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FINDING 2024-005 Subject: Congressionally Recommended Awards - Internal Control Federal Agency: Department of Justice Federal Program: Congressionally Recommended Awards Assistance Listings Number: 16.753 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Recipients are required to submit semiannual performance reports along with quarterly financial reports based on grant activity. The City did not have an oversight or review process in place to ensure the required reports were submitted timely, accurately, and completely. The reports were generated and submitted by one individual, without a review or oversight process to detect and correct errors prior to submission. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The City's management did not have properly designed internal controls in place to review reports prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City cannot ensure that the reports submitted are materially accurate and correct. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 25 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the management of the City design and implement a proper system of internal controls, including a segregation of duties, to ensure the accuracy of the semiannual performance reports and quarterly financial reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.