Audit 395638

Finding 2023-001: Material Restatement to Fund Balance/Net Position Condition: During audit fieldwork, our testing resulted in a restatement of fund balance in order to correct a change in the Reporting Entity and split out funds required for separate reporting. Criteria: A good system of internal controls would provide for accurate recording and reporting of funds reported within the Reporting Entity on a regular basis to provide for accurate financial reporting. Cause: Year-end entries related to the Reporting Entity and Fund Balance/Net Position were required in order to accurately present the County’s financial statements. Effect: A material adjustment to the County’s beginning fund balance was required to properly state funds to be reported within the Entity. Recommendation: We recommend the County implement effective internal controls in order to provide an accurate assessment of reporting requirements. This implementation of improved controls would result in the appropriate recognition for financial reporting requirements. Corrective Action Plan: The County Administrator’s Office and all other offices impacting financial reporting will implement internal controls to properly record necessary funds to be reported at the Entity level.

Finding 2023-002: Grant Administration Condition: During our current year-end audit procedures, we noted that the County did not have adequate centralized procedures to track, monitor, and aggregate grant activity across grant departments to ensure compliance with grant requirements and to identify when the Single Audit threshold was met. Criteria: Federal regulations require non-federal entities to maintain effective internal controls over federal awards, including tracking grant expenditures, monitoring compliance, and determining when a Single Audit is required. Cause: The County did not clearly define responsibility for grant oversight or implement a centralized grant tracking process, resulting in inconsistent monitoring by individual departments. Effect: The County is at increased risk of grant noncompliance and may fail to timely identify when federal expenditures exceed the Single Audit threshold, potentially resulting in audit noncompliance, questioned costs, or loss of future funding. Recommendation: The County should establish a centralized grant tracking and monitoring process to ensure all State and Federal grants are properly recorded, monitored for compliance, and aggregated for determining Single Audit requirements. The County should also clearly define responsibilities for grant oversight, compliance monitoring, and reporting, including ongoing communication between departments and central administration. Corrective Action Plan: The County will designate a central function, such as the Treasurer’s Office, to maintain a comprehensive list of all grants awards received by County Departments. Departments will be required to notify the central function upon application for and receipt of grant funding and to provide periodic expenditure and compliance information. Standardized procedures will be implemented to monitor grant activity, track cumulative federal expenditures, and assess Single Audit applicability.