LANE ELECTRIC COOPERATIVE, INC.

Identification of the federal program: 97.039 ? Hazard Mitigation Grant Program ? Department of Homeland Security Criteria: Proper oversight, review procedures and controls should be established to ensure the amounts reported on the Schedule of Expenditures of Federal Awards (SEFA) are accurate and adequately supported. Condition: Expenditures initially presented on the SEFA were misclassified as to assistance listing number and were overstated as they included overhead costs charged to the work orders which were not allowable federal expenditures. Cause: There was a lack of review of the SEFA and supporting documentation resulting in errors in the original SEFA. Effect: Corrections were required to revise the amounts reported on the SEFA. A lack of controls can result in errors not being caught in a timely manner. Questioned Costs: None Recommendations: Lane Electric Cooperative, Inc. should establish oversight and review procedures to ensure the amounts reported on the SEFA are accurate. Views of responsible officials: Lane Electric Cooperative, Inc acknowledges the requirement to establish specific controls related to federal programs to ensure the accurate reporting of costs on the SEFA. A corrective action plan will be prepared, including the development of internal control procedures specified to allowable costs of federal programs so that only those costs are included on the SEFA.

Lane Electric officials understand the requirements for a review process for transactions to be considered reimbursable as allowable costs. Each month, the Controller will review each transaction that has been added to the reimbursable cost database to ensure that there are not any disallowable costs included. The Controller will maintain proper education and training to accurately determine that only allowable costs have been reported on the Schedule of Expenditures and Federal Awards, and ultimately on the request for reimbursement. Lane Electric agrees to comply with this within 90 days of the filing date of the financial statements.