Finding Text
2025-002 Program Assistance Listing Number (ALN) - 10.XXX Program Name - Technical Assistance and Training Grants - Circuit Rider Services Federal Agency - U.S. Department of Agriculture Pass-Through Entity - National Rural Water Association Criteria Title 2 CFR Part 200 and the terms of the federal award require recipients to comply with program reporting requirements, including the timely submission of required financial reports. Timely reporting is a key internal control over compliance designed to ensure appropriate monitoring of federal expenditures and program activity. Under the Technical Assistance and Training Grants - Circuit Rider Services program, the National Rural Water Association requires recipients to submit monthly financial reports no later than 10 working days after the month following the reported activity. Condition For the period January through May 2025, all required monthly financial reports were submitted timely. However, for the period June through December 2025, all monthly financial reports were submitted after the required deadline, in some cases significantly late. Questioned costs None Context The Technical Assistance and Training Grants - Circuit Rider Services program requires the submission of monthly financial reports within a defined timeframe to support ongoing program oversight by the pass-through entity. The Organization historically maintained timely submission of required reports, as demonstrated by compliance with reporting deadlines from January through May 2025. During June through December 2025, the Organization experiences changes in key finance personnel, which coincided with delays in the preparation and submission of required monthly financial reports. The late submissions were concentrated within this period and did not represent a pattern of noncompliance prior to the staffing transition. Effect As a result of this deficiency, the Organization did not comply with the program's reporting requirements for a portion of the audit period. Untimely financial reporting increases the risk that federal expenditures are not monitored adequately and may limit the pass-through entity's ability to provide timely oversight. While no questioned costs were identified, the deficiency is significant enough to merit the attention of those charged with governance. Cause The late submission of monthly financial reports was primarily caused by turnover in key financial management personnel during the fiscal year. As discussed in Finding 2025-001, the Organization experienced a transition in the Finance Director position during 2025. The Organization's long-time Finance Director departed from the Organization during 2025, and after this transition the required reconciliation and review duties were not performed at a level necessary to maintain effective internal control over financial reporting. The lack of continuity and oversight during this transition period contributed to delays in the preparation and submission of required financial reports under the program. Management acknowledged that the staffing transition was the primary factor contributing to the untimely reporting. Subsequent to year-end, the Organization rehired the prior Finance Director to restore stability to the financial and compliance functions. Recommendation We recommend that management strengthen internal control over compliance by: Establishing documented procedures and internal deadlines to ensure monthly financial reports are prepared and submitted in accordance with program requirements. Implementing management-level review and monitoring controls to verify that required reports are submitted timely, particularly during periods of staff transition. Ensuring that personnel responsible for federal reporting possess the appropriate experience and training related to federal grant compliance requirements. Developing contingency plans or cross-training procedures to ensure continuity of compliance functions in the event of future personnel turnover. Views of the Responsible Officials and Planned Corrective Action Documented policies and procedures were left for the succeeding financial manager. The Finance Director who left the Organization was also available as a consultant during the rest of 2025. Help was made available to the new financial personnel through both executive management and the consultant. More in-depth training and screening will be prepared in succession planning by the current Finance Director during the summer of 2026. Emphasis will be given to timeliness and accuracy. New programs are also being screened for payroll and expense reporting, allowing for direct import as opposed to manual entry, allowing for better accuracy and timing of financial reports. The new Standard Operating Procedures will be shared with Executive management so they might step in in the event that there is a gap in the financial management position. Executive management is also evaluating the use of an independent accounting firm in the event of a vacancy in the future.