Audit 397805

Rural eConnectivity Pilot Program U.S. Department of Agriculture Loan ID MO1704-A59, April 2, 2020 – April 1, 2043 Criteria or Specific Requirement – Internal Controls over Compliance (2 CFR 200.303(a). non‑federal entities must establish and maintain effective internal controls over Federal awards, including segregation of duties to reasonably ensure reports submitted to the federal awarding agency or a pass-through entity include all activity of the reporting period, are supported by underlying accounting or performance records, and are fairly presented in accordance with governing requirements. Condition – The Cooperative did not maintain appropriate segregation of duties for approval of quarterly reports. Specifically, reports were not separately reviewed for completeness and accuracy by an individual in management at the appropriate level, the same individual prepared and approved the quarterly reports. Cause – The Cooperative’s internal controls were not adequate to ensure reports submitted were reviewed by a separate individual. The Cooperative had not assigned separate personnel to perform the preparation and approval functions for required quarterly reports. Effect or Potential Effect – A lack of segregation of duties increases the risk that errors or omissions in quarterly reports may not be prevented or detected in a timely manner. As a result, reports submitted to USDA may be inaccurate or incomplete. Questioned Costs – None Context – We selected a sample of two out of four quarterly reports submitted during the year for detailed testing. For both reports documentation showed the same individual was responsible for both preparing and approving the submissions. The sampling methodology used is not, and is not intended to be, statistically valid. Identification of a Repeat Finding, if Applicable – Not a repeat finding. Recommendation – The Cooperative should implement internal control procedures that ensure adequate segregation of duties for the preparation and approval of quarterly reports. At a minimum, report preparation and approval responsibilities should be assigned to different individuals. Views of Responsible Officials and Planned Corrective Actions – The Cooperative concurs with the finding and management will implement procedures to ensure appropriate segregation of duties are in place for reporting requirements.