Audit 401647

Identification of the Federal Program: 10.720 – Infrastructure Investment and Jobs Act Community Wildfire Defense Grants Criteria: Proper oversight, review procedures and controls should be established to ensure the reports submitted are prepared and reviewed by more than one individual. Condition: The Association did not have proper review procedures in place to document that an individual other than the one who prepared the reports are reviewing them. Cause: There was a lack of documentation to evidence the reports were reviewed prior to submission. Effect: The absence of proper review procedures increases the risk of errors, inaccuracies, or omissions in submitted reports. Without independent oversight, reporting discrepancies may go undetected, potentially leading to compliance issues, misstatements, or operational inefficiencies. Questioned Costs: None Recommendations: We recommend the Association develop internal control processes and procedures to ensure there is proper documentation to evidence reports are reviewed prior to submission. Views of Responsible Officials: Management of the Cooperative concurs with the auditors’ finding related to documentation of independent review over federal grant reporting. Reports submitted under the Community Wildfire Defense Grants program included a required certification signature by an authorized official; however, the state-provided reporting form did not include a separate preparer signature line. As a result, while management review and approval occurred prior to submission, documentation distinguishing report preparation from certification was not evident on the submitted forms. Management recognizes the importance of clearly documenting segregation of preparation and review responsibilities to evidence effective internal controls. To address this matter, the Cooperative will revise its grant reporting process to include documented identification of both the preparer and reviewer for all federal grant reports. When state-provided forms do not include a preparer acknowledgment, the Cooperative will supplement the form with an internal preparer certification or signature line that is retained with the grant file. Management believes these actions will strengthen documentation of internal controls over reporting while continuing to comply with state and federal reporting requirements. The Cooperative remains committed to responsible oversight and stewardship of federal grant funds for the benefit of its members. This change was implemented beginning with the first quarterly reporting period under the Grant Agreement in 2026.

Identification of the Federal Program: 10.720 – Infrastructure Investment and Jobs Act Community Wildfire Defense Grants Criteria: 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition: Homer Electric Association, Inc. has not developed written procedures for determining the allowability of costs. Cause: Management did not have written procedures for determining the allowability of costs. Effect: Unallowable costs could be charged to the program. Questioned Costs: None Recommendations: Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials: Management of Homer Electric Association, Inc. concurs with the auditors’ finding regarding the absence of written procedures for determining the allowability of costs in accordance with 2 CFR Part 200.302(b)(7). While Homer Electric Association, Inc. applies applicable federal cost principles when administering grant-funded activities and no unallowable costs were identified, these practices were not formally documented in written procedures during the audit period. Management acknowledges that written procedures are required to ensure consistency, continuity, and clear guidance for personnel involved in federal grant administration. To address this matter, management will develop and implement written procedures for determining the allowability of costs charged to federal programs. These procedures will reference applicable Uniform Guidance cost principles and outline review and approval responsibilities to ensure compliance prior to costs being charged to federal awards. The procedures will be communicated to appropriate staff and incorporated into Homer Electric Association, Inc.’s grant administration practices. Management believes these corrective actions will strengthen internal controls over federal financial management and support continued responsible stewardship of grant funds for the benefit of Homer Electric Association, Inc.’s members.