Audit 398703

Finding 2023-001 Noncompliance with Federal and State Reporting Requirements Assistance Listing Numbers 21.027 Cornoavirus State and Local Fiscal Recovery Funds (CSLFRF) Program Federal Agencies U.S. Department of Treasury Award Number/Year 2023 Criteria The Town has grant agreements from Federal and State of Illinois agencies with terms requiring compliance with financial reporting requirements in accordance with Uniform Guidance, the Illinois Grant Accountability and Transparency Act (GATA), and the Illinois Fiscal Responsibility Report Card Act. As such, for the year ended December 31, 2023, the Town is required to submit audited financial statements, a schedule of expenditures of federal awards (SEFA) and single audit reports to the Federal Audit Clearinghouse; the same audit package plus a Consolidated Year End Financial Report (CYEFR) to the GATA portal; and the audited financial statements and Annual Financial Report to the Illinois Comptroller. Required submissions the Illinois Comptroller are due within six (6) months after the Town’s fiscal yearend. The required submissions to the Federal Audit Clearinghouse and the GATA portal were due within nine (9) months after the Town’s fiscal year-end. Section III - Findings and Questioned Costs Relating to Compliance Over Federal Awards (continued) Condition The Town did not make its required submission to the Illinois Comptroller website prior to the due date of June 30, 2024 and did not make its required submissions to the Federal Audit Clearinghouse and GATA portal prior September 30, 2024. This finding also occurred in 2022 (2022-001) 2021, (2021-002), 2020 (2020-002), 2019 (2019-005) and 2017 (2017‐002). Cause The Town experienced a shortage of personnel in the Department of Financial Affairs during 2020. In response to the personnel shortage, the Town outsourced most of its financial accounting functions to a CPA firm, including preparing the Town’s financial statements, SEFA, CYEFR and other supplementary reports, and this transition required time to complete. Effect The effect is that controls over the financial reporting process were significantly weakened thereby increasing the risk that material misstatements could be included in the financial statements, SEFA, CYEFR and other supplementary schedules without management being aware. Additionally, noncompliance with financial reporting deadlines could cause funding sources for the Town to suspend funding until compliance is achieved. Questioned Costs None noted. Recommendation During 2021 the Town hired a CPA firm to which a majority of the accounting function was outsourced including preparing financial statements, SEFA, CYEFR and other supplementary schedules. We recommend that the Town continue to implement this corrective action plan until financial statements are prepared monthly in a timely manner and the SEFA, CYEFR and other supplementary schedules are prepared annually in a timely manner as prescribed in the Town’s accounting policies and procedures. Views of Responsible Officials and Planned Corrective Actions See corrective action plan.