FAC Explorer

Finding 1175182 (2025-002)

Material Weakness Repeat Finding
Requirement
L
Questioned Costs
-
Year
2025
Accepted
2026-02-24
Audit: 388805
Organization: University City District (PA)
Auditor: CBIZ CPAS PC

AI Summary

  • Core Issue: There is a significant lack of segregation of duties in the reporting process, leading to potential noncompliance with federal regulations.
  • Impacted Requirements: Failure to submit three out of four required reports on time violates 2 CFR 200.327 and 200.328.
  • Recommended Follow-Up: Implement internal controls to ensure proper segregation of duties and timely submission of all reports.

Finding Text

Finding No. 2025-002: Reporting – Material Weakness in Internal Control over Compliance Agency: Economic Development Administration ALN: 11.307 Federal Award Identification Number: ED22HDQ3070127 Criteria: Under the Committee of Sponsoring Organization framework, control activities are established through policies and procedures that help ensure that management’s directives to mitigate risks to the achievement of objectives are carried out. Segregation of duties is typically built into the selection and development of control activities. Furthermore, according to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), sections 200.327 and 200.328, recipients of federal awards are required to submit performance and financial reports by the due dates specified in the terms and conditions of the federal award. Context and Condition: There was an overall lack of segregation of duties surrounding the preparation and submission of reports to the awarding agency as the member of management performed this function with no review and approval for the period from July 2024 through March 2025. In addition, three of the four reports selected and tested were not submitted by the reporting due dates. Cause: The District failed to maintain a system of controls and procedures to ensure segregation of duties and appropriate review and approval process as well as submission within the required reporting timeframes. Effect: Due to the lack of adequate review and oversight over grant reporting and failure to submit required reports within the required dates may result in the District being noncompliant with 2 CFR 200.327 and 200.328. Repeat Finding: Yes, previously reported under ALN 17.289 Recommendation: We recommend that the District establish internal controls and procedures to incorporate segregation of duties and ensure that all reporting requirements are being adhered to and the reports are being submitted within the specified due dates. Views of Responsible Officials and Planned Corrective Action: See attached corrective action plan. Questioned Costs: None

Corrective Action Plan

Finding No. 2025-001: Segregation of Duties and Oversight – Payroll - Material Weakness in Internal Control over Financial Reporting Contact for Corrective Action: Matt Bergheiser, President Actions were taken to correct this finding immediately after the issuance of the FY2024 audit report in March 2025. As indicated in the FY2025 audit report, this weakness was noted for the period from July 2024 through March 2025. The weakness was corrected after March 2025 with the following actions: Preparation of timesheets and allocation of time prepared by the finance department with respect to federal grant awards are reviewed and approved by the department leaders where the federal grant dollars are being spent.Additionally, for better segregation of duties for financial reporting and grant reporting the following controls were added: The finance department instituted a monthly financial reporting package to be sent to the President of the organization which includes the monthly financial statements and any significant adjustments in the previous period. President will review and approve the packet monthly. The head of the finance department reviews all general ledger detail, a listing of all journal entries made, and significant accounts reconciliations, done by finance department staff. Aged payables and receivables are reviewed by the team internally and reported periodically to the President. Finally, reporting also includes an update to the Schedule of Federal Awards and other significant grant reporting done in conjunction with the advancement team. An executive member of management, reviews the federal grant reports prepared by the finance team prior to submission. In addition, UCD hired a full-time CPA Controller in April 2025 to manage and oversee compliance for the organization and ensure the timeliness of reporting. Expected Completion Date: 7/1/2025 Finding No. 2025-002: Reporting – Material Weakness in Internal Control over Compliance Contact for Corrective Action: Matt Bergheiser, President See Plan for Finding No. 2025-001, same plan applies here. Expected Completion Date: 7/1/2025

Categories

Internal Control / Segregation of Duties

Programs in Audit

ALN Program Name Expenditures
11.307 ECONOMIC ADJUSTMENT ASSISTANCE $1.35M
17.289 COMMUNITY PROJECT FUNDING/CONGRESSIONALLY DIRECTED SPENDING $40,000