FAC Explorer

Audit 52436

FY End
2022-12-31
Total Expended
$1.81M
Findings
2
Programs
4
Organization: City of Deer River (MN)
Year: 2022 Accepted: 2023-07-24
Auditor: Sterle & CO LTD

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
48761 2022-001 Significant Deficiency Yes P
625203 2022-001 Significant Deficiency Yes P

Programs

ALN Program Spent Major Findings
10.760 Water and Waste Disposal Systems for Rural Communities $1.16M Yes 1
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $559,016 - 0
66.458 Capitalization Grants for Clean Water State Revolving Funds $75,697 - 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $11,912 - 0

Contacts

Name Title Type
KJGGYUQAL8Y4 Sarah Nelson Auditee
2182468195 Jeff Sterle Auditor
No contacts on file

Notes to SEFA

Accounting Policies: NOTE 1 BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal award activity of the City under programs of the federal government for the year ended December 31, 2022. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because this schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. NOTE 3 INDIRECT COST RATE The City has elected not to use the 10% de minimis indirect cost rate allowed under the Uniform Guidance. NOTE 4 COVID 19 - AMERICAN RESCUE PLAN The City received $50,816 in funds during the year under the American Rescue Plan. The funds were not yet expended as of December 31, 2022 and accordingly are not reflected in the accompanying Schedule of Federal Awards Expended. The funds have been set aside and restricted by the City in the annual financial statements. The total funds received by the City under this program (ALN 21.019c) is $101,632 as of December 31, 2022. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate.

Finding Details

Finding 2022-001
2022-001 Lack of segregation of duties - Significant Deficiency Condition: Lack of segregation of duties over financial processes. Criteria: For an effective control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performing their assigned duties. Context: The lack of segregation of duties exists within the City as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Effect: Errors or misappropriations could occur and go undetected for a period of time. Questioned Costs: Not applicable Cause: Limited number of staff available to appropriately divide duties. Recommendation: The City's council members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of bank activity as well as general ledger and journal entries. The council members should also periodically perform on site inspections of assets and financial records. Views of Responsible Officials and Corrective Actions: The City agrees with the recommendations and continues to provide oversight as needed.
Finding 2022-001
2022-001 Lack of segregation of duties - Significant Deficiency Condition: Lack of segregation of duties over financial processes. Criteria: For an effective control system, division of accounting duties should exist to prevent errors or misappropriations from going undetected in the course of employees performing their assigned duties. Context: The lack of segregation of duties exists within the City as a whole over all of its accounting and reporting functions. This is a common circumstance in governments of similar size. Effect: Errors or misappropriations could occur and go undetected for a period of time. Questioned Costs: Not applicable Cause: Limited number of staff available to appropriately divide duties. Recommendation: The City's council members need to be cognizant of the issue and provide appropriate oversight. Such oversight includes careful review of bank activity as well as general ledger and journal entries. The council members should also periodically perform on site inspections of assets and financial records. Views of Responsible Officials and Corrective Actions: The City agrees with the recommendations and continues to provide oversight as needed.