being trained on the accounting processes to allow for 1.) redundancy in personnel and 2.) assist in improving controls specific to the segregation of duties for recordkeeping, custody, and authorization. The Authority follows the following federal award reimbursements requests and payment approval process: Federal Award Reimbursement & Contractor Payment: 1. A licensed independent Engineer detail reviews all invoices/pay applications and signs and certifies the work completed before providing to the Authority. 2. After the Engineer approves invoices/pay applications, they are sent to the Office Manager who begins data entry into PENNVEST’s online request portal. The Office Manager then prepares the payment request packets for the upcoming board meeting and QuickBooks entries for federal award tracking. 3. The Board reviews the submittal packets in detail and provides approval to submit the request for reimbursement to PENNVEST. 4. After Board approval, the Accounting Manager submits the request and corresponding invoice/pay application support to PENNVEST’s online portal. 5. PENNVEST reviews the request for disbursements. Once approved, they wire funds to the Authority’s bank account. 6. After the Authority receives the funds from PENNVEST, they begin the process to pay the Contractors. 7. Payment to contractors occurs through written check or ACH after approval and at minimum two signatures are obtained from the Board and the Authority Manager. All paper checks require two signatures. ACH payments to contractors require a board member approval in the form of a signature on the ACH printout prepared by the Accounting Manager. 8. The Office Manager performs the bank reconciliation process within QuickBooks and clears any outstanding checks on the reconciliation module. 9. The Accounting Manager reviews the bank statement reconciliation and any outstanding account payables.
Finding 2023-002
2023-002 Material Weakness – Preparation of Schedule of Expenditures of Federal and State Awards (“SEFSA”) Statement Condition: Under Uniform Guidance 2 CFR Section 200.508 reporting compliance, it is the auditee’s responsibility to prepare the Schedule of Expenditures of Federal and State Awards statement. The Uniform Guidance 2 CFR Section 200.502 requires the proper tracking and accounting of federal expenditures incurred under the same basis of accounting as the basic financial statements to ensure proper cut-off and timely reporting to the Federal Audit Clearinghouse. Criteria: Procedures should be in place to create a materially accurate Schedule of Expenditures of Federal and State awards statement based on the cash basis of accounting specifically tracking expenses when they are paid. Cause: The procedures in place did not create a materially accurate Schedule of Expenditures of Federal and State awards financial statement for major program compliance. For CFDA #66.458, the SEFSA provided by the Authority did not represent expenditures as paid. This was a result of the bifurcation between loan and grant disbursements, as well as presentation of loan balances on the SEFSA. Uniform Guidance states that SEFSA loan balances should be reported as prior year outstanding loan balance plus current year borrowings. Effect: The fund used to track the expenditures did not properly reflect the federal expenditures incurred in 2023. Recommendation: Procedures should be implemented to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, which should include ascertaining between loan and grant expenditures, and understanding the process for reporting loan balances on the SEFSA. Views of Responsible Officials and Planned Corrective Actions: In order to create a materially accurate Schedule of Expenditures of Federal and State award financial statement, the Authority will establish procedures to ascertain loan and grant expenditures, as well as taking into account the Uniform Guidance requirement for presenting loan balances on the SEFSA.