{"database": "mytown-research", "table": "audit_findings", "rows": [[4, "wa-sao", "1018576", "2015-001", null, "WA", "Town of Coupeville", "City/Town", "0357", "5315185", "no_match", "Washington State Auditor's Office", "Financial and Federal audit \u2014 Town of Coupeville", "Financial and Federal", 2015, "2014-01-01", "2015-12-31", "2018-09-20", "federal_award_compliance", "material_weakness", null, null, "The Town did not have adequate internal controls in place to ensure accurate financial reporting on the Schedule of Expenditures of Federal Awards", "Background \nTown management is responsible for designing and following internal controls that \nprovide reasonable assurance regarding the reliability of financial reporting. These \ncontrols should ensure financial events are identified properly and presented \ncompletely. Controls should also ensur e the criteria and accounting methodology \napplied to financial events is correct. Our audit identified a deficiency in internal \ncontrols that adversely affected the Town\u2019s ability to produce reliable schedules. \nBecause of its effect on the Town\u2019s financial reporting, we consider this a \nsignificant deficiency. \nLocal governments in Washington that spend federal funds must prepare a Schedule \nof Expenditures of Federal Awards (SEFA) as part of the annual financial report. \nFederal regulations require grantees to identify, in their accounts, all federal money \nspent on the SEFA each fiscal year. \nIf the government spends $750,000 or more in federal grant awards in a year, it \nmust arrange for an audit of its federal grants, in accordance with federal \nregulations. Further, the government must submit the single audit reporting package \nto the federal government within 30 calendar days after we issue our audit report or \nwithin nine months after the end of the audit period, whichever is earlier. \nDescription of Condition \nThe Town\u2019s internal controls over financial reporting of the SEFA were not \nsufficient to ensure accurate presentation . Although required for governments \nreporting on a cash basis, t he Town did not report expenditures paid related to a \nfederal loan on the SEFA. \nCause of Condition \nThe Town did not have a clear understanding of the SEFA reporting requirements \nfor its federal grants and loans and did not follow guidance provided in the \nBudgeting, Accounting and Reporting System (BARS) Manual or Uniform \nGuidance. \n \n \nWashington State Auditor\u2019s Office Page 7 \nAlthough the Town had procedures in place to review the required schedules, the \nreview was not adequate to detect and correct errors related to the SEFA before the \naudit. \nEffect of Condition \nThe Town misstated its SEFA because it did not include expenditures of the federal \nloan awarded under CFDA 10.760 Water and Waste Disposal Systems for Rural \nCommunities. \nThe Town identified the misstatement and corrected the SEFA. However, the \nadditional expenditures caused the Town\u2019s annual federal expenditures to exceed \nthe $750,000 threshold, requiring a federal single audit, after the Town\u2019s federal \ndeadline for completing the audit and submitting its reporting package had expired. \nAfter the federal deadline, our Office completed a federal single audit, updated and \nreissued our financial audit report and issued the Town\u2019s federal single audit report. \nRecommendation s \nWe recommend the Town: \n\uf0b7 Prepare the SEFA in accordance with requirements outlined in the \nBudgeting, Accounting and Reporting System (BARS) Manual and Uniform \nGuidance \n\uf0b7 Strengthen internal controls over SEFA preparation to ensure all federal \nawards spent are included on the schedule \nTown \u2019s Response \nIn 2015 the Town received a Water and Waste Disposal Systems for Rural \nCommunities loan from the USDA. Town staff sought guidance from their USDA \nrepresentative on reporting requirements and was told the loan did not qualify for \nreporting on the Schedule o f Expenditures of Federal Awards (SEFA) because it \nwas a loan and not a grant. Based on this inaccurate guidance, the loan \nexpenditures were not reported on the 2015 SEFA. Unfortunately, the 2014 -2015 \nannual audit performed by the State did not find the error in the 2015 SEFA report \neither. In late 2017 the Town applied for a FEMA grant, which if awarded in 2018 \nwould require specific financial management. In preparation of possibly receiving \nthis grant award the Town sent staff to a Washington State Audito r's training on \nmanaging Federal Awards, to ensure records and reporting would be handled \nappropriately. It was at this training that staff learned that the federal loan \nawarded under CFDA 10.760 should have been included in the 2015 SEFA report. \n \n \nWashington State Auditor\u2019s Office Page 8 \nThe Town immediately contacted the State Auditor's Office to self -report and then \nfiled a corrected SEFA and scheduled a federal single audit. \nAuditor\u2019s Remarks \nWe appreciate the Town\u2019s commitment to resolve this finding and thank the Town \nfor its cooperation and assistance during the audit. We will review the corrective \naction taken during the next regular audit. \nApplicable Laws and Regulations \nTitle 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative \nRequirements, Cost Principles, and Audit Requirements for Federal Awards \n(Uniform Guidance), section 510 \u2013 Financial Statements, establishes criteria and \nrequirements related to the preparation of the schedule of expenditures of Federal \nawards. \nThe American Institute of Certified Public Accountan ts defines significant \ndeficiencies and material weaknesses in its Codification of Statements on Auditing \nStandards, section 935, paragraph 11. \nBudget, Accounting and Reporting Standards (BARS) manual 4.8.5 establishes \nreporting requirements related to the schedule of expenditures of Federal awards. \nTitle 2 CFR Part 200, Uniform Guidance, section 302 \u2013 Financial Management, \nrequires grantees to identify, in their accounts, all Federal awards received and \nexpended and the Federal programs under which the awards were received. \nTitle 2 CFR Part 200, Uniform Guidance, section 501 - Audit Requirements, \nrequires non -Federal entities that expend Federal awards of $750,000 or more \nduring its fiscal year to have conducted a single audit. \nTitle 2 CFR Part 200, Unifor m Guidance, section 514 \u2013 Scope of Audit, requires \nthe audit be conducted in accordance with Generally Accepted Government \nAuditing Standards (GAGAS) and encompass the financial statements and \nschedule of expenditure of Federal awards (SEFA). \nTitle 2 CFR Part 200, Uniform Guidance, section 512 \u2013 Report submission, requires \nthe audit be completed, the data collection form and reporting package submitted \nwithin the earlier of 30 calendar days after the auditor\u2019s report, or nine months after \nthe end of the audit period. \n \n \nWashington State Auditor\u2019s Office Page 9", "https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1018576&isFinding=false&sp=false", "2026-07-30 13:24:54"]], "columns": ["rowid", "source", "report_number", "finding_number", "muni_id", "state", "entity_name", "entity_type", "entity_ext_id", "place_geoid", "match_method", "auditor", "report_title", "audit_type", "fiscal_year", "period_start", "period_end", "published_date", "finding_category", "severity", "questioned_cost", "cost_basis", "finding_title", "finding_text", "report_url", "fetched_at"], "primary_keys": ["rowid"], "primary_key_values": ["4"], "units": {}, "query_ms": 27.355911006452516, "source": "MyTown", "source_url": "https://mytown.theboringparts.com", "license": "CC BY 4.0", "license_url": "https://creativecommons.org/licenses/by/4.0/"}