Finding Text
Reference Number: 2023-005 – Timeliness in Financial Reporting (repeat finding) Evaluation of Finding: Material weakness/material noncompliance Assistance Listing Number: All Federal Programs reported on the SEFA Condition: The City lacks procedures to ensure the single audit report is completed timely and discrepancies between accounting records are researched and resolved. Criteria: A non-Federal entity that expends $750,000 or more in Federal grant awards during its fiscal year must have a single or program-specific audit conducted in accordance with the provisions set forth in CFR 200.500 subpart F. The audit must be completed and submitted to the Federal Audit Clearinghouse within nine months after the end of the entity’s fiscal year end or before the extended due date allowed by the Office of Management and Budget (OMB). Cause of Condition: Delays in reconciling of the accounting records resulted in delays of the completion of the audit and issuance of the annual comprehensive financial report. Effect or Potential Effect of Condition: Delays in the completion of the audit and issuance of the annual comprehensive financial report resulted in the single audit being completed and submitted after the extended due date of September 30, 2022, for the City’s fiscal year ending June 30, 2023, and therefore being out of compliance with OMB requirements. Questioned Costs None. Context The City’s financial statements and single audit reports are used by the federal awarding agencies and pass-through entities to assess the non-federal entity's financial condition, internal controls, and compliance with federal requirements. Repeat Finding Yes. Recommendation: LSL recommends that the City establish procedures to ensure all reporting requirements are completed timely. Management’s Response and Corrective Action: The City recently went through implementation of a new financial software, which has allowed for development of some documentation and assignment of roles and responsibilities with the new system. Staff will make efforts to enhance and update this documentation to provide specific details about the annual financial reporting. The City has also struggled with vacancies in key positions, as well as challenges in completing successful recruitments to fill the positions; staff exploring options for third party assistance with financial reporting functions.