Audit 412512

Finding 2025-001 Repeat Finding of 2024-001 Program Federal Assistance Listing and Title: 10.766 Community Facilities Loans and Grants Award Numbers: Unknown Federal Grantor: U.S. Department of Agriculture Pass-Through Agency: N/A Criteria: 2 CRF 200.303 Internal Controls requires that nonfederal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. To minimize the risk of errors, internal controls should be in place for all program compliance requirements, including the preparation and deposits of loan and reserve payments, which should be reviewed and approved by a responsible party other than the original preparer. Condition/Context: There was not a review/approval performed of the annual reserve deposit tested and its entry for the loan. The sample was not statistically valid. Cause: There are no controls in place for a review and approval process of journal entries and deposits for the loan and reserve payments. Effect: Accounting software and/or reports could contain errors. Questioned Costs: None noted. Recommendation: The fire department should review its internal control procedures to ensure there is proper review and approval processes over completeness and accuracy of deposits and reserve payments, including documentation of that review. Management Response: The control deficiency has been discussed with the Department's management and we acknowledge our responsibility for a review and approval process. The Board was aware that this condition existed and realizes that the concentration of duties and responsibilities in a limited number of individuals is not desirable from a control point of view. The Department is now using our Fire Board Treasurer to review and confirm deposits and account balances for our USDA loan and reserve payments. This provides an additional, objective layer of duty separation for our financial work. This position is currently held by Mark Eastman from the Town of Perry, who is not part of our in-house management team. Mr. Eastman signed a written statement certifying his review for FY2026. As part of a broader separation of duties strategy, the Department now employs a Business Manager. This role has access to our QuickBooks accounting software to review all transactions, balances, and journal entries, with a directive to escalate any discrepancies found.