Finding 1786 (2022-002)

Assistance Listing No: 97.044, Assistance to Firefighters Grant Federal Grantor: U.S. Department of Homeland Security - Direct Award Compliance Requirement: Allowable Costs/Costs Principals Condition: The District’s internal control over compliance procedures did not ensure the appropriate amount was claimed on the grant and did not ensure the appropriate local match amount was billed to five other local fire districts participating in the grant program (participating agencies). The District overclaimed federal grant funds by $6,399 and overcharged local matching fund amounts to the participating agencies by $6,557. Criteria: Uniform Guidance, Section 200.303 requires funding recipients to establish and maintain internal control over the Federal Award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the federal award, which includes controls that ensure the entity claims the appropriate amount of grant funds. Cause: The District is not experienced in the requirements of the Uniform Guidance and does not have an experienced accountant on staff. Effect: The District overbilled grant funds and is not in compliance with the terms and conditions of the award. Context: The District previously contracted with the El Dorado Hills Fire Department for accounting assistance, but the contract terminated during 2022 and the District did not contract with a qualified accountant subsequent to the termination of the contract. Also, the District assumed a certain dollar amount would be received from the contractor from the trade-in of equipment being replaced with grant funds, but the trade-in proceeds exceeded the expected amount and the total contract costs declined. The District did not account for the additional trade in value of the equipment when claiming grant funds and billing local match to participating agencies. Recommendation: The District should implement additional control procedures to ensure grant expenses are reconciled and the appropriate amount of grant funds are claimed. The District should consider contracting with an external accountant with significant knowledge of governmental and single audit accounting and reporting standards so has an additional layer of review over grant activity. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective actions are included at the corrective action plan end of this report.