Finding 384217 (2023-004)

Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Special Tests and Provisions Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Condition: During our testing, there was no formal review separate from the preparer over the reserve fund reconciliation or financial covenant calculations for the federal program. Cause: The Home did not have an adequate internal control policy in place to ensure review and approval over the reserve fund or financial covenant calculations. Effect: The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: Sampling was not used. The Home has one required reserve account and three financial covenant calculation requirements that were tested. Repeat Finding from Prior Years: Yes Recommendation: We recommend that the Home enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials: Management agrees with the finding.