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FINDING 2022-005 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2019-FF-00944 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit Reimbursement Requests, Quarterly Performance Reports, and Semi-Annual SF-425 Federal Financial Reports to the Federal Emergency Management Agency (FEMA). The reporting periods, as well as the respective due dates are based on the calendar year, and recipients must begin to submit reports in the period following the beginning of their period of performance, and throughout the entire period of performance of the grant. Information to be reported includes expenditures for the appropriate reporting period. The Township submitted five reimbursement requests during the audit period. The Director of Finance prepared a sheet with the payroll and benefit amounts to be submitted for reimbursement and provided it to the Assistant Fire Chief. The reimbursement request was filed by the Assistant Fire Chief, without a review or oversight process in place to prevent, or detect and correct, errors and ensure compliance with the reporting compliance requirement. Additionally, the Township did not have a system of internal controls in place to ensure submission of required reports. The Township did not submit the Semi-Annual SF-425 Federal Financial Report that was due by July 30, 2022, or the four Quarterly Performance Reports that were due during the audit period. The lack of internal controls and noncompliance were systemic issues 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). . . ." 2 CFR 200.329 states in part: ". . . (b) Reporting program performance. The Federal awarding agency must use OMBapproved common information collections, as applicable, when providing financial and performance reporting information. As appropriate and in accordance with above mentioned information collections, the Federal awarding agency must require the recipient to relate financial data and accomplishments to performance goals and objectives of the Federal award. Also, in accordance with above mentioned common information collections, and when required by the terms and conditions of the Federal award, recipients must provide cost information to demonstrate cost effective practices (e.g., through unit cost data). In some instances (e.g., discretionary research awards), this will be limited to the requirement to submit technical performance reports (to be evaluated in accordance with Federal awarding agency policy). Reporting requirements must be clearly articulated such that, where appropriate, performance during the execution of the Federal award has a standard against which non-Federal entity performance can be measured. (c) Non-construction performance reports. The Federal awarding agency must use standard, governmentwide OMB-approved data elements for collection of performance information including performance progress reports, Research Performance Progress Reports. (1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non- Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also ? 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report. . . ." Cause A system of internal controls was not designed or implemented by management of the Township which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be controls consisting of policies and procedures. Policies reflect the management's expectation of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reimbursement requests were completed and filed by one individual and the Semi-Annual SF-425 Federal Financial Report and the four Quarterly Performance Reports due during the audit period were not submitted as required. Noncompliance with the grant agreement and the reporting compliance requirement could result in the loss of future federal funds to the Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over reimbursement requestions. In addition, we recommended that management of the Township establish a proper system of internal controls and develop policies and procedures to ensure that all required reports are filed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.