FAC Explorer

Finding 93898 (2022-002)

Significant Deficiency
Requirement
AB
Questioned Costs
-
Year
2022
Accepted
2023-03-28
Audit: 90093
Organization: Town of Easton (the Easton Utilities Commission) (MD)
Auditor: Cliftonlarsonallen LLP

AI Summary

  • Core Issue: The Commission lacks a documented review and approval process for equipment and inventory expenditures related to the grant.
  • Impacted Requirements: This deficiency violates the requirement for effective internal controls as outlined in 2CFR § 200.303(a) and related frameworks.
  • Recommended Follow-Up: The Commission should establish formal policies and procedures to ensure all grant expenditures are reviewed and approved properly.

Finding Text

Federal Agency: U.S. Department of Agriculture Federal Program Name: Rural eConnectivity Pilot Program Assistance Listing Number: 10.752 Federal Award Identification Number and Year: MD 1701-A64, 2020 Award Period: July 1, 2020 ? July 1, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 2CFR ? 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO/Internal Control Framework defines control activities as ?policies and procedures that help ensure management?s directives are carried out.? Management review controls are defined as, ?the activities of a person, different than the preparer, through analyzing and performing oversight of activities performed, and is an integral part of any internal control structure.? Questioned Costs: None Condition/Context: The Commission did not have a documented review/ approval process in place for equipment and inventory expenditures charged to the grant for the fiscal year ended June 30, 2022. In addition, the Commission did not maintain evidence of the approval of equipment and inventory expenditures charged to the grant. Cause: The Commission does not have sufficient policies and procedures over internal controls to ensure review and approval of grant expenditures are properly documented. Effect: Expenditures may be charged to the grant that are not eligible. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Commission formalize policies and procedures over internal controls to ensure review and approval of equipment and inventory expenditures are properly documented. Views of responsible officials: Management agrees with the finding.

Corrective Action Plan

Rural eConnectivity Pilot Program ? Assistance Listing No. 10.752 Recommendation: We recommend the Commission formalize policies and procedures over internal controls to ensure review and approval of equipment and inventory expenditures are properly documented. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: The review of inventory requisitions will be denoted with the reviewer?s initials. The monthly equipment charges will be provided to the Supervisor of Velocity Plant Operations for review and his approval confirmed via email. Since the inception of the Rural eConnectivity program, the Commission has worked closely with representatives from the USDA to ensure compliance with the USDA?s accounting and reporting requirements. Inventory requisitions are completed by field crew and warehouse personnel, reviewed, and approved by the Supervisor of Velocity Plant Operations who reviews each and files in a binder. There is a final cursory reasonableness review by the Senior Staff Accountant. During the preparation of the USDA?s Financial Requirement Statement for reimbursement purposes, the Senior Staff Accountant and CFO review all invoices and material requisitions for proper coding. This review did not include physical signoff during the period tested. Name of the contact person responsible for corrective action: Steve J. Ochse Planned completion date for corrective action plan: April 30, 2023

Categories

Equipment & Real Property Management Internal Control / Segregation of Duties Significant Deficiency Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 93897 2022-001
    Significant Deficiency
  • 670339 2022-001
    Significant Deficiency
  • 670340 2022-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
10.752 Rural Econnectivity Pilot Program (b, E) $1.61M
21.027 Coronavirus State and Local Fiscal Recovery Funds $229,798
32.002 Universal Service Fund - High Cost $15,754