Finding Text
2024-004 – Written Policies Required by the Uniform Guidance (repeat)
Finding Type: Material Weakness in Internal Controls and Noncompliance (Allowable Costs/Cost Principles, Cash Management, Procurement and Suspension & Debarment)
Federal Program: U.S. Environmental Protection Agency – Capitalization Grants for Clean Water State Revolving Funds (AL #66.458)
Criteria: The City does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award.
Condition: Although the City has processes in place to conform to the requirements in the Uniform Guidance, there are no formal written policies in place.
Cause: This condition appears to be the result of a time lag in developing a plan for compliance. After initially receiving this finding in the 2023 audit, the City started the process of writing policies, but was unable to finalize them prior to the end of the year.
Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance.
Questioned Costs: No costs have been questioned as a result of this finding.
Recommendation: We recommend that the City the City proceed with implementing written policies and procedures as soon as practicable.
Views of Responsible Officials: The City was in the process of preparing written policies that are in compliance with Uniform Guidance throughout the year and formally adopted a policy document in April 2024.