Finding Text
2024-06 LACK OF CONTROLS OVER FEDERAL FINANCIAL REPORTS Type of Finding: Material Weakness in Internal Control Over Compliance and Other Matters Criteria: The Federal Internal Control Standards issued by the GAO requires management to design control activities to achieve objectives and respond to risks. Standard internal control practices over federal award reporting require that all submitted reports include evidence of formal review and documentation of the date of submission. Condition: Until December 2024, the District did not properly segregate duties over the preparation of Federal financial reports. Federal reports were completed without review or input. Cause: The District did not have sufficient time nor staffing to implement the corrective actions after the completion of the previous audits. Effect: The Federal financial reports submitted were not prepared or reviewed by the Accountant. As a result, Federal reports were not completed accurately and do not reconcile to the underlying financial data. Recommendation: We recommend the District implement formal procedures requiring documented supervisory review and reconciliation of all reports prior to submission. Management's Response: Similar to finding 2024-02, this issue persisted because NRMEDD did not have sufficient time or staffing to implement corrective actions following the delayed receipt of the 2023 audit findings in December 2024. To ensure compliance, NRMEDD has implemented a formal reconciliation process where the NRMEDD Loan Manager prepares all federal financial reports and submits them to the Bookkeeper for a secondary review. The Bookkeeper will verify that each report reconciles to the underlying financial data and general ledger before final submission, providing documented evidence of supervisory review from the Executive Director to satisfy GAO Internal Control Standards.