Finding 1226261 (2025-002)

Material Weakness Repeat Finding
Requirement
B
Questioned Costs
-
Year
2025
Accepted
2026-08-11

AI Summary

  • Core Issue: Non-storm-related costs were mistakenly included in the FEMA project worksheet, violating compliance requirements.
  • Impacted Requirements: The Cooperative failed to maintain effective internal controls to ensure all costs charged were allowable and related to the declared disaster.
  • Recommended Follow-Up: Implement a documented review process to reconcile final project worksheets with invoices and confirm all costs are storm-related before submission.

Finding Text

Program: 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Significant Deficiency: Non‑storm‑related costs included on FEMA project worksheet Compliance Requirement: Allowable Costs/Cost Principles Condition/Criteria: The recipient and subrecipient must establish, document, and maintain effective internal control over Federal awards to provide reasonable assurance that costs charged to the award are allowable, allocable, and related to the declared disaster, in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR §200.303(a)) Costs included on a FEMA project worksheet were identified that the Cooperative had intended to exclude because the work was not related to the declared storm event. In addition, certain costs from a separate invoice that was not related to the storm were inadvertently included on the project worksheet. These costs were included in the FEMA submission as prepared or finalized with the assistance of the FEMA representative. Cause: The Cooperative did not perform a review of the final project worksheet amounts to ensure that all costs included were storm‑related and agreed to the Cooperative’s internally determined eligible costs prior to submission or acceptance. Effect: As a result, non‑storm‑related costs were included on the FEMA project worksheet. The errors noted did not result in material known or likely questioned costs required to be reported. Recommendation: The Cooperative should implement procedures requiring a documented review and reconciliation of final FEMA project worksheets to underlying invoices and management’s determination of storm‑related eligible costs prior to submission or acceptance. This review should confirm that all costs included relate to the declared event and that any intended exclusions are reflected in the final submission. Bolinger,

Corrective Action Plan

Views of Responsible Officials and Planned Corrective Actions: (Prepared by Cooperative Management) 2025 -002 – Significant Deficiency in Internal Controls When the Cooperative completed the Essential Elements of Information (EEI) Worksheet, they excluded amounts billed to the Cooperative for mutual aid help that was performed in an area that was not included in the declared area on the same invoice as work performed in the declared area. On September 25, 2024, the Cooperative sent an email to the FEMA representative with a reconciliation worksheet attached to the email showing the difference between the amounts listed on the mutual aid invoices and the amount reported by the Cooperative on the EEI Worksheet for mutual aid because the FEMA representative could not tie the invoice amounts to the amount reported on the EEI Worksheet. Notation of the amount to be excluded, $11,746, and why it should be excluded was documented on the reconciliation worksheet that was attached to the email. It was the FEMA representative that ultimately included an amount in the final submission that the Cooperative did not include in the EEI Worksheet and clearly communicated should not be included. In the future the Cooperative will verify all final numbers that the FEMA representative intends to report to the CRC. In December 2025, when the Cooperative was reviewing a work order for damage that happened in Colorado during the same storm that was the declared event, it was discovered that $2,294 in retirement costs performed by a contractor was accidentally included in the FEMA claim. In May 2024 when the contractor invoice was received and paid, it was accidentally coded as 100% Nebraska when 3.5% of the invoice should have been coded as Colorado retirement. In the future the Cooperative will have a better review process to catch any accidental coding errors. The Cooperative acknowledges that a total of $14,040 in costs were included when they should not have been.

Categories

Allowable Costs / Cost Principles

Other Findings in this Audit

  • 1226260 2025-001
    Material Weakness Repeat

Programs in Audit

ALN Program Name Expenditures
97.036 DISASTER GRANTS - PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) $1.82M