Finding Text
2024-033 - Delayed Availability of Financial Records Federal Programs Affected 23.002 - Appalachian Area Development 14.228 - Community Development Block Grants/State's Program Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agency U.S. Department of Housing and Urban Development (HUD) Appalachian Regional Commission (ARC) Compliance Requirement: Reporting - 2 CFR §200.512(a) Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs None Criteria Under 2 CFR §200.512(a), entities expending $750,000 or more in federal awards must submit the Single Audit report to the Federal Audit Clearinghouse within nine months of the end of the fiscal year. Government Auditing Standards also require timely access to financial records to support audit procedures and ensure the audit is completed in accordance with required timelines. Condition The City's financial records were not made available to the auditors until July 22, 2025, despite the Single Audit report being due by June 30, 2025. This delay prevented timely completion and submission of the audit. Cause The delay was due to the City not finalizing its year-end financial closeout in time to support audit fieldwork. Contributing factors included staffing turnover and delays in reconciling key accounts. Effect The Single Audit report was submitted late, resulting in noncompliance with federal reporting deadlines. This may affect the City's standing with federal agencies and could delay access to future federal funding. Recommendation We recommend the City implement procedures to ensure timely financial closeout and audit readiness, including: Establishing internal deadlines for closing the books Assigning responsibility for audit preparation tasks Conducting a pre-audit readiness review to ensure all records are complete and accessible Views of Responsible Officials We acknowledge the delay and are taking steps to improve our year-end close process. We will establish internal deadlines and assign staff to ensure timely audit preparation in future years.