Finding Text
Finding Number: 2025-004 Repeat Finding: No Type of Finding: Significant Deficiency in Internal Control and Nonmaterial Noncompliance Description: Inadequate Financial Reporting Expertise Resulting in Incorrect Submission of Required Federal Reports Major Programs: Aging Cluster Questioned Costs: None How the questioned costs were computed: N/A Compliance Requirement: Reporting Condition: The auditee submitted financial reports required by the funding source containing inaccuracies and omissions. During the reporting process, Agency personnel were unable to independently prepare and complete the required reports accurately due to a lack of sufficient knowledge and understanding of the reporting requirements. As a result, the funding source provided significant assistance and information necessary for the auditee to complete and submit the reports correctly. Criteria: Uniform Guidance requires recipients of federal awards to establish and maintain effective internal controls that provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective controls include ensuring that personnel responsible for compliance reporting possess the skills, knowledge, and expertise necessary to prepare accurate and complete reports and that reports are subject to adequate review before submission. Cause: Management did not ensure that personnel assigned responsibility for reporting had the necessary training, experience, or technical knowledge to understand and apply the funding source's reporting requirements. In addition, management did not implement sufficient supervisory review procedures to detect reporting errors prior to submission. Effect: As a result of the control deficiency, required reports were initially inaccurate and could not be completed without substantial assistance from the funding source. Reliance on external parties to prepare or correct required compliance reports increases the risk that reporting errors, omissions, or noncompliance may not be identified timely. Inaccurate reporting could adversely affect funding decisions, monitoring activities, and the funding source's ability to evaluate program performance and financial accountability. Recommendation: We recommend management strengthen internal controls over federal reporting by: Ensuring personnel responsible for compliance reporting receive adequate training regarding program requirements and reporting instructions. Evaluating whether existing staffing possesses the appropriate skills, knowledge, and expertise to prepare required federal reports. Developing written procedures and reporting checklists for all required submissions. Implementing a formal supervisory review process to verify the accuracy, completeness, and consistency of reports before submission. Maintaining documentation supporting reported amounts and reported performance information. Providing periodic refresher training when reporting requirements change. View of Responsible Officials: Management agrees with the finding and has developed a written corrective action plan.