Audit 370022

Finding 2023-007 Lack of Internal Control over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of the Interior Federal Program: Aid to Tribal Governments (ATG) and Consolidated Tribal Government (CTG) ALN: 15.020 (ATG) and 15.021 (CTG) Award Numbers: A19AV00203 (ATG); A19AV00203 and A22AV00218 (CTG) Award Year: 2021 (ATG); 2021 and 2022 (CTG) Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Internal control procedures should be in place to ensure that the payroll accounting system is maintained to be able to accurately record payroll transactions. Payroll transactions should be supported by approved timesheets, and documentation of pay rates, general ledger coding, and deductions should be included in the personnel files. Condition and context: During our testing of payroll transactions charged to the Aid to Tribal Governments program, we noted that out of a sample of twenty-five (25) payroll transactions reviewed, three (3) employees were missing documentation of an approved pay rate in their personnel file. During our testing of payroll transactions charged to the Consolidated Tribal Government program, we noted that out of sample of twenty-five (25) transactions reviewed, four (4) lacked documentation of an approved pay rate in their personnel file. Cause: Lack of internal control over payroll transactions. Effect: The lack of internal controls over payroll transactions creates the potential for misstatement of expenditures due to employees being paid incorrectly or having paychecks coded to the incorrect fund. Questioned Costs: Known or likely questioned costs are below the $25,000 reporting threshold. Repeat finding: This is a repeat of Finding 2022-008, and since it is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend the Village adhere to their internal control policies to ensure that personnel action forms (PAF) are on hand for all employees. PAF’s should document the employee’s approved pay rate, fund(s) in which the employee should be coded to, and any other pertinent information related to the employee. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2023-004 Late Reporting and Noncompliance with Reporting Requirements Federal Agency: U.S. Department of the Interior and U.S. Department of the Treasury Federal Program: Aid to Tribal Governments (ATG); Consolidated Tribal Government (CTG); and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively ALN: 15.020 (ATG); 15.021 (CTG); and 21.027 (CSLFRF), respectively Award Numbers: A19AV00203 (ATG); A19AV00203 and A22AV00218 (CTG); and SLFRP4178/4850 (CSLFRF), respectively Award Year: 2021 (ATG); 2021 and 2022 (CTG); and 2021 (CSLFRF), respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: In accordance with 2 CFR part 200, subpart F, section 200.512, the reporting package must be submitted the earlier of nine (9) months after year end or 30 days after the report issuance. Condition and context: The Village did not adhere to the Uniform Guidance requirement of submitting the reporting package within the earlier of 30 days after the receipt of the audit report, or the nine (9) months after the end of the audit period. Cause: Due to high employee turnover, the Village was not able to complete the audit before the Uniform Guidance deadline. Effect: The Village was not in compliance with reporting requirements. Questioned Costs: None noted. Repeat finding: This is a repeat of Finding 2022-005, and since it is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend the Village adhere to Uniform Guidance reporting requirements. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2023-005 Late Reporting and Noncompliance with Reporting Requirements Federal Agency: U.S. Department of the Interior and U.S. Department of the Treasury Federal Program: Aid to Tribal Governments (ATG); Consolidated Tribal Government (CTG); and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively ALN: 15.020 (ATG); 15.021 (CTG); and 21.027 (CSLFRF), respectively Award Numbers: A19AV00203 (ATG); A19AV00203 and A22AV00218 (CTG); and SLFRP4178/4850 (CSLFRF), respectively Award Year: 2021 (ATG); 2021 and 2022 (CTG); and 2021 (CSLFRF), respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Program requirements for ATG and CTG programs state that Federal Financial Reports must be submitted within 30 days after the end of each quarter. Program requirements of the CSLFRF program state that Project and Expenditures Report be submitted by April 30th of each year. Condition and context: The Village did not adhere to the quarterly or annual reporting requirements for these programs. We reviewed two quarterly reports for the ATG and CTG programs and all reports reviewed were submitted late. We reviewed the Project and Expenditures Report for the CSLFRF program and determined it was submitted late and the expenditures reported did not agree to the supporting general ledger. Cause: Lack of internal controls over grant and program reporting. Effect: Failure to follow compliance requirements could result in loss of Federal funding. Questioned Costs: None noted. Repeat finding: This is a repeat of Finding 2022-006, and since it is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend the Village adhere to quarterly and annual reporting requirements specified in the grant agreement. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2023-006 Lack of Internal Control over Cash Management Federal Agency: U.S. Department of the Interior and U.S. Department of the Treasury Federal Program: Aid to Tribal Governments (ATG); Consolidated Tribal Government (CTG); and Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), respectively ALN: 15.020 (ATG); 15.021 (CTG); and 21.027 (CSLFRF), respectively Award Numbers: A19AV00203 (ATG); A19AV00203 and A22AV00218 (CTG); and SLFRP4178/4850 (CSLFRF), respectively Award Year: 2021 (ATG); 2021 and 2022 (CTG); and 2021 (CSLFRF), respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management as contained in 2 CFR 200.305, states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that grant funds drawn down were used for grant expenditures in the applicable program. We compared the unearned revenue balances of the grant funds with the available cash balances at year end. The Village’s cash balances for all governmental funds amounted to $7,546,844 at December 31, 2023. The unearned revenues were $8,138,199 which resulted in a shortfall of $591,355. The ATG and CTG programs had unearned revenue balances of $552,928, and the CSLFRF program had an unearned revenue balance of $6,624,359 as of December 31, 2023. Cause: Lack of internal control over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Cash advances were used to fund other unrelated programs of the Village. Questioned Costs: $591,355, which is the shortfall between cash and cash equivalents and the unearned revenue balances. Repeat Finding: This is a repeat of Finding 2022-003, and since it is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs to ensure that unearned revenue balances do not exceed total cash and cash equivalents. Management’s Response: Management concurs with this finding. See corrective action plan.