Finding Text
Assistance Listing Number: 21.027 Coronavirus State and Local Fiscal Recovery Funds
Federal Agency – Department of Treasury
Compliance Requirement – Reporting
Finding Type: Significant Deficiency on Internal Control
Condition
During the audit, it was observed that the Authority lacks sufficient personnel designated to the oversight and review of the reporting process. This has resulted in the reporting procedure being conducted by a single individual without any formal oversight or review by additional staff or management, leading to a lack of checks and balances in this compliance area.
Criteria
The Uniform Guidance section 200.303 regarding internal controls, requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the management of Federal awards is in compliance with Federal statutes, regulations, and terms and conditions of the Federal awards. This includes accurate financial reporting and proper segregation of duties to prevent any individual from both preparing and reviewing the same transaction or report.
Cause
Lack of sufficient personnel designated for oversight roles. This shortage has resulted in the absence of formal review and oversight, as there are inadequate human resources to fulfill these critical control functions.
Effect
The lack of management review and oversight in the reporting process increases the risk of non-compliance with federal requirements and inaccuracies in reporting over federal funds.
Questioned Costs
None
Recommendation
To resolve these issues and prevent future occurrences, the Authority should consider the following actions:
• Strengthen Internal Controls: Implement stronger internal control procedures to ensure accurate financial reporting and supervision. This should include establishing clear protocols for the preparation and review of financial reports, with distinct roles assigned to different individuals to maintain segregation of duties.
• Address Staffing Issues: Take steps to address the employee shortage, either by hiring additional staff or by training existing staff to take on multiple roles, ensuring that duties can be adequately segregated even with limited personnel.
• Regular Training and Awareness: Conduct regular training sessions for all relevant staff on compliance with Federal program requirements and the importance of internal controls, including the need for segregation of duties in financial reporting.