Audit 363951

Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the accompanying notes to the schedule. Condition: The Cooperative does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. As auditors, we were requested to assist with the preparation of the schedule. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Cooperative meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Cooperative would not be able to draft a complete and accurate schedule. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding form Prior Year: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Cooperative is aware of this condition for financial reporting requirements relating to the Cooperative’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. Condition: The cooperative’s procurement policy had not identified the dollar thresholds of procurement within the methods of procurement. In addition, one contract selected for testing was missing one of the required contract provisions. Cause: The cooperative’s procurement policy is very thorough and identifies the methods of procurement, however, management had not identified the thresholds of procurement included within the policy. Effect: The Cooperative’s policy was missing required information Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 7 transactions out of 29 transactions were selected for testing, which accounted for $1,134,758 of $3,548,469 federal program expenditures. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review their procurement policy to ensure it includes the dollar thresholds for each of the procurement methods. In addition, we suggest the Cooperative review their contracts to ensure it includes all the required contract provisions. Views of Responsible Officials: Management agrees with the finding.

Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Preparation of the Schedule of Expenditures of Federal Awards Material Weakness in Internal Control over Compliance Criteria: Proper controls over financial reporting include a system designed to prepare the schedule of expenditures of federal awards (the schedule) and the accompanying notes to the schedule. Condition: The Cooperative does not have an internal control system designed to provide for a complete and accurate schedule of expenditures of federal awards being audited. As auditors, we were requested to assist with the preparation of the schedule. Cause: Auditor assistance with preparation of the schedule is not unusual as the schedule has unique and specialized requirements and preparation is only required when the Cooperative meets a specified threshold of federal expenditures. Effect: There is a reasonable possibility that the Cooperative would not be able to draft a complete and accurate schedule. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding form Prior Year: No Recommendation: While we recognize that this condition is not unusual for an organization with limited staffing, it is important that the Cooperative is aware of this condition for financial reporting requirements relating to the Cooperative’s schedule and the internal controls that impact financial reporting. Views of Responsible Officials: Management agrees with the finding.

Department of Homeland Security, Iowa Department of Homeland Security and Emergency Management, Federal Financial Assistance Listing 97.039, DR-4457-IA-0040 Hazard Mitigation Grant Program Procurement, Suspension & Debarment Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal awards that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. Condition: The cooperative’s procurement policy had not identified the dollar thresholds of procurement within the methods of procurement. In addition, one contract selected for testing was missing one of the required contract provisions. Cause: The cooperative’s procurement policy is very thorough and identifies the methods of procurement, however, management had not identified the thresholds of procurement included within the policy. Effect: The Cooperative’s policy was missing required information Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 7 transactions out of 29 transactions were selected for testing, which accounted for $1,134,758 of $3,548,469 federal program expenditures. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review their procurement policy to ensure it includes the dollar thresholds for each of the procurement methods. In addition, we suggest the Cooperative review their contracts to ensure it includes all the required contract provisions. Views of Responsible Officials: Management agrees with the finding.