Finding Text
Finding 2022-009 Lack of Internal Control over Compliance and Noncompliance with Special Tests and Provisions – Investment and Deposit of Advance Funds
Federal Agencies: US Department of the Interior, and US Department of Housing and Urban Development
Federal Programs: Bureau of Indian Affairs Compact (BIA Compact), and NAHASDA
Assistance Listing Numbers: 15.022, and 14.867, respectively
Award Numbers: GT-OSGT043-16 (BIA Compact), 55-IT0211860 and 20BV0211860 (NAHASDA)
Award Years: 2022 (BIA Compact) and 2022 (NAHASDA)
Type of Finding: Material weakness in internal control over compliance and material noncompliance.
Criteria: Funds received in advance are required to be (1) invested only in obligations of the United States or in obligations or securities that are guaranteed or insured by the United States, or mutual (or other) funds registered with the Securities and Exchange Commission and which only invest in obligations of the United States or securities that are guaranteed or insured by the United States; or (2) deposited only in accounts that are insured by an agency or instrumentality of the United States, or are fully collateralized to ensure protection of the advance funds, even in the event of bank failure.
Condition and Context: During our testing of special tests and provisions, management was unable to provide sufficient documentation to indicate that advance funds were being held in allowable investment securities or within fully insured and/or collateralized bank accounts.
Cause: Lack of internal control over compliance and material noncompliance with the special tests and provisions requirement of the program.
Effect: The lack of internal control over advance funds resulted in material noncompliance with the special tests and provisions requirements of the program.
Questioned Costs: The amount of known or likely questioned costs, if any, could not be determined.
Repeat Finding: Yes, this is a repeat of finding 2021-004. Since it is a repeat finding we believe this to be a systematic issue.
Recommendation: We recommend the Council adheres to its internal control policies to ensure compliance requirements are met.
Management’s Response: Management concurs with the finding. See Corrective Action Plan.