FAC Explorer

Audit 320135

FY End
2023-06-30
Total Expended
$9.90M
Findings
8
Programs
22
Organization: City of Laconia (NH)
Year: 2023 Accepted: 2024-09-20
Auditor: Marcum LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
497391 2023-003 Significant Deficiency - AB
497392 2023-004 Significant Deficiency - AB
497393 2023-003 Significant Deficiency - AB
497394 2023-004 Significant Deficiency - AB
1073833 2023-003 Significant Deficiency - AB
1073834 2023-004 Significant Deficiency - AB
1073835 2023-003 Significant Deficiency - AB
1073836 2023-004 Significant Deficiency - AB

Programs

ALN Program Spent Major Findings
14.218 Community Development Block Grants/entitlement Grants $1.23M Yes 0
84.010 Title I Grants to Local Educational Agencies $1.17M - 0
84.287 Twenty-First Century Community Learning Centers $782,688 Yes 0
21.027 Coronavirus State and Local Fiscal Recovery Funds $688,192 Yes 0
10.555 National School Lunch Program $673,724 - 0
84.027 Special Education_grants to States $630,944 - 0
84.184 Safe and Drug-Free Schools and Communities_national Programs $619,412 - 0
84.425 Education Stabilization Fund $491,234 Yes 2
84.048 Career and Technical Education -- Basic Grants to States $231,626 - 0
16.838 Comprehensive Opioid Abuse Site-Based Program $214,363 - 0
84.367 Improving Teacher Quality State Grants $154,147 - 0
10.553 School Breakfast Program $137,651 - 0
84.002 Adult Education - Basic Grants to States $122,511 - 0
10.565 Commodity Supplemental Food Program $80,905 - 0
10.558 Child and Adult Care Food Program $72,730 - 0
10.582 Fresh Fruit and Vegetable Program $59,514 - 0
20.106 Airport Improvement Program $53,037 - 0
84.173 Special Education_preschool Grants $19,834 - 0
84.358 Rural Education $16,705 - 0
84.196 Education for Homeless Children and Youth $8,861 - 0
16.710 Public Safety Partnership and Community Policing Grants $7,960 - 0
16.607 Bulletproof Vest Partnership Program $4,867 - 0

Contacts

Name Title Type
YH1XUKJDNKAB Glenn Smith Auditee
6035243877 Scott McIntire Auditor
No contacts on file

Notes to SEFA

Title: NOTE 4 - DONATED PERSONAL PROTECTIVE EQUIPMENT (PPE) (UNAUDITED) 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 to reimbursement. De Minimis Rate Used: N Rate Explanation: The City has elected not to use the 10-percent de minimis indirect cost rate as allowed under the Uniform Guidance. During fiscal year 2023, the City did not receive donated PPE from federal sources.

Finding Details

Finding 2023-003
MW-2023-03 LACK OF PROPER CONTROLS OVER COMPLIANCE FOR PURCHASES FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D, 84.425U AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA All purchase orders must be reviewed and approved by a department head prior to submission as per the City’s internal control policies. CONDITION During our audit, we found that the client was unable to provide purchase orders for 7 of the transactions tested under the ESSER program. This indicates a lapse in the adherence to the established review and approval process for expenditures. CAUSE The lack of proper documentation for the specified transactions was due to a breakdown in the internal control process, where purchase orders were either not generated or not retained as required. EFFECT OR POTENTIAL EFFECT Without proper documentation and adherence to the review and approval process, there is an increased risk of unauthorized or inappropriate expenditures. This could lead to financial mismanagement and non-compliance with funding agency requirements, potentially resulting in funding disallowances. SECTION III – FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) RECOMMENDATION We recommend that the City reinforces the importance of following established internal control procedures for reviewing and approving all expenditures. This can be achieved through regular training for staff involved in the procurement process and periodic audits to ensure compliance. Additionally, implementing a centralized document retention system for purchase orders and related documents will help in maintaining proper records and facilitating easier retrieval during audits. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-004
MW-2023-04 LACK OF SEGREGATION OF DUTIES IN JOURNAL ENTRY PROCESSING FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA Journal entries should be prepared and approved by different individuals to ensure adequate segregation of duties as a part of the City’s internal control process. This is a best practice and helps to prevent the potential for errors and fraud to be undetected. CONDITION During our audit, we observed that the preparer and reviewer for two of the journal entries tested were the same. There was no evidence of approval by an individual other than the preparer before these entries were posted. CAUSE The absence of a secondary approval for journal entries prepared suggests a weakness in the internal control process, where the requirement for independent review and approval is not being enforced. EFFECT OR POTENTIAL EFFECT The lack of segregation of duties increases the risk of undetected errors and unauthorized entries, which could lead to financial misstatements, fraud, and reduced reliability of financial records. This could compromise the integrity of the financial reporting process. RECOMMENDATION We recommend that the client establish a policy requiring that all journal entries be approved by an individual other than the preparer before posting. The School Business Administrator or any other preparer should ensure that a secondary reviewer, such as a senior accountant or another administrator, reviews and approves all journal entries. Implementing this control will strengthen the segregation of duties and enhance the accuracy and integrity of financial reporting. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-003
MW-2023-03 LACK OF PROPER CONTROLS OVER COMPLIANCE FOR PURCHASES FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D, 84.425U AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA All purchase orders must be reviewed and approved by a department head prior to submission as per the City’s internal control policies. CONDITION During our audit, we found that the client was unable to provide purchase orders for 7 of the transactions tested under the ESSER program. This indicates a lapse in the adherence to the established review and approval process for expenditures. CAUSE The lack of proper documentation for the specified transactions was due to a breakdown in the internal control process, where purchase orders were either not generated or not retained as required. EFFECT OR POTENTIAL EFFECT Without proper documentation and adherence to the review and approval process, there is an increased risk of unauthorized or inappropriate expenditures. This could lead to financial mismanagement and non-compliance with funding agency requirements, potentially resulting in funding disallowances. SECTION III – FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) RECOMMENDATION We recommend that the City reinforces the importance of following established internal control procedures for reviewing and approving all expenditures. This can be achieved through regular training for staff involved in the procurement process and periodic audits to ensure compliance. Additionally, implementing a centralized document retention system for purchase orders and related documents will help in maintaining proper records and facilitating easier retrieval during audits. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-004
MW-2023-04 LACK OF SEGREGATION OF DUTIES IN JOURNAL ENTRY PROCESSING FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA Journal entries should be prepared and approved by different individuals to ensure adequate segregation of duties as a part of the City’s internal control process. This is a best practice and helps to prevent the potential for errors and fraud to be undetected. CONDITION During our audit, we observed that the preparer and reviewer for two of the journal entries tested were the same. There was no evidence of approval by an individual other than the preparer before these entries were posted. CAUSE The absence of a secondary approval for journal entries prepared suggests a weakness in the internal control process, where the requirement for independent review and approval is not being enforced. EFFECT OR POTENTIAL EFFECT The lack of segregation of duties increases the risk of undetected errors and unauthorized entries, which could lead to financial misstatements, fraud, and reduced reliability of financial records. This could compromise the integrity of the financial reporting process. RECOMMENDATION We recommend that the client establish a policy requiring that all journal entries be approved by an individual other than the preparer before posting. The School Business Administrator or any other preparer should ensure that a secondary reviewer, such as a senior accountant or another administrator, reviews and approves all journal entries. Implementing this control will strengthen the segregation of duties and enhance the accuracy and integrity of financial reporting. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-003
MW-2023-03 LACK OF PROPER CONTROLS OVER COMPLIANCE FOR PURCHASES FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D, 84.425U AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA All purchase orders must be reviewed and approved by a department head prior to submission as per the City’s internal control policies. CONDITION During our audit, we found that the client was unable to provide purchase orders for 7 of the transactions tested under the ESSER program. This indicates a lapse in the adherence to the established review and approval process for expenditures. CAUSE The lack of proper documentation for the specified transactions was due to a breakdown in the internal control process, where purchase orders were either not generated or not retained as required. EFFECT OR POTENTIAL EFFECT Without proper documentation and adherence to the review and approval process, there is an increased risk of unauthorized or inappropriate expenditures. This could lead to financial mismanagement and non-compliance with funding agency requirements, potentially resulting in funding disallowances. SECTION III – FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) RECOMMENDATION We recommend that the City reinforces the importance of following established internal control procedures for reviewing and approving all expenditures. This can be achieved through regular training for staff involved in the procurement process and periodic audits to ensure compliance. Additionally, implementing a centralized document retention system for purchase orders and related documents will help in maintaining proper records and facilitating easier retrieval during audits. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-004
MW-2023-04 LACK OF SEGREGATION OF DUTIES IN JOURNAL ENTRY PROCESSING FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA Journal entries should be prepared and approved by different individuals to ensure adequate segregation of duties as a part of the City’s internal control process. This is a best practice and helps to prevent the potential for errors and fraud to be undetected. CONDITION During our audit, we observed that the preparer and reviewer for two of the journal entries tested were the same. There was no evidence of approval by an individual other than the preparer before these entries were posted. CAUSE The absence of a secondary approval for journal entries prepared suggests a weakness in the internal control process, where the requirement for independent review and approval is not being enforced. EFFECT OR POTENTIAL EFFECT The lack of segregation of duties increases the risk of undetected errors and unauthorized entries, which could lead to financial misstatements, fraud, and reduced reliability of financial records. This could compromise the integrity of the financial reporting process. RECOMMENDATION We recommend that the client establish a policy requiring that all journal entries be approved by an individual other than the preparer before posting. The School Business Administrator or any other preparer should ensure that a secondary reviewer, such as a senior accountant or another administrator, reviews and approves all journal entries. Implementing this control will strengthen the segregation of duties and enhance the accuracy and integrity of financial reporting. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-003
MW-2023-03 LACK OF PROPER CONTROLS OVER COMPLIANCE FOR PURCHASES FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D, 84.425U AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA All purchase orders must be reviewed and approved by a department head prior to submission as per the City’s internal control policies. CONDITION During our audit, we found that the client was unable to provide purchase orders for 7 of the transactions tested under the ESSER program. This indicates a lapse in the adherence to the established review and approval process for expenditures. CAUSE The lack of proper documentation for the specified transactions was due to a breakdown in the internal control process, where purchase orders were either not generated or not retained as required. EFFECT OR POTENTIAL EFFECT Without proper documentation and adherence to the review and approval process, there is an increased risk of unauthorized or inappropriate expenditures. This could lead to financial mismanagement and non-compliance with funding agency requirements, potentially resulting in funding disallowances. SECTION III – FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) RECOMMENDATION We recommend that the City reinforces the importance of following established internal control procedures for reviewing and approving all expenditures. This can be achieved through regular training for staff involved in the procurement process and periodic audits to ensure compliance. Additionally, implementing a centralized document retention system for purchase orders and related documents will help in maintaining proper records and facilitating easier retrieval during audits. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.
Finding 2023-004
MW-2023-04 LACK OF SEGREGATION OF DUTIES IN JOURNAL ENTRY PROCESSING FEDERAL AGENCY: U.S. DEPARTMENT OF EDUCATION CLUSTER/PROGRAM: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AWARD NAME: COVID-19 - ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND AL NUMBER(S): 84.425D AWARD YEAR: 2023 COMPLIANCE REQUIREMENT: ACTIVITIES ALLOWED/ALLOWABLE COSTS TYPE OF FINDING Internal Control over Compliance – Material Weakness CRITERIA Journal entries should be prepared and approved by different individuals to ensure adequate segregation of duties as a part of the City’s internal control process. This is a best practice and helps to prevent the potential for errors and fraud to be undetected. CONDITION During our audit, we observed that the preparer and reviewer for two of the journal entries tested were the same. There was no evidence of approval by an individual other than the preparer before these entries were posted. CAUSE The absence of a secondary approval for journal entries prepared suggests a weakness in the internal control process, where the requirement for independent review and approval is not being enforced. EFFECT OR POTENTIAL EFFECT The lack of segregation of duties increases the risk of undetected errors and unauthorized entries, which could lead to financial misstatements, fraud, and reduced reliability of financial records. This could compromise the integrity of the financial reporting process. RECOMMENDATION We recommend that the client establish a policy requiring that all journal entries be approved by an individual other than the preparer before posting. The School Business Administrator or any other preparer should ensure that a secondary reviewer, such as a senior accountant or another administrator, reviews and approves all journal entries. Implementing this control will strengthen the segregation of duties and enhance the accuracy and integrity of financial reporting. VIEWS OF RESPONSIBLE OFFICIAL AND PLANNED CORRECTIVE ACTION See accompanying Corrective Action Plan.