Audit 90093

FY End

2022-06-30

Total Expended

$2.04M

Findings

4

Programs

3

Organization: Town of Easton (the Easton Utilities Commission) (MD)

Year: 2022 Accepted: 2023-03-28

Auditor: Cliftonlarsonallen LLP

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
93897	2022-001	Significant Deficiency	-	I
93898	2022-002	Significant Deficiency	-	AB
670339	2022-001	Significant Deficiency	-	I
670340	2022-002	Significant Deficiency	-	AB

ALN	Program	Spent	Major	Findings
10.752	Rural Econnectivity Pilot Program (b, E)	$1.61M	Yes	2
21.027	Coronavirus State and Local Fiscal Recovery Funds	$229,798	-	0
32.002	Universal Service Fund - High Cost	$15,754	-	0

Contacts

Name	Title	Type
RN4HQWTJMFZ8	Carrie Manuel	Auditee
4107639429	Bill Early	Auditor
No contacts on file

Notes to SEFA

Title: Basis of Presentation 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 for all awards. Under these principles, certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the Easton Utilities Commission (the Commission), an enterprise fund of the Town of Easton, Maryland under programs of the federal government for the year ended June 30, 2022. The information in this Schedule is presented in accordance with the requirements of 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Commission, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the Commission.

Finding Details

Finding 2022-001

Federal Agency: U.S. Department of Agriculture Federal Program Name: Rural eConnectivity Pilot Program Assistance Listing Number: 10.752 Federal Award Identification Number and Year: MD 1701-A64, 2020 Award Period: July 1, 2020 ? July 1, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2CFR ? 200.318(a), non-Federal entities must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Questioned Costs: None Condition/Context: The Commission?s procurement policy for federal expenditures is not in accordance with ?? 200.317 through 200.327. Cause/Effect: The Commission does not have sufficient documented policies and procedures over procurement to ensure federal procurement requirements are met. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission establish and document procurement policies and procedures in conformity with the Federal requirements ?? 200.317 through 200.327. Views of responsible officials: Management agrees with the finding.

Finding 2022-002

Federal Agency: U.S. Department of Agriculture Federal Program Name: Rural eConnectivity Pilot Program Assistance Listing Number: 10.752 Federal Award Identification Number and Year: MD 1701-A64, 2020 Award Period: July 1, 2020 ? July 1, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2CFR ? 200.303(a), non-Federal entities must 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). COSO/Internal Control Framework defines control activities as ?policies and procedures that help ensure management?s directives are carried out.? Management review controls are defined as, ?the activities of a person, different than the preparer, through analyzing and performing oversight of activities performed, and is an integral part of any internal control structure.? Questioned Costs: None Condition/Context: The Commission did not have a documented review/ approval process in place for equipment and inventory expenditures charged to the grant for the fiscal year ended June 30, 2022. In addition, the Commission did not maintain evidence of the approval of equipment and inventory expenditures charged to the grant. Cause: The Commission does not have sufficient policies and procedures over internal controls to ensure review and approval of grant expenditures are properly documented. Effect: Expenditures may be charged to the grant that are not eligible. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission formalize policies and procedures over internal controls to ensure review and approval of equipment and inventory expenditures are properly documented. Views of responsible officials: Management agrees with the finding.

Finding 2022-001

Federal Agency: U.S. Department of Agriculture Federal Program Name: Rural eConnectivity Pilot Program Assistance Listing Number: 10.752 Federal Award Identification Number and Year: MD 1701-A64, 2020 Award Period: July 1, 2020 ? July 1, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2CFR ? 200.318(a), non-Federal entities must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. Questioned Costs: None Condition/Context: The Commission?s procurement policy for federal expenditures is not in accordance with ?? 200.317 through 200.327. Cause/Effect: The Commission does not have sufficient documented policies and procedures over procurement to ensure federal procurement requirements are met. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission establish and document procurement policies and procedures in conformity with the Federal requirements ?? 200.317 through 200.327. Views of responsible officials: Management agrees with the finding.

Finding 2022-002

Federal Agency: U.S. Department of Agriculture Federal Program Name: Rural eConnectivity Pilot Program Assistance Listing Number: 10.752 Federal Award Identification Number and Year: MD 1701-A64, 2020 Award Period: July 1, 2020 ? July 1, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2CFR ? 200.303(a), non-Federal entities must 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). COSO/Internal Control Framework defines control activities as ?policies and procedures that help ensure management?s directives are carried out.? Management review controls are defined as, ?the activities of a person, different than the preparer, through analyzing and performing oversight of activities performed, and is an integral part of any internal control structure.? Questioned Costs: None Condition/Context: The Commission did not have a documented review/ approval process in place for equipment and inventory expenditures charged to the grant for the fiscal year ended June 30, 2022. In addition, the Commission did not maintain evidence of the approval of equipment and inventory expenditures charged to the grant. Cause: The Commission does not have sufficient policies and procedures over internal controls to ensure review and approval of grant expenditures are properly documented. Effect: Expenditures may be charged to the grant that are not eligible. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission formalize policies and procedures over internal controls to ensure review and approval of equipment and inventory expenditures are properly documented. Views of responsible officials: Management agrees with the finding.