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 Costs/Cost Principles.
Type of Finding: Material Weakness in Internal Control Over Compliance.
Criteria: Internal controls should be in place to provide reasonable assurance that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles.
Condition: The City lacks sufficient controls over allowable cost/cost principles to ensure that costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles.
Cause: The City did not design and implement controls over compliance with allowable cost/cost principles.
Effect or Potential Effect: Failure to have adequate internal controls over compliance with allowable cost/cost principles could result in costs charged to the program that are not allowable costs as defined by the appropriate cost principles circular.
Questioned Costs: There are no questioned costs.
Recommendation: We recommend that the City design and implement controls to: Accountability for authorization is fixed in an individual who is knowledgeable of the requirements for determining allowable costs; and supporting documentation is compared to lists of allowable and unallowable expenditures.
Views of Responsible Officials and Planned Corrective Action: Management concurs with the audit finding. The City will design and implement controls to ensure that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles.