LEE COUNTYLocal Government

INTERNAL CONTROL DEFICIENCY: Assistance Listing Number 20.205: Highway Planning and Construction Pass-through Entity Identifying Number: 56(107)-NC-56 Federal Award Year: 2022 Prior Year Finding Number: N/A U.S. Department of Transportation Passed through the Iowa Department of Transportation. Segregation of Duties over Federal Revenues ? The County Secondary Roads Department did not properly segregate custody, record-keeping and reconciling functions for revenues, including those related to federal programs. Criteria ? Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the County?s financial statements. An effective internal control system also provides for internal controls related to ensuring proper accounting for all funds by reviewing reconciliations of bank and book balances. Condition ? Generally, one or two individuals in the offices identified may have control over the following areas for which no compensating controls exist:(1) Incoming mail is opened by an employee who is authorized to make entries to the accounting records.(2) Generally, one individual may have control over collecting, depositing, posting and daily reconciling of receipts for which no compensating controls exist. Cause ? The County offices noted above have a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions, processes and reports. Effect ? Inadequate segregation of duties and inadequate policies could adversely affect each County office?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation ? Each official should review the control activities of their office to obtain the maximum internal control possible under the circumstances. The official should utilize current personnel, including elected officials, to provide additional control through review of financial transactions, reconciliations and reports. In addition, all bank accounts should be reviewed by an independent person, and a monthly report of voided receipts should be maintained. Secondary Roads Response and Corrective Action Planned ? With limited staff, we will attempt to segregate duties as much as possible. We will explore having state reimbursements directly deposited at the County Treasurer. Conclusions ? Response acknowledged. All offices should continue to review current operating procedures for the areas noted to obtain the maximum internal control possible. The officials should utilize current personnel to provide additional control through review of financial transactions, reconciliations and reports.

INTERNAL CONTROL DEFICIENCY: CFDA Number 93.870: Maternal, Infant and Early Childhood Home Visiting Grant Pass-through Entity Identifying Number: 5880CH06 Federal Award Year: 2021 Prior Year Finding Number: 2020-001 U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health III-A-21 (2021-011) Segregation of Duties over Federal Revenues Criteria ? Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the County?s financial statements. An effective internal control system also provides for internal controls related to ensuring proper accounting for all funds by reviewing reconciliations of bank and book balances and accounting for void receipts. Condition ? Generally, one or two individuals in the offices identified may have control over the following areas for which no compensating controls exist: Applicable Offices (1) Incoming mail is opened by an employee who is authorized to make entries to the accounting records. Treasurer, Recorder (2) Generally, one individual may have control over collecting, depositing, posting and daily reconciling of receipts for which no compensating controls exist. Recorder, Health Department, Conservation, Lee County Economic Development Group, Great River Progressive Housing (3) A listing of cash and checks received by mail is not regularly prepared by someone independent of cash and receipt functions or compared to cash receipt records or bank deposits. Sheriff (4) Bank accounts were not reconciled by an individual who does not sign checks, handle or record cash. Recorder (5) Bank reconciliations were not reviewed periodically by an independent person for propriety. Recorder, Lee County Economic Development Group (6) Responsibilities for maintaining detailed accounts receivable records are not segregated from posting receipts. Health Department (7) A monthly report of voided receipts is not maintained and reviewed by someone independent of the receipts process for receipts voided in the Solutions system. Treasurer (8) The person who signs checks is not independent of the person preparing checks, approving disbursements and recording cash receipts. Recorder, Conservation, Great River Progressive Housing Cause ? The County offices noted above have a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions, processes and reports. Effect ? Inadequate segregation of duties and inadequate policies could adversely affect each County office?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation ? Each official should review the control activities of their office to obtain the maximum internal control possible under the circumstances. The official should utilize current personnel, including elected officials, to provide additional control through review of financial transactions, reconciliations and reports. In addition, all bank accounts should be reviewed by an independent person, and a monthly report of voided receipts should be maintained. Responses ? (a) Recorder ? We will review our controls and try to make changes where possible given our limited staff. Now that we are back to being in the office all the time, we will have an independent person review bank reconciliations monthly. (b) Treasurer ? We will work to have the mail opened by someone independent (who does not access the receipts system). We will start generating a monthly report of voided receipts in the Solutions system and have someone independent review this report. (c) Sheriff ? We will have the mail opener prepare a listing of receipts, on a test basis. (d) Health Department Response and Corrective Action Planned ? With limited staff, we will attempt to segregate duties as much as possible. We have hired new staff and will be able to segregate duties. (e) Conservation ? With limited staff, we will attempt to segregate duties as much as possible. (f) Great River Progressive Housing ? With limited staff, we will attempt to segregate duties as much as possible. (g) Lee County Economic Development Group ? We will ask a Board member who does not sign checks to review the bank reconciliations, outside of our meetings. Conclusions ? Responses acknowledged. All offices should continue to review current operating procedures for the areas noted to obtain the maximum internal control possible. The officials should utilize current personnel to provide additional control through review of financial transactions, reconciliations and reports.

INTERNAL CONTROL DEFICIENCY: CFDA Number 93.870: Maternal, Infant and Early Childhood Home Visiting Grant Pass-through Entity Identifying Number: 5880CH06 Federal Award Year: 2021 Prior Year Finding Number: 2020-001 U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health III-B-21 (2021-012) Expenditure Support Not Properly Approved Criteria ? Properly designed policies and procedures are an integral part of ensuring the reliability and accuracy of the County?s approval of expenditures. Approval of expenditures should be made by a supervisor to ensure the reliability and accuracy of the requests. Condition ? Monthly packets, with supporting documentation for claims and payroll, were submitted online at IowaGrants.Gov in order to request reimbursement for grant expenditures. The claims and payroll included in the packets were not all approved by the Department Director. Cause ? Policies and procedures have not been implemented to require review and approval of claims for expenditures. Effect ? The lack of review and approval increases the risk for undetected errors in expenditure requests. Recommendation ? The County should implement procedures to ensure expenditures are properly approved by the Department Director. Response and Corrective Action Planned ? We will ensure expenditures are properly approved by the Department Director and will initial invoices to evidence this approval. Claims will be signed before copied with backup paperwork. Conclusion ? Response accepted.

INTERNAL CONTROL DEFICIENCY: CFDA Number 93.590: Community-Based Child Abuse Prevention Grants Pass-through Entity Identifying Number: ACFS-19-059 Federal Award Year: 2020 Prior Year Finding Number: NA U.S. Department of Health and Human Services Passed through the Iowa Department of Human Services CFDA Number 93.870: Maternal, Infant and Early Childhood Home Visiting Grant Pass-through Entity Identifying Number: 5889CH06, 5880CH06 Federal Award Year: 2020 Prior Year Finding Number: 2019-001 U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health CFDA Number 93.994: Maternal and Child Health Services Block Grant to the States Pass-through Entity Identifying Number: 5889MH11, 5880MH11 Federal Award Year: 2020 Prior Year Finding Number: 2019-001 U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health III-A-20 (2020-001) Segregation of Duties over Federal Revenues ? The County Health Department did not properly segregate custody, record-keeping and reconciling functions for revenues, including those related to federal programs. See item II-A-20.II-A-20 County Offices ? Segregation of Duties Criteria ? Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the County?s financial statements. An effective internal control system also provides for internal controls related to ensuring proper accounting for all funds by reviewing reconciliations of bank and book balances and accounting for void receipts. Condition ? Generally, one or two individuals in the offices identified may have control over the following areas for which no compensating controls exist: Applicable Offices (1) Incoming mail is opened by an employee who is authorized to make entries to the accounting records. Treasurer, Recorder, Health Department (2) Generally, one individual may have control over collecting, depositing, posting and daily reconciling of receipts for which no compensating controls exist. Health Department, Conservation, Lee County Economic Development Group, Great River Progressive Housing (3) A listing of cash and checks received by mail is not regularly prepared by someone independent of cash and receipt functions or compared to cash receipt records or bank deposits. Sheriff (4) Bank reconciliations were not reviewed periodically by an independent person for propriety. Lee County Economic Development Group (5) Responsibilities for maintaining detailed accounts receivable records are not segregated from posting receipts. Health Department (6) A monthly report of voided receipts is not maintained and reviewed by someone independent of the receipts process for receipts voided in the Solutions system. Treasurer (7) The person who signs checks is not independent of the person preparing checks, approving disbursements and recording cash receipts. Conservation, Great River Progressive Housing Cause ? The County offices noted above have a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions, processes and reports. Effect ? Inadequate segregation of duties and inadequate policies could adversely affect each County office?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation ? Each official should review the control activities of their office to obtain the maximum internal control possible under the circumstances. The official should utilize current personnel, including elected officials, to provide additional control through review of financial transactions, reconciliations and reports. In addition, all bank accounts should be reviewed by an independent person, and a monthly report of voided receipts should be maintained. Responses (a) Recorder ? We will review our controls and try to make changes where possible given our limited staff. (b) Treasurer ? We will work to have the mail opened by someone independent (who does not access the receipts system). We will start generating a monthly report of voided receipts in the Solutions system and have someone independent review this report. (c) Sheriff ? We will have the mail opener prepare a listing of receipts, on a test basis. We will try this as time allows. (d) Health Department Response and Corrective Action Planned ? With limited staff, we will attempt to segregate duties as much as possible. We will look at having a different individual open mail and when things slowdown from COVID-19 we will train someone else on deposits. (e) Conservation ? With limited staff, we will attempt to segregate duties as much as possible. The director and office manager plan to review current operations to see where improvements can be made. (f) Great River Progressive Housing ? With limited staff, we will attempt to segregate duties as much as possible. We are diligently pursuing the transition of the property management duties to Keokuk Housing Authority; however, this can only take place with the consent of the Iowa Finance Authority. Until that time, the Great River Progressive Housing Board will heed the audit suggestions as much as possible. (g) Lee County Economic Development Group ? We will ask a Board member who does not sign checks to review the bank reconciliations, outside of our meetings. We will ask them to scan for unusual items, verify outstanding check listing, outstanding deposits, any other reconciling items, verify the book balance agrees to QuickBooks ledger and bank balance agrees to the bank statement. Conclusions ? Responses acknowledged. All offices should continue to review current operating procedures for the areas noted to obtain the maximum internal control possible. The officials should utilize current personnel to provide additional control through review of financial transactions, reconciliations and reports.

INTERNAL CONTROL DEFICIENCIES: CFDA Number 93.870: Maternal, Infant and Early Childhood Home Visiting Grant Pass-through Entity Identifying Number: 5888CH06, 5889CH06 Federal Award Year: 2019 Prior Year Finding Number: NA U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health CFDA Number 93.994: Maternal and Child Health Services Block Grant to the States Pass-through Entity Identifying Number: 5888MH11, 5889MH11 Federal Award Year: 2019 Prior Year Finding Number: NA U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health III-A-19 (2019-001) Segregation of Duties over Federal Revenues ? The County Health Department did not properly segregate custody, record-keeping and reconciling functions for revenues, including those related to federal programs. See item II-A-19.II-A-19 County Offices ? Segregation of Duties Criteria ? Management is responsible for establishing and maintaining internal control. A good system of internal control provides for adequate segregation of duties so no one individual handles a transaction from its inception to completion. In order to maintain proper internal control, duties should be segregated so the authorization, custody and recording of transactions are not under the control of the same employee. This segregation of duties helps prevent losses from employee error or dishonesty and maximizes the accuracy of the County?s financial statements. An effective internal control system also provides for internal controls related to ensuring proper accounting for all funds by reconciling bank and book balances, accounting for void receipts and reviewing journal entries. Condition ? Generally, one or two individuals in the offices identified may have control over the following areas for which no compensating controls exist: Applicable Offices (1) Incoming mail is opened by an employee who is authorized to make entries to the accounting records. Treasurer, Recorder, Health Department (2) Generally, one individual may have control over collecting, depositing, posting and daily reconciling of receipts for which no compensating controls exist. Treasurer, Recorder, Health Department, Conservation, Ag Extension, Friends of Public Health, Lee County Economic Development Group (3) Bank accounts were not reconciled by an individual who does not sign checks, handle or record cash. Bank reconciliations were not reviewed periodically by an independent person for propriety. Recorder, Ag Extension, Lee County Economic Development Group (4) Responsibilities for maintaining detailed accounts receivable records are not segregated from posting receipts. Health Department (5) A monthly report of voided receipts is not maintained and reviewed by someone independent of the receipts process for receipts voided in the Solutions system. Treasurer (6) The person who signs checks is not independent of the person preparing checks, approving disbursements and recording cash receipts. Recorder (7) Journal entries are not reviewed and approved by an independent person. Treasurer, Auditor Cause ? The County offices noted above have a limited number of employees and procedures have not been designed to adequately segregate duties or provide compensating controls through additional oversight of transactions, processes and reports. Effect ? Inadequate segregation of duties and inadequate policies could adversely affect each County Office?s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation ? Each official should review the control activities of their office to obtain the maximum internal control possible under the circumstances. The official should utilize current personnel, including elected officials, to provide additional control through review of financial transactions, reconciliations and reports. In addition, all bank accounts should be reconciled to book balances, a monthly report of voided receipts should be maintained and reviewed, and journal entries should be approved. Responses (a) Recorder ? We will review our controls and try to make changes where possible given our limited staff. We will ask the independent person who reviews the monthly bank reconciliations to document this review with their initials. (b) Treasurer ? I will work on all the areas discussed. (c) Health Department ? We have limited staff and have had one employee retire that was part of this process. We plan to train a new employee to take on part of these duties. (d) Conservation ? With limited staff, we will attempt to segregate duties as much as possible. (e) Ag Extension ? With limited staff, segregation of duties is difficult. We will have an independent person review the bank reconciliations. (f) Friends of Public Health ? With limited staff, we will segregate duties as much as possible. (g) Lee County Economic Development Group ? We will try to get board members involved to review and approve. (h) Auditor ? We will have an independent person approve journal entries. Conclusions ? Responses acknowledged. All offices should review current operating procedures for the areas noted to obtain the maximum internal control possible. The officials should utilize current personnel to provide additional control through review of financial transactions, reconciliations and reports.

INTERNAL CONTROL DEFICIENCIES: CFDA Number 93.870: Maternal, Infant and Early Childhood Home Visiting Grant Pass-through Entity Identifying Number: 5888CH06, 5889CH06 Federal Award Year: 2019 Prior Year Finding Number: NA U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health CFDA Number 93.994: Maternal and Child Health Services Block Grant to the States Pass-through Entity Identifying Number: 5888MH11, 5889MH11 Federal Award Year: 2019 Prior Year Finding Number: NA U.S. Department of Health and Human Services Passed through the Iowa Department of Public Health III-B-19 (2019-002) Requests for Grant Reimbursement Criteria ? Properly designed policies and procedures are an integral part of ensuring the reliability and accuracy of the County?s requests for grant reimbursement. Requests for grant reimbursement should be approved by a supervisor to ensure the reliability and accuracy the requests. Condition ? Monthly packets, with supporting documentation for claims and payroll, were submitted online IowaGrants.Gov, in order to request reimbursement for grant expenditures. The requests for grant reimbursement were not approved by the department director. Cause ? Policies and procedures have not been implemented to require review and approval of requests for grant reimbursement before submission. Effect ? The lack of review and approval increases the risk for undetected errors in reimbursement requests. Recommendation ? The County should implement procedures to ensure requests for grant reimbursement are approved before submission. Response and Corrective Action Planned ? The Health director will begin signing the front page of the monthly packet to document approval of the request for reimbursement. Conclusion ? Response accepted.