Audit 372545

Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance ALN 21.019: Coronavirus Relief Fund Criteria: A recipient of federal funds must establish, document, and maintain effective internal control over the Federal Award that provides reasonable assurance that the recipient or subrecipient is managing the Federal Award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal Award. (2 CFR 200.303). Condition: The District incurred project costs that were not formally approved for payment by the Board of Directors. Formal approval of payments is an important internal control over the use of federally awarded funds. However, no documentation was provided to demonstrate such approval, and there was no evidence of formal authorization in the Board meeting minutes. Context: The project started in calendar year 2024, and costs were paid throughout the year for water and sewer system upgrades. Effect: Without adequate oversight, there could be unallowable costs and costs incurred outside of the grant period. Questioned Costs: None. Cause: The District discussed invoices during their monthly meetings and reviewed reports supplied by the engineer, but no formal documentation of approval was recorded in the meeting minutes or on the invoices and supporting documentation. Auditor Recommendation: We recommend that the District record in the meeting minutes or on the invoices and supporting documents, board approval for payment of invoices prior to payment. District Response: The Water District Secretary will bring before the board every invoice from Central, WET, Shumaker, and payroll for a separate vote for approval. This will be completed at the November 2025 meeting.