Audit 341902

2023-002 U.S. Department of Rural Development, Assistant Listing #10.760 Water and Waste Disposal Systems for Rural Communities for the period of January 1, 2023 through December 31, 2023 Criteria: Allowable costs under the Water and Waste Disposal Systems for Rural Communities program may only be reimbursed from grant proceeds once. Duplicate reimbursements are considered unallowable costs subject to repayment. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Statement of Condition: Closing costs totaling $49,807 related to the Rural Development permanent loan closing were reimbursed from the grant twice. Cause: The closing costs were reimbursed at closing as a prepayment towards the next pay requisition. When the District submitted the next pay requisition, the closing costs were included on the project worksheet, causing the costs to be reimbursed again. Because the reimbursement at closing was outside the normal request process maintained by the client, controls in place did not capture the duplicate request. Effect: Duplicate costs are unallowable and must be returned to the U.S. Department of Rural Development. Known Questioned Costs: $49,807 Recommendation: We recommend management develop a process to ensure that costs paid at permanent loan closing are included on the pay requisitions and project tracking worksheets, but are not requested for reimbursement.

2023-002 U.S. Department of Rural Development, Assistant Listing #10.760 Water and Waste Disposal Systems for Rural Communities for the period of January 1, 2023 through December 31, 2023 Criteria: Allowable costs under the Water and Waste Disposal Systems for Rural Communities program may only be reimbursed from grant proceeds once. Duplicate reimbursements are considered unallowable costs subject to repayment. In addition, administrative requirements under the Uniform Guidance require grantees to develop internal controls and procedures sufficient to prevent noncompliance. Statement of Condition: Closing costs totaling $49,807 related to the Rural Development permanent loan closing were reimbursed from the grant twice. Cause: The closing costs were reimbursed at closing as a prepayment towards the next pay requisition. When the District submitted the next pay requisition, the closing costs were included on the project worksheet, causing the costs to be reimbursed again. Because the reimbursement at closing was outside the normal request process maintained by the client, controls in place did not capture the duplicate request. Effect: Duplicate costs are unallowable and must be returned to the U.S. Department of Rural Development. Known Questioned Costs: $49,807 Recommendation: We recommend management develop a process to ensure that costs paid at permanent loan closing are included on the pay requisitions and project tracking worksheets, but are not requested for reimbursement.