Finding 478252 (2023-009)

Material Weakness
Requirement
M
Questioned Costs
-
Year
2023
Accepted
2024-07-11
Audit: 314916
Organization: Town of Big Sandy (MT)

AI Summary

  • Core Issue: The Town failed to monitor the North Central Regional Water Authority (NCRWA) for compliance with federal grant requirements.
  • Impacted Requirements: Non-compliance with 2CFR 200-part f, leading to NCRWA's lack of awareness regarding federal requirements.
  • Recommended Follow-up: The Town should identify all federal funds and establish monitoring procedures to ensure compliance with federal regulations.

Finding Text

2022/2023-009 Monitoring Subrecipients CFDA Title: Drinking Water State Revolving Fund CFDA Number: 66.468 Federal Award Number: Fiscal Year Ended June 30, 2023 Award #WRF-22515 and #WRF-22516 Federal Agency: United States Environmental Protection Agency Pass-through Entity: Montana Department of Natural Resources and Conservation Subrecipient: North Central Regional Water Authority Condition: The Town reimbursed North Central Regional Water Authority (NCRWA) $900,000 of federal sourced money for expenses related to a federal water project managed and owned by NCRWA. The assets acquired/built by NCRWA are the property of NCRWA. The $900,000 reimbursement is a sub-award of a federal grant from the City to NCRWA. The City did not monitor NCRWA to ensure the money was audited and spent in accordance with the federal requirements. Context: During the federal portion of the audit, we discovered the Town received two federal sourced loans totaling $900,000. We further discovered the money was transferred to another Montana local government to build a water project. Inquiry with the city disclosed no formal monitoring procedures. Criteria: The Town did not monitor the subrecipient (NCRWA) as required by 2CFR 200-part f. Additionally, the Town did not notify NCRWA of the federal requirements for the grant. Effect: The Town was not in compliance with the monitoring requirements of the federal grant. Additionally, NCRWA was not aware of the federal requirements. As a result, their audit did not include this federal grant as part of their annual audit. The federal audit opinion will be qualified for this matter. Cause: The Town was not aware of the monitoring requirements. Recommendation: We recommend the Town identify all federal money and comply with all federal compliance requirements.

Corrective Action Plan

FINDING 2022/2023-009: Monitoring Subrecipients Response: The Town will identify and federal money and comply with compliance requirements, especially when acting as a pass-through on projects.

Categories

Subrecipient Monitoring

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
66.468 Capitalization Grants for Drinking Water State Revolving Funds $750,000
21.027 Coronavirus State and Local Fiscal Recovery Funds $286,739