Document Policies and Procedures Over Federal Awards Type of Finding Compliance – Other Matter Internal Control Over Compliance – Significant Deficiency Criteria or Specific Requirement Uniform Guidance (2 CFR Part 200) requires non-federal entities administering federal awards to establish and maintain written policies and procedures to address all requirements specified in the regulations, including but not limited to internal controls, determination of allowable costs, procurement, subrecipient monitoring, financial management, and reporting. Condition and Context During our audit, we noted that the Town did not have formal policies and procedures in place covering all requirements of Uniform Guidance as specified in 2 CFR Part 200. Certain elements, such as cash management, property and equipment management, internal control, and other compliance areas, were not addressed in written policies or documented procedures. Cause: The Organization has not developed comprehensive written policies and procedures to address all compliance requirements under Uniform Guidance. Effect or Potential Effect:The absence of complete written policies and procedures for all elements under Uniform Guidance increases the risk of noncompliance with federal requirements, reduces consistency in federal program administration, and limits transparency and accountability. Questioned Costs:No questioned costs are reported. Identification as a Repeat Finding: This was not a finding in the prior year. Recommendation: Management of the Town should develop and implement comprehensive written policies and procedures that address all major compliance requirements under Uniform Guidance (2 CFR Part 200). Periodic review and updates should be performed to ensure ongoing compliance.
Improve Internal Controls Over Reporting and Period of Performance Federal Program(s) Information : Federal Agency: U.S. Department of Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021 Compliance Requirement: Reporting, Period of Performance Type of Finding: Compliance Internal Control Over Compliance – Significant Deficiency Criteria or Specific Requirement: Recipients of State and Local Fiscal Recovery Funds are required to submit complete, accurate, and supported Project and Expenditure Reports in accordance with U.S. Department of the Treasury reporting requirements. Effective internal controls over compliance should ensure that information reported to the Federal agency is supported by underlying accounting records and is subject to an independent review prior to submission. Pursuant to 2 CFR §200.303, non-Federal entities must establish and maintain effective internal control over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, recipients were required to obligate funds by December 31, 2024 and report obligations on their Project and Expenditure Report. Recipients must maintain adequate supporting documentation demonstrating that funds reported as obligated as of December 31, 2024, met the applicable Treasury requirements and were supported by executed contracts, purchase orders, subaward agreements, or other legally binding commitments. Condition and Context: The Town was required to submit an annual Project and Expenditure Report during the fiscal year. During testing of the report, we were unable to materially reconcile the cumulative obligations reported as of December 31, 2024, to the Town’s underlying supporting documentation and accounting records. In addition, we noted that the same individual was responsible for both the preparation and submission of the report. No documented supervisory review was performed prior to submission. Accordingly, adequate segregation of duties and review controls over the reporting process had not been established. Cause: Management had not implemented formal procedures to ensure reported amounts were reconciled to supporting records prior to submission and had not established a review process providing adequate segregation of duties over Federal reporting activities. Effect or Potential Effect: Reported information submitted to the U.S. Department of the Treasury may be inaccurate, incomplete, or unsupported. Without adequate documentation supporting obli+B2gations as of December 31, 2024, the Town cannot demonstrate compliance with Treasury’s obligation requirements. Consequently, expenditures associated with unsupported obligations may have been improperly charged to the award. The lack of independent review increases the risk that reporting errors, omissions, or unsupported amounts could occur and remain undetected, potentially resulting in noncompliance with Federal reporting requirements. Questioned Costs: No questioned costs are reported. Identification as a Repeat Finding: This is a repeat of finding 2024-001. Recommendation The Town should establish formal reporting procedures requiring reconciliation of all amounts reported to supporting accounting records and other relevant documentation prior to submission, as well as retention of documentation supporting all reported balances, including cumulative obligations and expenditures. An independent supervisory review of each report prior to submission should be performed to verify completeness, accuracy, and consistency with underlying records.
Missing Procurement Contract Provisions Federal Program(s) Information Federal Agency: U.S. Department of Treasury Pass-Through Entity: Norfolk County Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021 Compliance Requirement: Procurement Type of Finding: Compliance Internal Control Over Compliance – Significant Deficiency Criteria or Specific Requirement Appendix II to 2 CFR Part 200 requires non-Federal entities to include certain contract provisions in contracts funded with Federal awards, as applicable. In addition, 2 CFR 200.322 requires non-Federal entities to provide, to the greatest extent practicable, a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States. Contracts exceeding $100,000 must also include the Byrd Anti-Lobbying Amendment certification requirements as applicable. Condition and Context: During testing of two out of four vendor contracts subject to procurement requirements under the program, we noted that one contract did not contain all required Federal contract provisions. Specifically, the contract was missing the Byrd Anti-Lobbying Amendment provision and certification requirements, and the Domestic Preferences for Procurements provision required under 2 CFR 200.322 related to the Build America, Buy America (BABA) requirements. As a result, the contract did not fully comply with the Federal contract provision requirements applicable to procurements funded with Federal awards. Note that the sample was not a statistically valid sample. Cause: The Town did not have adequate review procedures in place to ensure all applicable Federal clauses required under Appendix II to 2 CFR Part 200 and Uniform Guidance procurement requirements were incorporated into contracts before execution. Effect or Potential Effect: Failure to include all required Federal contract provisions may result in noncompliance with Federal procurement requirements and could limit the Federal government’s ability to enforce applicable grant conditions. In addition, the omission of required clauses increases the risk that contractors may not be aware of specific Federal compliance obligations associated with the award. Questioned Costs: No questioned costs are reported. Identification as a Repeat Finding: This was not a finding in the prior year. Recommendation The Town should strengthen its procurement review and contract administration procedures to ensure all B3contracts funded with Federal awards contain the applicable provisions required by Appendix II to 2 CFR Part 200 and other Uniform Guidance procurement requirements, including the Byrd Anti-Lobbying Amendment and Domestic Preferences for Procurements provisions. Management should utilize a standardized Federal contract clause checklist and perform a documented review prior to contract execution.