Audit 407113

Department of the Interior Direct Program: WaterSMART (Sustain and Manage America’s Resources for Tomorrow) – 15.507 Award Year: 2025 Criteria or Specific Requirement – Matching: The District’s Notice of Award from the Department of Interior (the Department) outlined a 50% cost-sharing requirement whereby the expenditure of federal and non-federal funds based upon the 50% cost share percentage should have occurred concurrently. Condition: During our testing over the District’s WaterSMART grant, we noted the expenditure of funds did not follow the 50% cost share percentage as outlined in the Notice of Award. Cause: The District’s controls to ensure federal and non-federal cost sharing percentages were followed for each expenditure were not operating effectively. Effect or Potential Effect: Federal funds were mostly expended prior to the use of non-federal funds. Questioned Costs – None Context: The District’s federal award included a 50% non-federal match which the District subsequently met in 2026 through the use of local grant dollars. Identification of Prior Year Finding – N/A Recommendation: We recommend the District implement controls to ensure award provisions are followed and any cost-sharing requirements are met for future grant awards. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The District acknowledges that expenditures under the WaterSMART grant did not consistently follow the required federal and non-federal cost-sharing ratio throughout the grant period. Although the District ultimately satisfied the required non-federal match through local grant funding, management recognizes that the timing of expenditures did not align with the award requirements. To address this matter, the District has implemented procedures requiring management to monitor grant expenditures and matching contributions on an ongoing basis throughout the life of a grant award.