Finding Text
Lack of Internal Controls Over the Reporting Process
Significant Deficiency
Reclamation States Emergency Drought Relief Program, AL 15.514
Condition
During our audit of the District’s compliance with federal program requirements, we noted that
the entity does not have established internal controls over the reporting process. Specifically,
there are no formal procedures in place to ensure the accuracy, completeness, and timeliness
of required federal reports.
Criteria
Per 2 CFR § 200.303, non-federal entities must establish and maintain effective internal control
over federal awards to provide reasonable assurance that the entity is managing the awards in
compliance with applicable regulations. Additionally, 2 CFR § 200.327 requires recipients to
submit performance and financial reports that are accurate, complete, and timely.
Cause
This is the first year the District has been subject to a single audit, exceeding the $750,000
expenditure threshold, and has not yet developed formal policies or procedures for reviewing
and approving required financial and programmatic reports.
Effect
The lack of internal controls increases the risk of inaccurate, incomplete, or untimely reporting,
which could result in noncompliance with federal requirements and potential future corrective
actions by granting agencies.
Recommendation
We recommend that the District develop and implement formal policies and procedures to
ensure that federal reports are reviewed for accuracy, completeness, and timeliness prior to
submission. Management should assign responsibility for report preparation and review,
implement checklists or reconciliation processes, and provide training to staff involved in federal
reporting.
Views of Responsible Officials
See the attached Corrective Action Plan.