Central Montana Regional Water AuthorityLocal Government

Allowable Costs and Cost Principles U.S. Department of Treasury, passed through from the Montana Department of Natural Resources and Conservation ALN: 21.027, Coronavirus State and Local Fiscal Recovery Funds Criteria: The grant award RW-22-077A scope of work is for Phase 3, 3A and 4 – LiDAR Survey of Pipeline Routes. Musselshell County also contracted with the Authority to pay for a portion of these costs. Code section 2 CFR 200.302 requires recipients to maintain appropriate records and documentation to sufficiently identify the amount, source and expenditure of federal funds for federal awards. Condition: The Authority received reimbursement for expenses incurred from the County and the Montana Department of Natural Resources and Conservation (DNRC), totaling $55,698. The same costs were incorrectly counted toward both funding sources. Context: The Authority collected revenue twice for the same costs. No funds were reimbursed to the County. For the DNRC, additional costs were incurred through June 30, 2023, that totaled $13,512, which were not included in any draws or cash receipts from DNRC through June 30, 2023. So essentially the Authority used up some of this overage before year end, resulting in an overage of $42,186. Effect: The Authority overdrew on revenue by $55,698. Questioned Costs: We question the costs reported as federal expenditures for this program totaling $42,186. Cause: The Authority made an error when submitting reimbursement for costs incurred. Auditor Recommendation: We recommend the Authority: 1) reimburse DNRC or the County for the overage, 2) strengthen internal controls over tracking of expenditures for grants to ensure duplication does not occur in the future. Authority Response: Based upon DNRC direction, the Authority will pay back DNRC with water user fees from Roundup. The Project Administrator will work with the outside accountant to assist with the record keeping of the Authority

Reporting U.S. Department of Treasury, passed through from the Montana Department of Natural Resources and Conservation ALN: 21.027, Coronavirus State and Local Fiscal Recovery Funds U.S. Department of Agriculture ALN: 10.760, Water and Waste Disposal Systems for Rural Communities Criteria: The grant award RW-22-077A required quarterly progress reports for the periods ending March, June, September, and December be submitted to DNRC during the term of the award. The US Department of Agriculture, Rural Development award also requires quarterly income and expense reports. Condition: For the RW-22-077A award, the Authority only submitted one quarterly report. For the Rural Development award, the Authority submitted summaries, invoice copies, and other documentation, and Rural Development acknowledged each draw request that was submitted. Context: The information included in the reports and submitted to Rural Development provided agreed to the accounting records and supporting documents. Effect: The Authority did not comply with the reporting requirements outlined in the award agreements. Questioned Costs: None Cause: For the RW-22-077A award, only one was submitted because there were so few draws the information would have been redundant with no additional information included in the omitted reports. For both awards, with each draw request, the Authority includes copies of invoices and a summary of all expenses compared to the grant award balances. For the Rural Development award, the Authority gets a confirmation from Rural Development and they have accepted this method; the Authority has not prepared financial reports using the Rural Development 442-2 or 442-3 reports. Auditor Recommendation: We recommend that the Authority follow the terms of the grant awards and submit the reports required in the awards. Authority Response: The Project Administrator and the outside accountant will work with the grantor entities and submit reports as required, based on direction provided by the grantors.