Finding 1223557 (2024-001)

Material Weakness Repeat Finding
Requirement
ABI
Questioned Costs
-
Year
2024
Accepted
2026-07-13
Audit: 406953
Organization: MUNICIPALITY OF HARRISBURG (SD)

AI Summary

  • Core Issue: The Municipality lacks effective internal controls for the CSLFRF program, leading to significant compliance and oversight failures.
  • Impacted Requirements: Policies for federally funded activities and procurement controls are inadequate, resulting in errors and incomplete grant administration records.
  • Recommended Follow-Up: Implement formal policies and strengthen review processes to ensure timely detection and correction of errors in grant management.

Finding Text

The Municipality did not maintain effective internal control over compliance for the CSLFRF program. Specifically, the Municipality had not formally adopted policies adequately addressing federally funded activities, and procurement-related controls at the municipal level were ineffective. Additionally, documentation available for audit did not consistently evidence an appropriate municipal review of the project ledger and related pay applications. Audit procedures identified coding and recording errors that resulted in material adjustments for annual report and audit presentation, indicating that review controls were not operating effectively. Although SECOG compiled invoices and prepared pay applications, the Municipality did not evidence the performance of a sufficient oversight or review control to detect and correct errors on a timely basis. Further, during the audit, support had to be obtained from SECOG to determine whether certain procedures had been performed, indicating that the Municipality was not consistently maintaining complete grant administration records. These control deficiencies were systemic in nature and not limited to isolated transactions. The deficiency affected all items tested, which represented approximately 99% of the total dollar value of grant expenditures.

Corrective Action Plan

The City of Harrisburg's Mayor, Derick Wenck, is the contact person responsible for the corrective action plan for these findings. The City of Harrisburg will develop and adopt comprehensive written policies and procedures governing the administration of federal awards including CSLFRF and future federally funded programs. Policies will address procurement standards, allowable costs, financial management, dovumentation retention, subrecipient and contractor oversight, reporting requirements, and monitoring responsibilities consistent with applicable federal regulations. Key personnel involved in grant administration, accounting, and procurement will receive periodic training regarding federal compliance requirements and internal control responsibilities. Because of the size of the City of Harrisburg, the municipality can't support hiring additional staff that would be sufficient to support the internal controls needed to properly segregate duties. The Mayor, City Council members and Finance employees are aware of the problem. A full physical inventory was conducted by the department heads and compared to the 2023 inventory count. Records were updated and reported to the finance officer. A complete inventory count will be conducted at the end of each year and reported to the finance officer. Expenditures will be reviewed and the budget updated based on actuals and a budget amendment approved by City Council if necessary.

Categories

Internal Control / Segregation of Duties Procurement, Suspension & Debarment

Programs in Audit

ALN Program Name Expenditures
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $4.41M
20.205 HIGHWAY PLANNING AND CONSTRUCTION $15,496