Finding 393931 (2022-006)

Material Weakness
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2024-04-22

AI Summary

  • Core Issue: The Water Works and Gas Board of the City of Red Bay requested reimbursements without paying invoices first, violating grant requirements.
  • Impacted Requirements: Non-compliance with 2 CFR section 200.305(b)(3) and Section 2.2(b) of the Special Conditions Loan Agreement.
  • Recommended Follow-Up: Ensure all invoices are paid before submitting reimbursement requests to maintain compliance.

Finding Text

2022-006 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management C – Cash Management Material Weakness and Noncompliance Criteria: The SRF Loan program is a reimbursable grant administered by ADEM. When non-Federal entities are funded under the reimbursement method, the entity they request reimbursement for expenses paid that are allowable to the grant under (2CFR section 200.305(b)(3)) and Section 2.2(b) of the Special Conditions Loan Agreement. Condition: During test work, instances were noted where The Water Works and Gas Board of the City of Red Bay did not pay the cost of the invoices prior to requesting reimbursement. The expenditures were allowable and approved by Alabama State Department of Environmental Management for reimbursement, but the invoices were not paid prior to requesting the reimbursement from Alabama State Department of Environmental Management. Context: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to submitting them for reimbursement to Alabama State Department of Environmental Management. Effect: The entity is not in compliance with 2 CFR section 200.305(b)(3) and Section 2.2(b) of the Special Conditions Loan Agreement. Cause: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to requesting reimbursement. Repeat Finding: No Recommendation: The Water Works and Gas Board of the City of Red Bay should ensure that invoices are paid prior to requesting reimbursement from the pass-through entity. Board’s Response: The Water Works and Gas Board of the City of Red Bay will ensure payments under reimbursable grants are made prior to reimbursement requests.

Corrective Action Plan

2022-006 a. Name of Contact Person Responsible for Corrective Action: Jeff Burks, General Manager, and Cynthia Fowler, Office Manager & Comptroller Phone Number: (256) 356-8622 b. Corrective Action Planned: The Water Works and Gas Board of the City of Red Bay will ensure payments under reimbursable grants are made prior to reimbursement requests. c. Anticipated Completion Date: Immediately

Categories

Cash Management Matching / Level of Effort / Earmarking Subrecipient Monitoring Material Weakness

Other Findings in this Audit

  • 393930 2022-005
    Significant Deficiency
  • 970372 2022-005
    Significant Deficiency
  • 970373 2022-006
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
66.468 Capitalization Grants for Drinking Water State Revolving Funds $1.32M