The Water Works and Gas Board of the City of Red BayLocal Government

2022-005 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management I – Procurement Significant Deficiency Criteria: Per 2 CFR section 200.318(c) entities are required to have written standards of conduct that cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Condition: The entity has no written standards of conduct per 2 CFR section 200.318(c). Context: The Water Works and Gas Board of the City of Red Bay does not have a written policy for standards of conduct. Effect: The entity is not in compliance with 2 CFR section 200.318(c). Cause: The entity failed to adopt a written standard of conduct. Repeat Finding: No Recommendation: The entity should adopt written standards of conduct to cover conflicts of interest and govern the performance of its employees engaged in the selection, award, and administration of contracts. Board’s Response: The Water Works and Gas Board of the City of Red Bay will maintain a written standards of conduct and comply with all State laws in relation the Board members and employees in regard to their relationship with vendors and contractors.

2022-006 AL# 66.468 – Capitalization Grants for Drinking Water State Revolving Funds Environmental Protection Agency – Passed Through the Alabama State Department of Environmental Management C – Cash Management Material Weakness and Noncompliance Criteria: The SRF Loan program is a reimbursable grant administered by ADEM. When non-Federal entities are funded under the reimbursement method, the entity they request reimbursement for expenses paid that are allowable to the grant under (2CFR section 200.305(b)(3)) and Section 2.2(b) of the Special Conditions Loan Agreement. Condition: During test work, instances were noted where The Water Works and Gas Board of the City of Red Bay did not pay the cost of the invoices prior to requesting reimbursement. The expenditures were allowable and approved by Alabama State Department of Environmental Management for reimbursement, but the invoices were not paid prior to requesting the reimbursement from Alabama State Department of Environmental Management. Context: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to submitting them for reimbursement to Alabama State Department of Environmental Management. Effect: The entity is not in compliance with 2 CFR section 200.305(b)(3) and Section 2.2(b) of the Special Conditions Loan Agreement. Cause: The Water Works and Gas Board of the City of Red Bay did not ensure that invoices were paid prior to requesting reimbursement. Repeat Finding: No Recommendation: The Water Works and Gas Board of the City of Red Bay should ensure that invoices are paid prior to requesting reimbursement from the pass-through entity. Board’s Response: The Water Works and Gas Board of the City of Red Bay will ensure payments under reimbursable grants are made prior to reimbursement requests.