Audit 329026

FY End

2023-09-30

Total Expended

$4.09M

Findings

2

Programs

1

Organization: Newport Borough Water Authority (PA)

Year: 2023 Accepted: 2024-11-20

Auditor: Smith Elliott Kearns & Company LLC

Organization Exclusion Status:

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ID	Ref	Severity	Repeat	Requirement
508404	2023-002	Material Weakness	-	L
1084846	2023-002	Material Weakness	-	L

ALN	Program	Spent	Major	Findings
10.760	Water and Waste Disposal Systems for Rural Communities	$4.09M	Yes	1

Contacts

Name	Title	Type
VXP5LKHB6HG9	Debra Kunish	Auditee
7175676373	Craig E. Witmer, Cpa, Cgfm	Auditor
No contacts on file

Notes to SEFA

Title: Note 3: Federally Financed Loans Accounting Policies: The accompanying Schedule of Expenditures of Federal Awards is presented using the accrual basis of accounting, which is described in Note 1 to the Authority's financial statements. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10% de minimis indirect cost rate for its federal programs. The Authority has received financing from the United States Department of Agriculture (USDA) under the Water and Waste Disposal Systems for Rural Communities program (ALN #10.760) to fund capital improvement projects. Interim financing of the projects during development and construction was provided by Bank of Landisburg loans. Beginning August 24, 2023, funding from the USDA loans were drawn upon and used to repay the Bank of Landisburg loan. In accordance with federal requirements applicable to the USDA Water and Waste Disposal Systems for Rural Communities Loan program, expenditures funded with interim financing in prior years of $408,837 repaid with the federal loan were considered federal awards when expended in prior years and are reduced from the federal loan expenditures shown on the schedule of expenditures of federal awards in 2023. Amounts expended, not drawn on loan, consist of fiscal year 2023 expenditures not drawn on loan until fiscal year 2024.

Finding Details

Finding 2023-002

Reference Number: 2023-002 Reporting Federal Agency: U.S. Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities - ALN 10.760 Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control over Compliance Criteria: The Water and Waste Disposal Systems for Rural Communities program requires quarterly repors to be filed with the U.S. Department of Agriculture within 30 days of quarter-end. Reports should include quarterly income and expense statements and be signed by the appropriate official at the Authority. Statement of Condition: The Authority did not file the September 30, 2023 quarterly report with the U.S. Department of Agriculture within the required timeframe. Statement of Cause: The Authority was unacquainted with the requirement noted in the U.S. Department of Agriculture's letter of conditions. Possible Asserted Effect: The Authority is not in compliance with the reporting requirements established by the U.S. Department of Agriculture and may not receive additional funding until this noncomplinace is corrected. Questioned Costs: No questioned costs relating to this reporting finding. Context: Inquired of the Authority and U.S. Department of Agriculture regarding the September 30, 2023 quarterly report, noting one had not been prepared and submitted. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Authority review all applicable compliance requirements for the federal funding including the reporting requirement. Views of responsible officials and planned corrective actions: The Authority did not realize quarterly reports were required and was never asked by USDA for these. USDA was contacted and the Authority has been informed that a quarterly Balance Sheet and Profit and Loss Statement will fulfill this requirement. The past due reports will be sent to USDA this month and going forward, quarterly reports will be forwarded to USDA within 30 days of the end of each quarter.

Finding 2023-002

Reference Number: 2023-002 Reporting Federal Agency: U.S. Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities - ALN 10.760 Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control over Compliance Criteria: The Water and Waste Disposal Systems for Rural Communities program requires quarterly repors to be filed with the U.S. Department of Agriculture within 30 days of quarter-end. Reports should include quarterly income and expense statements and be signed by the appropriate official at the Authority. Statement of Condition: The Authority did not file the September 30, 2023 quarterly report with the U.S. Department of Agriculture within the required timeframe. Statement of Cause: The Authority was unacquainted with the requirement noted in the U.S. Department of Agriculture's letter of conditions. Possible Asserted Effect: The Authority is not in compliance with the reporting requirements established by the U.S. Department of Agriculture and may not receive additional funding until this noncomplinace is corrected. Questioned Costs: No questioned costs relating to this reporting finding. Context: Inquired of the Authority and U.S. Department of Agriculture regarding the September 30, 2023 quarterly report, noting one had not been prepared and submitted. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Authority review all applicable compliance requirements for the federal funding including the reporting requirement. Views of responsible officials and planned corrective actions: The Authority did not realize quarterly reports were required and was never asked by USDA for these. USDA was contacted and the Authority has been informed that a quarterly Balance Sheet and Profit and Loss Statement will fulfill this requirement. The past due reports will be sent to USDA this month and going forward, quarterly reports will be forwarded to USDA within 30 days of the end of each quarter.