Castle Rock, The Town of

Federal Financial Assistance Listing Number: 21.027 Federal Grantor: U.S. Department of Treasury Passed-Through: Douglas County Award No. and Year: Multiple Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, requires non-Federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the federal award (§200.303). In addition, 2 CFR §200.328 and §200.329 require non‑Federal entities and subrecipients to submit financial and performancereports in accordance with the terms and conditions of the federal award and pass‑through entityrequirements. Condition: The Town did not have documented or consistently applied internal controls to ensure compliance with the County’s subrecipient guidance requiring the submission of formal special reports for ALN 21.027. Specifically, the Town did not maintain written procedures or standardized documentation evidencing the preparation, review, approval, and submission of required special reports in the format prescribed by the pass‑through entity. Cause: Management relied on email correspondence and progress meetings rather than a formally designed and implemented reporting control process. Effect: As a result, there is a reasonable possibility that required special reporting information submitted to the County could be incomplete, inconsistent, untimely, or not retained in accordance with federal and pass‑through entity record retention requirements, without detection by management. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used as the population was too small to sample. Program reporting requirements were expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Findings from Prior Years: No. Recommendation: The Town should establish and document internal controls over compliance with special reporting requirements for federal awards, including: •Formal procedures for preparing special reports in the format required by thepass‑through entity; •Management review and approval of reports prior to submission; and •Retention of complete and accurate reporting documentation in accordance with federaland pass‑through entity requirements. Views of Responsible Officials: See separately issued Corrective Action Plan.