Finding Text
Finding Number: 2022-006 Prior Year Finding Number: 2021-006 Compliance Requirement: Reporting Program: U.S. Department of Commerce Economic Development Cluster ALN: 11.307 Award #: 01-01-14843, 01-01-14844 Award Year: 03/06/19 – 06/30/25 03/06/19 – 05/21/22 Criteria – Each non-Federal entity must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We reviewed 8 (3 financial, 5 performance) out of the 14 reports (6 financial, 8 performance) required to be submitted during the fiscal year and noted the following: • 3 performance reports tested did not contain evidence of proper segregation of duties. The same individual prepared and reviewed each report. • 2 performance reports tested did not contain evidence of review prior to submission. Cause – It appears that policies and procedures, including review over reporting procedures, were not functioning as intended. Effect or Potential Effect – The lack of effective internal controls over compliance can potentially lead to the reporting of inaccurate or incomplete information to the Federal Government. Questioned Costs – None. Context – We tested a sample of 8 reports and found 5 exceptions, as noted in the condition. This is a condition identified per review of the Authority’s compliance with the specified requirements not using a statistically valid sample. Recommendation – We recommend that management implement procedures to ensure proper segregation of duties in the preparation and review of reports. Specifically, the individual responsible for preparing the report should not be the same person reviewing and approving it. Management should assign separate personnel for the preparation and independent review of all required reports and maintain documentation evidencing both roles. Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority will implement measures to ensure proper monitoring and review of the required reports by an appropriate official. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.