Finding Text
2022-003: Reporting
Material Weakness in Internal Control Over Compliance and noncompliance
Department of Agriculture
Federal Assistance Listing/CFDA #10.766
Community Facilities Loans and Grants Cluster
Criteria
2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over
the federal award that provides assurance that the entity is managing the federal award in compliance
with federal statutes, regulations, and conditions of the federal award. The Association is required to
submit an accurate report to the department of agriculture for each filing period of outstanding loan
balances.
Condition
The Association filed the RD 442-3 and RD 442-2 with inaccurate financial information for the current
and prior year balance sheets and prior year statement of income and equity. The forms due in 2022 for
the December 31, 2021 year end were also not timely.
Cause
The Association did not have the internal controls in place to ensure the financial information submitted
to the Department of Agriculture was complete and accurate.
Effect
The lack of adequate policies over the report preparation and submission increases the risk that
employees participating in the federal award administration may not be able to detect and correct
noncompliance in a timely manner. The Association submitted inaccurate financial information and the
2021 reporting wasn’t performed timely.
Context
RD forms included financial information that doesn’t agree with the financial statements for the years
presented and the 2021 reporting forms were not timely.
Recommendation
We recommend that the Association enhance internal control policies to ensure the reports are supported
by supporting calculations. This would include implementing a secondary review and approval over the
reporting.
Views of Responsible Officials and Planned Corrective Actions
Management agrees with the finding, has prepared an assessment of the root causes of this material
weakness, and has developed a corrective action plan.
Indication of Repeat Finding
This is not a repeat finding in the current year.