CITY OF ST. MARIES, IDAHOLocal Government

Condition: The City does not have fully formalized or documented procedures related to the accurate recording, reconciling or oversight of grant programs. In connection with performing our audit testing, we noted that procedures had not been adequately performed to properly reconcile grant revenues, expenditures and the related receivables and liabilities, as applicable, which resulted in material misstatements (see Finding 2021-003). Criteria: Costs charged to federal programs are to be supported by adequate documentation in accordance with guidelines established in the OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly referred to as ?Uniform Guidance?). Furthermore, governmental accounting standards require that revenue for expenditure-driven grant programs be recognized when the City meets the eligibility requirements of the grant and the resources are considered to be available. When grant funds are received in advance, if any, unearned revenue (a liability) should be recorded until the costs have been incurred, eligibility requirements are met, or unexpended funds are returned to the granting agency. Effect: While no instances of noncompliance were noted in connection with performing our audit testing, adjustments were required in order to properly record grant expenditures and related revenue. Without adequate procedures in place, grant expenditures and revenue may not be properly identified, which could result in noncompliance with the grant requirements or Uniform Guidance. Cause: The City does not have fully formalized, documented procedures for tracking and recording activity related to grants. In addition, there are limited, if any, oversight procedures in place to catch errors in the accounting of grants or in applicable compliance requirements. Questioned Costs: No known questioned costs were identified during the course of the audit. Recommendation: We recommend that the City continue to develop and implement policies and procedures to identify and track grants. These procedures should include maintaining a schedule of all grants, detailing the source of funding, expenditures incurred and revenues earned on a grant-to-date basis and a year-to-date basis. These procedures should also include documented communication between those administering the grants and those responsible for the financial records. In addition, we recommend that the City appoint an individual with the responsibility of providing compliance oversight. The individual can either be an existing employee or an external contractor who possesses sufficient skill, knowledge or experience in understanding Uniform Guidance requirements. Management?s Response: The City will continue to develop and implement documented procedures for recording and communicating information regarding grants. Oversight and any necessary training will be made available on an as-needed basis, in an effort to eliminate audit adjustments and ensure compliance with grant requirements.

Condition: The City does not have fully formalized or documented procedures related to the accurate recording, reconciling or oversight of grant programs. In connection with performing our audit testing, we noted that procedures had not been adequately performed to properly reconcile grant revenues, expenditures and the related receivables and liabilities, as applicable, which resulted in material misstatements (see Finding 2020-003). Criteria: Costs charged to federal programs are to be supported by adequate documentation in accordance with guidelines established in the OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly referred to as ?Uniform Guidance?). Furthermore, governmental accounting standards require that revenue for expenditure-driven grant programs be recognized when the City meets the eligibility requirements of the grant and the resources are considered to be available. When grant funds are received in advance, if any, unearned revenue (a liability) should be recorded until the costs have been incurred, eligibility requirements are met, or unexpended funds are returned to the granting agency. Effect: While no instances of noncompliance were noted in connection with performing our audit testing, adjustments were required in order to properly record grant expenditures and related revenue. Without adequate procedures in place, grant expenditures and revenue may not be properly identified, which could result in noncompliance with the grant requirements or Uniform Guidance. Cause: The City does not have fully formalized, documented procedures for tracking and recording activity related to grants. In addition, there are limited, if any, oversight procedures in place to catch errors in the accounting of grants or in applicable compliance requirements. Questioned Costs: No known questioned costs were identified during the course of the audit. Recommendation: We recommend that the City continue to develop and implement policies and procedures to identify and track grants. These procedures should include maintaining a schedule of all grants, detailing the source of funding, expenditures incurred and revenues earned on a grant-to-date basis and a year-to-date basis. These procedures should also include documented communication between those administering the grants and those responsible for the financial records. In addition, we recommend that the City appoint an individual with the responsibility of providing compliance oversight. The individual can either be an existing employee or an external contractor who possesses sufficient skill, knowledge or experience in understanding Uniform Guidance requirements. Management?s Response: The City will continue to develop and implement documented procedures for recording and communicating information regarding grants. Oversight and any necessary training will be made available on an as-needed basis, in an effort to eliminate audit adjustments and ensure compliance with grant requirements.