Finding Text
Internal Control Over Financial Reporting and Compliance
Criteria: Management is responsible for the internal controls that address the assertions related to financial reporting and compliance requirements related to the Township’s federal award programs. Management is responsible for designing and implementing a system of internal controls which include written policies and procedures for how various accounting and transaction reporting will be performed and documented for financial reporting and compliance purposes.
Condition: Although the Township appears to have a system of internal controls in place, the Township does not have written policies and procedures that outline how accounting and transaction reporting will be performed and documented for cash disbursements, cash receipts, federal award programs, etc. This is a requirement of the Uniform Guidance.
Cause: Due to the small size of the Township, a complex system of internal controls has not appeared necessary. This has resulted in management not taking the time to document written policies and procedures over significant internal control areas.
Effect: This situation could allow noncompliance with the Uniform Guidance and federal regulations to occur.
Perspective: While we consider this finding to be a significant deficiency, we do not perceive it to negatively impact the audit opinions issued. This is a systemic problem caused by a lack of experience within the Township related to the Uniform Guidance. The Township is actively working to remedy the situation.
Recommendation: We recommend that the Township implement written policies and procedures over significant internal control areas.
Response: The Township acknowledges this situation and agrees that this recommendation would help strengthen internal controls. The Board of Trustees is working to implement written policies and procedures over significant internal control areas including federal award programs.