FAC Explorer

Finding 370141 (2021-005)

Material Weakness
Requirement
B
Questioned Costs
-
Year
2021
Accepted
2024-02-22
Audit: 291678
Organization: Town of Livermore Falls (ME)
Auditor: Rhr Smith and Company

AI Summary

  • Core Issue: The Town lacks proper internal controls, leading to unapproved invoices and board warrants before issuing checks.
  • Impacted Requirements: Compliance with 2 CFR 200.303 is not met, risking improper allocation of expenses and potential reimbursement issues.
  • Recommended Follow-Up: Develop and implement a documented approval process to ensure only allowable costs are charged to the program.

Finding Text

2021-005 – Allowable Costs/Cost Principles Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoice’s and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds Identification of Questioned Costs: None identified. Context: The population selection consisted of 12 out of 16 transactions were examined. Of the 12 samples, 12 did not have management approval and 7 did not document board approvals to ensure that only allowable costs were being charged to the program and 8 out of 12 invoices were over 30 days late. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.

Corrective Action Plan

The Treasurer, Town Manager and Select Board will take the following actions to address finding 2021-005 The current Town Manager was appointed by the Select Board on August 14, 2023, and had no knowledge of this material weakness. She is an experienced Manager and has drafted a new Procurement Policy that addresses this deficiency. The Select Board will review this draft at their meeting in January 2024, edits will be made and then it will be sent to legal for final review before adoption. Additionally, Department Heads are required to turn in no later than Thursday by noon, invoices to be paid on that week’s warrant. The Treasurer has been given authority by the Town Manager to contact Department Heads and request that they come to the office weekly to turn in invoices. All invoices must have the appropriate expense code and be signed by the Department Head.

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties

Other Findings in this Audit

  • 370139 2021-003
    Material Weakness
  • 370140 2021-004
    Significant Deficiency
  • 370142 2021-006
    Significant Deficiency
  • 370143 2021-007
    Significant Deficiency
  • 370144 2021-005
    Material Weakness
  • 370145 2021-006
    Significant Deficiency
  • 370146 2021-007
    Significant Deficiency
  • 946581 2021-003
    Material Weakness
  • 946582 2021-004
    Significant Deficiency
  • 946583 2021-005
    Material Weakness
  • 946584 2021-006
    Significant Deficiency
  • 946585 2021-007
    Significant Deficiency
  • 946586 2021-005
    Material Weakness
  • 946587 2021-006
    Significant Deficiency
  • 946588 2021-007
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
10.760 Water and Waste Disposal Systems for Rural Communities $474,240
66.458 Capitalization Grants for Clean Water State Revolving Funds $80,241