Audit 408121

FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Internal Controls Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP2104 Pass-Through Entity: Allen County Compliance Requirement: Reporting Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 13 MAYSVILLE REGIONAL WATER AND SEWER DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The District was the recipient of a federal program subaward from Allen County, Indiana. Recipients of the subaward are required to submit a Monthly Project Spending Report (MPSR) for each month throughout the life of the grant to Allen County's grant administrator. Information to be reported on the MPSR includes original project funding, funds spent during the month, funds spent to date, planned percentage of project completion as of the end of the reporting month, and actual percentage of project completion. The Office Manager completed and submitted the MPSRs during the audit period as required; however, the District did not design and implement a review process or oversight for the reports prior to submission. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) 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 terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed or implemented by management of the District to ensure that MPSRs were prepared by one individual and reviewed by another individual before submission to Allen County's grant administrator. Effect Without the proper implementation of an effectively designed system of internal controls, errors could occur and remain undetected. As such, the District could not ensure that the reports submitted were materially accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the District establish a system of internal controls and develop policies and procedures over the preparation and review of monthly reports to ensure appropriate reviews, approval, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the District provides Allen County with complete and accurate information for all reports. INDIANA STATE BOARD OF ACCOUNTS 14 MAYSVILLE REGIONAL WATER AND SEWER DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 15