2025-017 Controls Over SRF Reimbursement Requests ALN Title: Drinking Water State Revolving Fund ALN Number: 66.468 Pass-through Entity: Montana Department of Natural Resources and Conservation Condition: The City did not have adequate internal controls over the preparation, review, reconciliation, and timely submission of SRF reimbursement requests. Context: As part of our audit of the SRF program, we tested reimbursement requests and related supporting documentation, including the City's project tracking schedule and allocation of project costs among SRF, ARPA, and local funding sources. We noted the following: • $19,052 of engineering costs were included in both an ARPA funding request and an SRF reimbursement request. DNRC identified the duplicate request, and the City subsequently worked with DNRC to correct the request by replacing the duplicated costs with other eligible project expenditures. We verified the replacement expenditures were allowable, within the applicable period of performance, and were not reimbursed from another funding source. • Approximately $880,440 of eligible project expenditures incurred between February and May 2025 were not initially submitted for SRF reimbursement until October 2025. The reimbursement request required subsequent correction related to the duplicate funding issue and was resubmitted in January 2026. Criteria: The City should maintain adequate internal controls over federal reimbursement requests to ensure expenditures are properly supported, allowable, allocated to the appropriate funding source, and not submitted for reimbursement from more than one funding source. Controls should also provide for periodic review of unreimbursed expenditures and timely preparation, review, and submission of reimbursement requests. Effect: The lack of adequate controls resulted in $19,052 being submitted for reimbursement from two funding sources and significant eligible project costs remaining unreimbursed for an extended period. DNRC identified the duplicate request before duplicate reimbursement occurred, and the City subsequently corrected the requests. We identified no questioned costs. However, these conditions increase the risk that reimbursement requests could be inaccurate, duplicated, unsupported, or not submitted timely. Cause: The City did not have formal procedures to reconcile project expenditures and funding allocations among the SRF program, ARPA, and other funding sources or to periodically identify and submit eligible unreimbursed expenditures. Recommendation: We recommend the City establish procedures over SRF reimbursement requests. Procedures should require monthly review and submission of eligible unreimbursed expenditures, reconciliation of expenditures to the project tracking schedule and other funding sources, and documented independent review and approval before submission. The review should verify that costs are eligible, properly supported, assigned to the appropriate funding source, and have not previously been submitted for reimbursement.
2025-018 Audit Report Filing Deadline ALN Title: Drinking Water State Revolving Fund ALN Number: 66.468 Pass-through Entity: Montana Department of Natural Resources and Conservation Condition: The City's fiscal year 2025 Single Audit was not completed and submitted within the required federal and State reporting deadlines. Context: The City was subject to the Single Audit requirements for fiscal year 2025. The need for a Single Audit was not identified until after initial audit planning had begun, which required additional federal audit procedures and reporting beyond those originally planned. The audit and related reporting package were completed after the applicable filing deadline. Criteria: Under 2 CFR 200.512, the audit, data collection form, and reporting package are required to be submitted to the Federal Audit Clearinghouse within 30 calendar days after the auditee receives the auditor's reports or nine months after the end of the audit period, whichever is earlier. For the City's June 30, 2025 fiscal year-end, the nine-month deadline was March 31, 2026. Montana's Local Government Services Bureau also identifies March 31 as the filing date for federal Single Audit reports and requires reports to comply with federal Single Audit requirements and ARM 2.4.411. Effect: The City did not comply with the required federal and State Single Audit reporting deadlines for fiscal year 2025. Cause: The City did not identify that federal expenditures for fiscal year 2025 would require a Single Audit until after the audit planning process had begun. As a result, the additional audit procedures and reporting requirements necessary for the Single Audit were not incorporated into the original audit planning and reporting timeline. Recommendation: We recommend the City establish procedures to monitor federal expenditures throughout the fiscal year and determine whether the Single Audit threshold has been met before yearend audit planning begins. The City should communicate the anticipated need for a Single Audit to its auditor timely so the additional audit procedures and reporting requirements can be incorporated into the audit plan and schedule.