Finding Text
Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Reporting Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Federal Award Number: N/A Pass-Through Entity: N/A Compliance Requirements: Reporting Audit Findings: Material Weakness, Noncompliance, Qualified Opinion Criteria: 7 CFR 1780, section 1780.47F states in part: “Prior to the beginning of each fiscal year the following will be submitted to the processing office. … 2 (ii) Financial information may be reported on Form RD442-2 which includes Schedule 1, “Statement of Budget, Income and Equity” and Schedule 2, “Projected Cash Flow” or information in similar format.” The reporting requirements section for assistance listing number 10.760 in the Compliance Supplement states in part: "Form RD 442-2, Statement of Budget, Income and Equity (OMB No. 0575-0015) – This report covers financial operations relating to the borrower’s water or waste disposal project. A borrower may submit this financial data on other forms, provided the forms are in a similar format and signed and dated by the organization’s official to certify the correctness of the information. Also, an annual audit may be submitted in lieu of this form (7 CFR 1780, section 1780.47). Form RD 442-3, Balance Sheet (OMB No. 0575-0015) – This report presents the financial status of the borrower’s water and waste disposal project. A borrower may submit this financial data on other forms, provided the forms are in a similar format and signed and dated by the organization’s official to certify the correctness of the information. Also, an annual audit may be submitted in lieu of this form (7 CFR 1780, section 1780.47)." Condition: The District did not have proper controls in place to ensure that the RD442-2 and RD 442-3 forms were filled out and submitted. Cause: There were not sufficient internal controls in place to ensure submission of the reports. Effect: The failure to establish an effective internal control system placed the District at risk of noncompliance with the grant agreement and the Reporting compliance requirements. Questioned Costs: There were no questioned costs identified. Context: Form RD442-2 and Form RD442-3 were not submitted to the granting agency. The District may submit the financial data in other forms, however, the required reporting information was not submitted at all for the year under audit. The forms are required to be submitted on GAAP accrual basis. Identification as a repeat finding, if applicable: No Recommendation: We recommend that the District ensure all reports are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.