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2016 Monticello Corrective Action PlanCITY OF MONTICELLO Corrective Action Plans and Summary Schedule of Prior Audit Findings Year Ended December 31, 2016 -1- A. FINANCIAL STATEMENT FINDINGS None. B. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE AND NONCOMPLIANCE – CAPITALIZATION GRANTS FOR CLEAN WATER STATE REVOLVING FUNDS – CFDA NO. 66.458 2016-001 Internal Controls Over Compliance With Procurement Requirements Finding Summary 2 CFR § 1500.10 requires that if the City of Monticello, Minnesota (the City) is satisfied with the qualifications and performance of the architect or engineer who provided any or all of the facilities planning or design services for the Wastewater Treatment Works Project, and wishes to retain that firm or individual during construction of the project, the City may do so without further public notice and evaluation of qualifications, provided the City follows one of three acceptable exceptions. During our audit, we noted that the City did not obtain the necessary Environment Protection Agency exception documentation in order to continue using the same architect or engineer during construction under the Capitalization Grants for Clean Water State Revolving Funds agreement. Corrective Action Plan Actions Planned – The City is in the process of reviewing internal controls in place for procurement requirements to ensure compliance with Uniform Guidance in the future. Official Responsible – The City’s Finance Director. Planned Completion Date – December 31, 2017. Disagreement With or Explanation of Finding – The City agrees with this finding. Plan to Monitor – The City’s Finance Director will assure appropriate internal controls and procedures are effectively implemented and followed for future federal grants. CITY OF MONTICELLO Corrective Action Plans and Summary Schedule of Prior Audit Findings (continued) Year Ended December 31, 2016 -2- B. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER COMPLIANCE – CAPITALIZATION GRANTS FOR CLEAN WATER STATE REVOLVING FUNDS – CFDA NO. 66.458 2016-002 Internal Controls Over Compliance With Cash Management, Allowable Costs, Procurement Standards, and Standards of Conduct for Conflicts of Interest Finding Summary 2 CFR § 200.302(b)(6) and (7) requires the City to have written cash management procedures, which includes procedures for determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. 2 CFR 200.318(a) requires the City to have written procurement procedures which reflect applicable federal law. 2 CFR § 200.318(c) and 48 CFR § 52.203-13 requires the City to have written standards of conduct that cover conflicts of interest and govern the performance of its employees in the selection, award, and administration of contracts. The City did not have documented written controls to ensure compliance with the U.S. Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) cash management, allowable costs, procurement standards, and standards of conduct covering conflicts of interest. Corrective Action Plan Actions Planned – The City is in the process of reviewing and updating its written policies and procedures relating to cash management, allowable costs, procurement, and standards of conduct covering conflicts of interest for its federal programs to ensure compliance with Uniform Guidance in the future. Official Responsible – The City’s Finance Director. Planned Completion Date – December 31, 2017. Disagreement With or Explanation of Finding – The City agrees with this finding. Plan to Monitor – The City’s Finance Director will assure appropriate written internal controls and procedures are updated and in place for future federal grants. CITY OF MONTICELLO Corrective Action Plans and Summary Schedule of Prior Audit Findings (continued) Year Ended December 31, 2016 -3- C. MINNESOTA LEGAL COMPLIANCE FINDINGS None. D. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS No findings were reported in the prior year.