Finding 959319 (2022-005)

2022‐005 Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Cluster Reporting 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, we noted a lack of documentation of a secondary review on the RD442‐2 forms submitted to the USDA. Cause ‐ The Organization did not have an adequate internal control policy in place to ensure the review and approval of the report was documented. Effect ‐ The lack of adequate policies governing review and approval increase 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. Context ‐ A selection of four quarterly reports out of total population of eight were tested. Documentation of a secondary review was missing from two quarterly reports. Repeat Finding from Prior Years ‐ No Recommendation ‐ We recommend that the Organization enhance internal control policies to ensure that formal documentation of the reviews are present. Views of Responsible Officials ‐ Management agrees with the finding.