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FINDING 2025-004 Subject: Assistance to Firefighters Grant - Internal Controls Federal Agency: Department of Homeland Security Federal Program: Assistance to Firefighters Grant Assistance Listings Number: 97.044 Federal Award Number and Year (or Other Identifying Number): EMW-2023-FG-06299 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The grant agreement between the City and the awarding agency required the City to submit a Federal Financial Report (SF-425) and a Performance Progress Report (PPR) on a semiannual basis. The submitted reports encompassing the audit period were tested. The reports were prepared and submitted by the grant administrator; however, there was no segregation of duties documented to ensure the reports were complete, accurate, and timely submitted. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF KENDALLVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The City did not design or implement internal controls over the reports because the City relied on the grant administrator for complying with the Reporting requirement. Effect Without the proper implementation of an effectively designed system of internal controls, the City is at risk of noncompliance with the Reporting compliance requirement, including the potential for incomplete, inaccurate, or untimely reporting. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City design and implement a proper system of internal controls, including policies and procedures, to ensure that the City provides the awarding agency with complete, accurate, and timely reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.