Finding 659538 (2022-006)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-03-26
Audit: 76350
Organization: Fallon County (MT)

AI Summary

  • Core Issue: The government lacks the expertise to prepare and evaluate its financial statements and SEFA according to GAAP.
  • Impacted Requirements: This situation creates a material weakness in internal controls, as reliance on the audit firm does not meet professional standards.
  • Recommended Follow-Up: Consider hiring a qualified individual to assess the auditor-prepared financial statements and SEFA, despite potential cost concerns.

Finding Text

AUDITOR PREPARED FINANCIAL STATEMENTS Criteria: As part of its internal control structure, it is the government?s responsibility to prepare its financial statements and Schedule of Expenditures of Federal Awards (SEFA) in accordance with generally accepted accounting principles (GAAP). Condition: The government does not have the expertise to prepare or evaluate the selection and application of accounting principles and resulting disclosures and presentations within the auditor prepared financial statements and SEFA. Cause: The government is a small organization with limited resources. Effect: It is common for a small organization to rely on the audit firm to prepare the financial statements and SEFA; however, an audit firm cannot be considered part of the government?s internal control by professional standards currently in effect. Since some presentations and disclosures may be material to the financial statements and SEFA, this weakness in internal control would be classified as material. Recommendation: While it may not be cost effective to do so, we recommend the government consider hiring a qualified person to evaluate the auditor prepared financial statements and SEFA. Views of responsible officials and planned corrective actions: The government agrees with this finding and will adhere to the attached corrective action plan.

Categories

Reporting

Other Findings in this Audit

  • 83096 2022-006
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
20.106 Airport Improvement Program $606,897
15.999 Bankhead Jones Farm Tenant Act $132,724
20.509 Formula Grants for Rural Areas and Tribal Transit Program $85,337
97.047 Pre-Disaster Mitigation $39,077
93.354 Public Health Emergency Response: Cooperative Agreement for Emergency Response: Public Health Crisis Response $31,988
93.069 Public Health Emergency Preparedness $28,547
97.042 Emergency Management Performance Grants $25,500
93.044 Special Programs for the Aging_title Iii, Part B_grants for Supportive Services and Senior Centers $10,471
90.401 Help America Vote Act Requirements Payments $7,070
93.045 Special Programs for the Aging_title Iii, Part C_nutrition Services $4,953
93.268 Immunization Cooperative Agreements $4,687
10.557 Special Supplemental Nutrition Program for Women, Infants, and Children $4,281
93.994 Maternal and Child Health Services Block Grant to the States $3,374
21.027 Coronavirus State and Local Fiscal Recovery Funds $0
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $0
93.052 National Family Caregiver Support, Title Iii, Part E $0