Finding Text
2023‐003 United States Department Agriculture
Federal Financial Assistance Listing #10.766
Community Facilities Loans and Grant 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 the federal award that provides assurance that the entity is managing the
federal award in compliance with federal statutes, regulations, and conditions of the federal
award.
Condition – During our testing, there was no formal review separate from the preparer over the
reserve fund reconciliation for the federal program and there was no formal review of the
balance in comparison to the required minimum reserve balance.
Cause – The Health Center did not have an adequate internal control policy in place to ensure
review and approval over the reserve fund.
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 was not used. The Health Center has one reserve account, which includes the
debt service and emergency and replacement reserve, that was tested.
Repeat Finding from Prior Years – Yes, Finding 2022‐004
Recommendation ‐ We recommend that the Health Center enhance internal control policies to
ensure that formal documentation of reviews is present.
Views of Responsible Officials ‐ Management agrees with the finding.