JXN WaterLocal Government

FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAMS ALN 66.489 Response to Emergency Situations Affecting Public Water Systems (SDWA 1442b) FINDING #2023-001 MANAGEMENT’S RESPONSIBILITY FOR INTERNAL CONTROL CRITERIA: OMB Circular A-123 Management’s Responsibility for Internal Control - Management is responsible for developing and maintaining effective internal controls. CAUSE OF CONDITION: While performing our test of expenditures, we noted multiple invoices that did not have the proper approval. JXN Water, Inc. has a limited number of administrative staff, therefore this does not allow the organization to have the proper segregation of duties. EFFECT OR POSSIBLE EFFECT OF THE CONDITION: Improper or unauthorized expenditures. We identified all material accounts, once the material accounts were identified, we selected all material transactions from each account based on transaction materiality. We requested supporting documentation for each of our selections. While reviewing the supporting documentation, we noted there was no approver sign off. We also reviewed the audit trail in the Bill.com software and we noted many invoices that were paid that did not have an approver. RECOMMENDATION: Management should work to create a system of internal controls as required by OMB Circular A-123.