Town of GranbyLocal Government

Reference Number: 2023-001 Grant Loan Program Reporting Criteria: Internal controls over compliance in relation to reporting requirements of grant loan programs should be designed to verify the expenditures submitted are complete and accurate and transactions exist. Cause/Condition: The Town's internal controls were not designed effectively to ensure project expenditures on the United States Department of Agriculture (USDA) Form E – Rural Development (RD) Project Budget/Cost Certification Reporting were accurate and existed. Effect: The Town reported a duplicate expenditure incurred during the fiscal year ending December 31, 2023 on a Form E Report submitted to the USDA in the amount of approximately $15,000. Recommendation: The Town should design internal control procedures that require reconciliation of the expenditures reported on the Form Es submitted to Rural Development to the general ledger to ensure completeness and accuracy, as well as to detect any duplicate expenses that should be removed from the claim before submission. Management’s Response: The Town acknowledges the audit finding related to internal controls over compliance with USDA Rural Development reporting requirements. During the review, it was identified that two separate project expenditures were incorrectly reported under the same vendor on Form E for the fiscal year ending December 31, 2023. While the expenditures themselves were valid and supported, the misclassification resulted in an inaccurate representation of vendor reporting. Corrective Action Plan: To address this issue and prevent recurrence, the Town has implemented the following measures: 1. Reconciliation Procedures: Finance Department staff will reconcile all expenditures reported on USDA Form E – RD Project Budget/Cost Certification Reporting to the general ledger, ensuring both the accuracy of amounts and the correct vendor attribution. 2. Vendor Verification: A vendor cross-check process will be added to the review, requiring staff to match each reported expenditure to the appropriate invoice, purchase order, and vendor record before submission. 3. Review & Approval Controls: A supervisory review will be conducted prior to submission of Form E reports to verify vendor accuracy, in addition to ensuring no duplicate or misclassified expenditures are reported. The Town is committed to ensuring compliance with all USDA reporting requirements. By strengthening reconciliation, vendor verification, and review processes, we will reduce the risk of reporting errors and maintain accurate, reliable financial reporting moving forward.