Audit 403627

United States Department of the Treasury Reference Number: 2024-010 Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal Award Number: 51-6000255 Type of Finding: Noncompliance and Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Reporting Condition: The following conditions were found during testing of the Town’s Annual Report for the period April 1, 2023 through March 31, 2024. 1. The Town’s procedures over the reporting did not include documentation of the preparation and review of the report. 2. Testing of the key line items- Obligations and Expenditures - Quantifiable Objective Criteria revealed the following: a. The Town reported the budgeted amount as cumulative obligations. b. The Town reported the same amount for current period obligations, current period expenditures and cumulative expenditures. The reported amount appeared to be the calculated amount of cumulative obligations. The support for the report did not appear to calculate the current period obligations or current period expenditures. A similar finding was reported in prior years’ audits. Criteria: United States Department of the Treasury State and Local Fiscal Recovery Funds Compliance and Reporting Guidance version 5.0 was issued September 20, 2022 and provides detailed reporting requirements 31 CFR §35.3 defines obligation and 2 CFR §200.1 defines expenditures. 2 CFR § 200.303 requires the implementation of effective internal controls: “Internal control requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the conditions of the federal award.” Cause: The Town experienced turnover at key positions in the Finance Department during the year. Effect: The Town was not in compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) at 2 C.F.R. § 200.32 and the Guidance on Recipient Compliance and Reporting Responsibilities, issued by the U.S. Department of the Treasury. Recommendation: We recommend that the Finance Department enhance its processes and oversight surrounding grant financial reporting to ensure all required reports are completed accurately and timely. Views of Responsible Town Officials and Planned Corrective Actions: See corrective action plan. Responsible Positions: Town Manager and Director of Finance

United States Department of the Treasury Reference Number: 2024-011 Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Federal Award Number: 51-6000255 Type of Finding: Noncompliance and Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Procurement Condition: During our audit of procurement transactions related to the SLFRF, we noted one instance where the Town acquired underground primary wire at a cost of $213,900 without documenting the quotes received or the procurement procedures, as required by federal regulations. A similar finding was reported in prior years’ audits. Criteria: Under 2 CFR §200.318-§200.326, non-federal entities must follow documented procurement procedures that reflect applicable state, local, and tribal laws and regulations, provided those procedures conform to federal standards. This purchase exceeded the $50,000 micro-purchase threshold, so it required the Simplified Acquisitions Procedures. Those procedures require obtaining quotes and documenting the procurement procedures. Cause: The Town did not document its procurement policies due to turnover in key positions during the year. Effect: The Town was not in compliance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) at 2 CFR §200.318-§200.326. The lack of documenting the quotes received and procurement procedures followed increases the risk that the Town may not receive the best prices or terms for the goods and services it purchases. Recommendation: We recommend that the Finance Department enhance its processes and oversight surrounding federal procurement requirements. Views of Responsible Town Officials and Planned Corrective Actions: See corrective action plan. Responsible Positions: Town Manager and Director of Finance