Finding 370150 (2022-006)

Material Weakness Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2024-02-22

Audit: 291679

Organization: Town of Livermore Falls (ME)

Auditor: Rhr Smith and Company

AI Summary

Core Issue: The Town lacks proper internal controls for approving invoices and board warrants before issuing checks.
Impacted Requirements: This violates 2 CFR 200.303, risking unallowable expenses being charged to the Clean Water State Revolving Funds.
Recommended Follow-Up: The Town should create and enforce policies for documented approval processes to ensure compliance and proper cost allocation.

Finding Text

2022-006 - 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 invoices 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 consisted of 13 out of 39 transactions. The Town did not have consistent documented approval of invoices and board warrants to ensure that only allowable costs were being charged to the program. 2 out of 13 invoices were paid over 30 days late. Repeat Finding: This is a repeat finding of 2021-005. Recommendation: It is recommended that the Town 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 Town Manager and Select Board will take the following actions to address finding 2022-006: 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 is drafting a new Internal Controls Policy that will address this deficiency. The Select Board will review this draft at their meeting in February or March 2024, edits will be made and then it will be sent to legal for final review before adoption. This policy will include sections on risk assessment and management, annual audit, chart of account, general ledger, reconciliation and verification, reserve funds and reserve accounts, investments, financial reporting, fraud, accounting software, online transactions and banking, documentation daily cash-ups, grants and projects, AR process, AP process, and payroll.

Other Findings in this Audit

370147 2022-003

Material Weakness Repeat
370148 2022-004

Significant Deficiency Repeat
370149 2022-005

Material Weakness
370151 2022-007

Significant Deficiency Repeat
370152 2022-006

Material Weakness Repeat
370153 2022-007

Significant Deficiency Repeat
370154 2022-006

Material Weakness Repeat
370155 2022-007

Significant Deficiency Repeat
946589 2022-003

Material Weakness Repeat
946590 2022-004

Significant Deficiency Repeat
946591 2022-005

Material Weakness
946592 2022-006

Material Weakness Repeat
946593 2022-007

Significant Deficiency Repeat
946594 2022-006

Material Weakness Repeat
946595 2022-007

Significant Deficiency Repeat
946596 2022-006

Material Weakness Repeat
946597 2022-007

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
10.760	Water and Waste Disposal Systems for Rural Communities	$1.37M
21.027	Coronavirus State and Local Fiscal Recovery Funds	$974,271
66.458	Capitalization Grants for Clean Water State Revolving Funds	$444,559