Finding Text
Information on the Federal Program(s):
10.760 Water and Waste Disposal Systems for Rural Communities, Department of Agriculture
14.228 Community Development Block Grants/State’s Program, Department of Housing and Urban Development
Compliance Requirements: Allowable Activities.
Type of Finding: Material Weakness in Internal Control Over Compliance.
Criteria: Internal controls should be in place to provide reasonable assurance that federal awards are expended only for allowable activities.
Condition: The City lacks sufficient controls over allowable activities to ensure that federal awards are expended only for allowable activities.
Cause: The City did not design and implement controls over compliance with allowable activities.
Effect or Potential Effect: Failure to have adequate internal controls over compliance with allowable activities could result in program assets used for activities that are not allowed by the programs requirements.
Questioned Costs: There are no questioned costs.
Recommendation: We recommend that the City design and implement controls to: ensure that applicable award agreements and contracts are reviewed by appropriate personnel for specific allowable activities requirements, budget parameters, and those activities/costs which require pre-approval by the awarding agency and documents such features; and ensure appropriate personnel review and approve invoices for allowability, adherence to cost principles, accuracy and completeness.
Views of Responsible Officials and Planned Corrective Action: Management concurs with the audit finding. The City will design and implement controls to ensure that federal awards are expended only for allowable activities.