TOWN OF SHERBORN, MASSACHUSETTS

2021-001 Improve Documentation and Controls Over Disbursements Process Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Cluster: Not applicable Federal Program Name: COVID-19 Coronavirus Relief Fund CFDA Number(s): 21.019 Pass-through Entity: Not applicable Award Year: 2021 Compliance Requirement Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance ? Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that Federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the Town is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Control deficiencies related to disbursements were noted as a result of the testing of internal controls. Samples of both vendor and payroll disbursements charged were tested in order to determine internal control over and compliance with Allowable Costs/Cost Principles. As a result of testing of vendor disbursements, inadequate support for certain items and inadequate controls were identified. Specifically, the Town was unable to produce 3 of 15 invoices selected for testing. Cause Weaknesses in the design of internal controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, there is a risk that amounts charged to federal awards could not be allowable or in accordance with applicable cost principles. No questioned costs are reported because the total unsupported costs were not material to the program. Recommendation The Town should address the weakness in internal controls noted above in order to provide reasonable assurance that federal awards are expended only for allowable activities, and that the costs of goods and services charged to federal awards are allowable and in accordance with applicable cost principles. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included at the end of this report after the schedule of prior year findings.

Corrective Action Plan - Finding 2021-001 "Improve Documentation and Controls Over Disbursement Process Finding: The Town had inadequate support for 3 of 15 invoices selected for testing. Corrective Action to be taken: The Town has been more diligent in regard to re-filing documents correctly once they have been pulled for various reporting projects. Historically, the internal control procedure for processing invoices is and has been strictly followed. The assumption is that the 3 invoices that could not be located occurred because the former Finance Director pulled these invoices for CARES Act Municipal Reporting. Due to remote working, they were likely not re-filed properly. Expected Completion Date: The internal control procedures have been and remain in effect. Compliance is easier to maintain as work is being done in the office.

2021-002 Document Policies and Procedures Over Federal Awards Federal Program(s) Information Cluster/Program: All federal programs Type of Finding Compliance ? Other Matters Criteria or Specific Requirement OMB?s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (UG) stipulate that federal award recipients must document their policies and procedures over cer?tain aspects of financial and program management. Specifically, written policies are required for the following: ? Cash management ? Determination of allowable costs ? Employee travel ? Procurement ? Subrecipient monitoring and management Condition and Context The Town has not formalized written policies and procedures related to federal awards required under Uniform Guidance. Cause Weaknesses in the design of internal controls. Effect There are no questioned costs as a result of this finding as there are no costs directly associated with this compliance requirement and this is a procedural requirement under the Uniform Guidance. Recommendation Written policies and procedures should be implemented in accordance with the Uniform Guidance. Views of Responsible Official and Planned Corrective Action Management?s views and corrective action plan is included at the end of this report after the schedule of prior year findings.

Corrective Action Plan - Finding 2021-002 "Document Policies and Procedures Over Federal Awards Finding: The Town has not formalized written policies and procedures related to Federal awards required under Uniform Guidance. Corrective Action to be taken: We have started this process and will continue to develop written policies and procedures related to Federal awards as required under Uniform Guidance. The policies and procedures will be compiled, reviewed by the Advisory Board and approved by the Select Board as required. Expected Completion Date: We anticipate the policies and procedures will be ready for Select Board approval in early 2023.