Finding Text
MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE – SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS – ALL FEDERAL PROGRAMS 2025-001 Reporting Compliance Requirement Criteria – 2 CFR § 200.510 requires that the City of Plymouth, Minnesota (the City) prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (SEFA) for the year ended December 31, 2025, which must include the total federal awards expended as determined in accordance with 2 CFR § 200.502. Management is responsible for establishing and maintaining effective internal controls over compliance with requirements applicable to federal programs, including separately tracking federal expenditures within the finance system to provide for accurate preparation of the SEFA. Condition – During our audit, we noted the City did not have sufficient controls in place to ensure the accurate preparation of the SEFA in compliance with this requirement. The City’s original SEFA for fiscal 2025 was understated by $1,587,830 in federal expenditures due to the omission of a new federal grant award to the City. This was discovered subsequent to the issuance of the original SEFA and therefore required a restatement of the SEFA and testing of federal Assistance Listing Number 66.202 as a major federal program. Questioned Costs – None. The 2025 SEFA has been corrected when the misstatement was identified, and testing of the new program was completed. Context – The City’s SEFA presented for audit for the year ended December 31, 2025 was missing expenditures of $1,587,830 in one major program that should have been included in this fiscal year. Cause – This was an oversight by city personnel. Repeat Finding – This is a current year finding. Effect – An inaccurate SEFA resulted in an incorrect major program determination for the Single Audit which required a restatement of the SEFA and additional major program testing. Recommendation – We recommend that the City review its internal control procedures over reporting and verify accuracy of expenditures reported on the SEFA in the future. View of Responsible Official and Planned Corrective Actions – The City agrees with the finding. The City has separately issued a Corrective Action Plan related to this finding.