Audit 370023

Finding 2024-003 Lack of Internal Control over Reporting and Noncompliance with Reporting Requirements Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: 21.027 Award Numbers: SLFRP4178/4850 Award Year: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Program requirements of the CSLFRF program state that Project and Expenditures Reports be submitted by April 30th of each year. Condition and context: We reviewed the Project and Expenditures Report for the CSLFRF program and determined it was submitted timely; however, the expenditures reported did not agree to the supporting general ledger data. 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 2023-005, and since it is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend the Village adhere to reporting requirements specified in the grant agreement and implement internal controls to ensure expenditures reported agree to supporting documentation. Management’s Response: Management concurs with the finding. See Corrective Action Plan.

Finding 2024-004 Lack of Internal Control over Cash Management Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: 21.027 Award Numbers: SLFRP4178/4850 Award Year: 2021 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 $6,230,065 at December 31, 2024. The unearned revenues were $6,512,960 which resulted in a shortfall of $282,895. The CSLFRF program had an unearned revenue balance of $5,352,004 as of December 31, 2024. 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: $282,895, which is the shortfall between cash and cash equivalents and the unearned revenue balances. Repeat Finding: This is a repeat of Finding 2023-006, 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.

Finding 2024-005 Lack of Internal Control over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) ALN: 21.027 Award Numbers: SLFRP4178/4850 Award Year: 2021 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 (where applicable), 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 CSLFRF program, we noted that out of sample of twenty-five (25) transactions reviewed, seventeen (17) 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 allows for the potential for misstatement of expenditures due to employees being paid incorrectly or having paychecks coded to the incorrect fund. Questioned Costs: None. Wage rates appeared reasonable under the circumstances and were in line with amounts paid by other similar organizations. Repeat finding: This is a repeat of Finding 2023-007, 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.