Finding Text
Criteria: Per Federal regulations, the auditee must prepare a schedule of expenditures of federal awards which reconciles to the financial statements. Condition: The City did not identify they were subject to a single audit and the auditors assisted in the preparation of the SEFA. Context: In fiscal year 2024, the City had $2,271,467 in federal program expenditures. Additionally, $1,335,200 was not recorded in the general ledger pending ability to request reimbursement from the State before paying the vendor. Cause: The City did not have proper controls and processes in place to ensure all federal funds expended were properly monitored and tracked for single audit. Effect: The City could fail to identify an audit over compliance for federal programs is requried and all federal funds were included. Recommendation: The City should consider policies and procedures to ensure all sources of federal funds are being monitored and identified for proper recognition in the financial statements and SEFA. Response: With the multiple award year of ARPA federal funds, and the addition of both Federal funds and state funds being awarded in multiple fiscal years for water project (DWSRF); the ability to track these funds and appropriately ledger/journal notes these expenditures were lacking. There was question as to if the amount the City's received was over the $750,000 threshold due to invoicing and payment dates being in multiple fiscal years. Going forward, the City is aware that the invoicing for the use of Federal Funds are the amounts to be looked at when deciding if a single audit needs to be completed. The City will make the auditors aware of the need for a single audit prior to them completing the normal annual audit each year it is necessary.