FAC Explorer

Audit 362556

FY End
2024-12-31
Total Expended
$1.44M
Findings
2
Programs
3
Organization: City of Deer River (MN)
Year: 2024 Accepted: 2025-07-18
Auditor: Sterle & CO LTD

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
571632 2024-001 Significant Deficiency Yes P
1148074 2024-001 Significant Deficiency Yes P

Programs

ALN Program Spent Major Findings
10.760 Water and Waste Disposal Systems for Rural Communities $1.39M Yes 1
21.019 Coronavirus Relief Fund $43,694 - 0
10.698 State & Private Forestry Cooperative Fire Assistance $2,500 - 0

Contacts

Name Title Type
KJGGYUQAL8Y4 Mark Box Auditee
2182468195 Jeff Sterle Auditor
No contacts on file

Notes to SEFA

Title: Note 1 Basis of Presentation Accounting Policies: See attached notes De Minimis Rate Used: N Rate Explanation: De minimis cost rate not used The accompanying schedule of expenditures of federal awards includes the federal award activity of the City under programs of the federal government for the year ended December 31, 2024. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements , Cost Principles, and Audt Requirements for Federal Awards (Uniform Guidance). Because this schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City.
Title: Note 2 Summary of Significant Accounting Policies Accounting Policies: See attached notes De Minimis Rate Used: N Rate Explanation: De minimis cost rate not used Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not alllowable or are limited as to reimbursement.
Title: Note 3 Indirect Cost Rate Accounting Policies: See attached notes De Minimis Rate Used: N Rate Explanation: De minimis cost rate not used The City has elected not to use 10% de minimus indirect cost rate allowed under Uniform Guidance.
Title: Note 4 U.S Department of Agriculture - Rural Development ALN #10.760 Accounting Policies: See attached notes De Minimis Rate Used: N Rate Explanation: De minimis cost rate not used The City expended a total of $1,393,747 during the year under the program that was comprised of $208,328 in grant funds and $1,185,419 loan proceeds. The City had expended/drawn down on interim federally guaranteed loans of $2,478,581 in previous years which were recorded in prior years' Schedule of Federal Expenditure Awards (SEFA). The final funds were drawn on the interim loan in 2024. The City refinanced the interim loan with the USDA for $3,664,000 subsequent to year end.
Title: Note 5 COVID 19 - American Rescue Plan - Coronavirus Relief Fund ALN #21.019 Accounting Policies: See attached notes De Minimis Rate Used: N Rate Explanation: De minimis cost rate not used The City received $101,632 in federal funds under this program in prior years. The program allowed the City to expend the funds through the current fiscal year end. The City fully expended the grant during the year on an approved community wide walking trail project in the amount of $43,694.

Finding Details

Finding 2024-001
Lack of segregation of duties - Significant Deficiency Criteria: For an effective control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performing their assigned duties. No one individual should have more than one duty related to approval, custody of assets, record keeping, and reconciliation functions. Condition: The City does not have enough staff to adequately separate duties in all financial transactions. Context: The lack of segregation of duties exists within the City as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Cause: LImited number of staff avasilable to appropriately divide duties. Effect: Errors or misappropriations could occur and go undetected for a period of time. Questioned Costs: Not applicable. Recommendation: The City's council members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of bank activity as well as general ledger and journal entries. The council members should also peridodically perform on site inspections of assets and financial records. Views of Responsible Officials and Corrective Actions: The City agrees with the recommendations and continues to provide oversight as needed.
Finding 2024-001
Lack of segregation of duties - Significant Deficiency Criteria: For an effective control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performing their assigned duties. No one individual should have more than one duty related to approval, custody of assets, record keeping, and reconciliation functions. Condition: The City does not have enough staff to adequately separate duties in all financial transactions. Context: The lack of segregation of duties exists within the City as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Cause: LImited number of staff avasilable to appropriately divide duties. Effect: Errors or misappropriations could occur and go undetected for a period of time. Questioned Costs: Not applicable. Recommendation: The City's council members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of bank activity as well as general ledger and journal entries. The council members should also peridodically perform on site inspections of assets and financial records. Views of Responsible Officials and Corrective Actions: The City agrees with the recommendations and continues to provide oversight as needed.