Finding 1141101 (2024-003)

Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions Material Weakness in Internal Control Over Compliance 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. Condition – During our testing, we noted that the reserve account was not separately identified and there was no formal review separate from the preparer over the reserve fund reconciliation for the federal program. Cause – The Organization did not have an adequate internal control policy in place to ensure the reserve account was separately tracked and a documented review and approval over the reserve fund occurred. Effect – The lack of adequate policies governing the review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context – Sampling was not used. The Organization has one reserve account that was tested. Repeat Finding from Prior Years – Yes, 2023-003 Recommendation – We recommend that the Organization enhance internal control policies to ensure that the reserve fund is separately tracked and formal documentation of reviews are present. View of Responsible Officials – Management agrees with the finding.