The New Creek Water Association IncNon-Profit

2021-001 Inadequate Segregation of Duties-All Federal Programs-Criteria: New Creek Water should have accounting duties segregated such that different employees are recording, processing, and reporting receipts and disbursements. Condition: New Creek Water does not have adequate segregation of duties in performing its accounting functions. Cause: New Creek Water does not have adequate staffing to allow for the proper segregation of duties. Effect: The employee performing all these functions may not record, process, and report the receipts and disbursements properly or at all, creating an increased risk of misstatement and risk of loss of New Creek Water assets due to fraud or unintentional error. Recommendation: Continue with mitigating controls such as having board members review canceled checks through online access to accounts; printing a report at the end of the month of all account adjustments to have the board approve; have a separate person mail all disbursements after checks have been signed by two authorized signors. Views of responsible official and planning corrective actions: New Creek Water acknowledges the suggestions and will try to comply.

2021-002 Maintenance of Depreciation Schedule-All Federal Programs-Criteria: New Creek Water should account for all asset deletions/additions and record the appropriate depreciation/amortization in their own fixed asset software. Condition: New Creek Water does not maintain its own depreciation schedule. Cause: New Creek Water does not have adequate resources available to operate and maintain its own depreciation schedule. Effect: Assets could be missed and not appropriately capitalized. There could also be assets still listed on the depreciation schedule that the Association no longer owns. Recommendation: The office manager should continue to record depreciation and amortization monthly and review the fixed asset listing to determine if there are any assets that need removed or added. Views of responsible official and planning corrective actions: New Creek Water acknowledges the suggestion and the office manager will routinely monitor the asset list and keep current.

2021-003 Uncollateralized Deposits - All Federal Programs-Criteria: New Creek Water should have deposits in excess of federal depository insurance coverage collateralized. Condition: New Creek Water?s deposits with a financial institution was in excess of federal depository insurance limits. The financial institution did not provide collateral for the amount in excess of the insurance limits. Cause: There was a timing issue related to the receipt of the USDA funding and the disbursement of a portion of those funds. New Creek Water did not have a collateral agreement in place for deposits held in a financial institution for amounts in excess of FDIC insurance coverage limits. Effect: As of June 30, 2021, $192,673 of New Creek Water?s bank deposits were exposed to custodial credit risk. Recommendation: We recommend New Creek Water establish a policy to address custodial credit risk and continuously monitor its compliance with the policy. New Creek Water should work with the financial institutions that it banks with to ensure all deposits are covered by federal depository insurance and that any excess deposits are backed by the proper collateralization. Views of responsible official and planning corrective actions: New Creek Water concurs with the finding. They have already worked with their financial institutions to ensure all their deposits are secured by federal depository insurance or backed by collateral.

2021-004 Material Adjustments to the Financial Statements were Required-All Federal Programs-Criteria: The accounting system should be designed to ensure that the financial statements are properly recorded as to amount, account, and period. Condition: Material adjustments to New Creek Water?s financial statements were required in order for them to be fairly stated for current year amounts. Cause: There were multiple invoices that were not properly recorded as accounts payable. The amount of depreciation expense recorded during the year was incorrect. The transactions related to the new waterline improvement project were recorded as expenses instead of CIP. Effect: If the adjustments were not made, the financial statements would be materially misstated and could have improperly influenced the users of the financial statements. Recommendation: We recommend that New Creek Water adopt additional controls over the financial reporting process to ensure all balances are fairly stated. Views of Responsible Officials and Planned Corrective Action: New Creek Water agrees with the recommendation and will make sure to follow the proper procedures and review the recording of transactions carefully throughout the year and at year-end.

2021-005 Lack of Written Policies as Required by the Uniform Guidance-All Federal Programs-Criteria: Per the Uniform Guidance, non-federal entities must adopt certain written policies including procedures on cash management, cost allowability procedures, travel policies, and procurement policies. Condition: New Creek Water has not developed and adopted said written policies. Cause: New Creek Water typically only has a financial statement audit and therefore, no written policies required by the Uniform Guidance or Single Audit procedures exist. Effect: Payments of federal funds could be made that do not meet the Uniform Guidance policies. There could be questioned costs and New Creek Water could be required to return funds and could also be disqualified from receiving future federal funding. Recommendation: We recommend that New Creek Water develop and adopt the required written policies as soon as possible in order to be in compliance with the Uniform Guidance. Views of Responsible Officials and Planned Corrective Action: New Creek Water is in agreement with this recommendation and will work on implementing the proper policies.