Audit 351292

Lack of Internal Controls Over the Reporting Process Significant Deficiency Reclamation States Emergency Drought Relief Program, AL 15.514 Condition During our audit of the District’s compliance with federal program requirements, we noted that the entity does not have established internal controls over the reporting process. Specifically, there are no formal procedures in place to ensure the accuracy, completeness, and timeliness of required federal reports. Criteria Per 2 CFR § 200.303, non-federal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is managing the awards in compliance with applicable regulations. Additionally, 2 CFR § 200.327 requires recipients to submit performance and financial reports that are accurate, complete, and timely. Cause This is the first year the District has been subject to a single audit, exceeding the $750,000 expenditure threshold, and has not yet developed formal policies or procedures for reviewing and approving required financial and programmatic reports. Effect The lack of internal controls increases the risk of inaccurate, incomplete, or untimely reporting, which could result in noncompliance with federal requirements and potential future corrective actions by granting agencies. Recommendation We recommend that the District develop and implement formal policies and procedures to ensure that federal reports are reviewed for accuracy, completeness, and timeliness prior to submission. Management should assign responsibility for report preparation and review, implement checklists or reconciliation processes, and provide training to staff involved in federal reporting. Views of Responsible Officials See the attached Corrective Action Plan.

Lack of Internal Controls Over the Reporting Process Significant Deficiency Reclamation States Emergency Drought Relief Program, AL 15.514 Condition During our audit of the District’s compliance with federal program requirements, we noted that the entity does not have established internal controls over the reporting process. Specifically, there are no formal procedures in place to ensure the accuracy, completeness, and timeliness of required federal reports. Criteria Per 2 CFR § 200.303, non-federal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance that the entity is managing the awards in compliance with applicable regulations. Additionally, 2 CFR § 200.327 requires recipients to submit performance and financial reports that are accurate, complete, and timely. Cause This is the first year the District has been subject to a single audit, exceeding the $750,000 expenditure threshold, and has not yet developed formal policies or procedures for reviewing and approving required financial and programmatic reports. Effect The lack of internal controls increases the risk of inaccurate, incomplete, or untimely reporting, which could result in noncompliance with federal requirements and potential future corrective actions by granting agencies. Recommendation We recommend that the District develop and implement formal policies and procedures to ensure that federal reports are reviewed for accuracy, completeness, and timeliness prior to submission. Management should assign responsibility for report preparation and review, implement checklists or reconciliation processes, and provide training to staff involved in federal reporting. Views of Responsible Officials See the attached Corrective Action Plan.