Audit 341314

FY End

2024-09-30

Total Expended

$1.32M

Findings

2

Programs

1

Organization: Denco Area 9-1-1 District (TX)

Year: 2024 Accepted: 2025-02-05

Auditor: Pattillo Brown & Hill LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
522106	2024-001	Significant Deficiency	-	B
1098548	2024-001	Significant Deficiency	-	B

ALN	Program	Spent	Major	Findings
21.027	Coronavirus State and Local Fiscal Recovery Funds	$1.32M	Yes	1

Contacts

Name	Title	Type
RWRYM8KPYMW8	Greg Ballentine	Auditee
9722210911	John K. Manning	Auditor
No contacts on file

Notes to SEFA

Title: Pass-through Expenditures Accounting Policies: The accompanying schedule of expenditures of federal awards (the “SEFA”) includes the federal grant activity of Denco Area 9-1-1 District (the “District”), under programs of the federal government for the year ended September 30, 2024. The information in the SEFA is presented in accordance with the requirements of Office of Management and Budget (OMB) Uniform Guidance. Because the SEFA presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position or changes in net position of the District. The District accounts for all federal awards under programs of the federal government in the General Fund. These programs are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other financing uses) in net current assets. The modified accrual basis of accounting is used for these funds. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e. both measurable and available. Federal grant funds for governmental funds are considered to be earned to the extent of expenditures made under the provisions of the grant. When such funds are advanced to the District, they are recorded as unearned revenue until earned. Otherwise, federal grant funds are received on a reimbursement basis from the respective federal program agencies. Generally, unused balances are returned to the grantor at the close of specified project periods. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service principal and interest expenditures on general long-term debt, including lease liabilities, as well as expenditures related to compensated absences, and claims and judgments, are recognized later based on specific accounting rules applicable to each, generally when payment is due. De Minimis Rate Used: Y Rate Explanation: The District has elected to use the de minimis indirect cost rate allowed under the Uniform Guidance. None of the expenditures reported on the SEFA were passed through to subrecipients.

Title: Relationship to the Basic Financial Statements Accounting Policies: The accompanying schedule of expenditures of federal awards (the “SEFA”) includes the federal grant activity of Denco Area 9-1-1 District (the “District”), under programs of the federal government for the year ended September 30, 2024. The information in the SEFA is presented in accordance with the requirements of Office of Management and Budget (OMB) Uniform Guidance. Because the SEFA presents only a selected portion of the operations of the District, it is not intended to and does not present the financial position or changes in net position of the District. The District accounts for all federal awards under programs of the federal government in the General Fund. These programs are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other financing uses) in net current assets. The modified accrual basis of accounting is used for these funds. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e. both measurable and available. Federal grant funds for governmental funds are considered to be earned to the extent of expenditures made under the provisions of the grant. When such funds are advanced to the District, they are recorded as unearned revenue until earned. Otherwise, federal grant funds are received on a reimbursement basis from the respective federal program agencies. Generally, unused balances are returned to the grantor at the close of specified project periods. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service principal and interest expenditures on general long-term debt, including lease liabilities, as well as expenditures related to compensated absences, and claims and judgments, are recognized later based on specific accounting rules applicable to each, generally when payment is due. De Minimis Rate Used: Y Rate Explanation: The District has elected to use the de minimis indirect cost rate allowed under the Uniform Guidance. Federal awards revenues are reported in the District's basic financial statements as follows: [See notes to SEFA for chart/table.]

Finding Details

Finding 2024-001

Criteria: According to 2 CFR 200.303, a non-federal entity must maintain effective internal control that provides reasonable assurance that the non-federal entity complies with Federal statutes, regulations, and the conditions of the Federal award. In the context of payroll expenditures, internal control should ensure that costs charged to the Federal program are allowable, in particular that they are allocable to the program (i.e. based on actual hours worked). Condition: For employees charging less than 100% of their payroll to the federal program, timesheets were used to identify time spent on program and nonprogram activities. During our testing of these payroll transactions, we noted 9 instances where the portion of an employee’s pay reimbursed by the program was different than the portion of hours supported by the timesheet. Cause: The District’s process for calculating these split payroll costs, and subsequently requesting reimbursement, did not include detailed review of all supporting calculations. Thus, the accuracy of certain requested payroll amounts relied on the personnel creating the reimbursement request. Effect or Potential Effect: While the noted errors did not result in charging unallowable costs, undetected future errors could cause funds to be drawn for payroll beyond the amount related to the program. Recommendation: We recommend that the District strengthen its controls over reimbursement requests by increasing the scope and detail of review prior to submission to the granting agency. Secondary review should be performed by another individual who did not prepare the original request when practicable.Contact Person Responsible For Corrective Action: Greg Ballentine, Executive Director Anticipated Completion Date: September 30, 2025 Management’s Response: Management acknowledges receipt of the audit report concerning our internal controls related to the review of reimbursement request worksheets. We appreciate the insight provided in identifying areas for improvement. While multiple levels of internal review were conducted during the creation of the base worksheet, we recognize the addition of columns could inadvertently introduce minor calculation errors and minor, inadvertent employee input errors could occur. To address this, we have implemented a procedure requiring that all worksheets undergo a review by an individual who did not prepare the original reimbursement request.

Finding 2024-001

Criteria: According to 2 CFR 200.303, a non-federal entity must maintain effective internal control that provides reasonable assurance that the non-federal entity complies with Federal statutes, regulations, and the conditions of the Federal award. In the context of payroll expenditures, internal control should ensure that costs charged to the Federal program are allowable, in particular that they are allocable to the program (i.e. based on actual hours worked). Condition: For employees charging less than 100% of their payroll to the federal program, timesheets were used to identify time spent on program and nonprogram activities. During our testing of these payroll transactions, we noted 9 instances where the portion of an employee’s pay reimbursed by the program was different than the portion of hours supported by the timesheet. Cause: The District’s process for calculating these split payroll costs, and subsequently requesting reimbursement, did not include detailed review of all supporting calculations. Thus, the accuracy of certain requested payroll amounts relied on the personnel creating the reimbursement request. Effect or Potential Effect: While the noted errors did not result in charging unallowable costs, undetected future errors could cause funds to be drawn for payroll beyond the amount related to the program. Recommendation: We recommend that the District strengthen its controls over reimbursement requests by increasing the scope and detail of review prior to submission to the granting agency. Secondary review should be performed by another individual who did not prepare the original request when practicable.Contact Person Responsible For Corrective Action: Greg Ballentine, Executive Director Anticipated Completion Date: September 30, 2025 Management’s Response: Management acknowledges receipt of the audit report concerning our internal controls related to the review of reimbursement request worksheets. We appreciate the insight provided in identifying areas for improvement. While multiple levels of internal review were conducted during the creation of the base worksheet, we recognize the addition of columns could inadvertently introduce minor calculation errors and minor, inadvertent employee input errors could occur. To address this, we have implemented a procedure requiring that all worksheets undergo a review by an individual who did not prepare the original reimbursement request.