CITY OF CLARKSVILLE

Under the Uniform Guidance (2 CFR 200.512), a non-federal entity that expends $750,000 or more in federal awards during its fiscal year must submit its Single Audit reporting package to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receipt of the auditor's report or nine months after the end of the audit period. For the City’s fiscal year ended September 30, 2024, the statutory submission deadline was June 30, 2025. Furthermore, 2 CFR 200.303 requires the City to establish and maintain effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with applicable federal statutes, regulations, and award terms and conditions. The City’s Single Audit reporting package for the fiscal year ended September 30, 2024, was not submitted to the FAC by the June 30, 2025, statutory deadline. The audit could not be initiated in a timely manner due to severe deficiencies in internal control, accounting records, and organizational governance: 1. Unstable General Ledger: The City continued to post transactions to the 2024 fiscal year as late as May 2025, preventing the timely preparation of an auditable trial balance; Breakdown in Organizational Governance: Before audit fieldwork could begin, both the City Manager and City Secretary resigned, leaving the City without administrative management to oversee and coordinate preparation for the financial statement and Single Audit engagements. The City did not maintain an effective and enforceable period-end closing process, and the prior-year general ledger remained open well into the following fiscal cycle. Turnover in the City Manager and City Secretary positions further disrupted administrative continuity and delayed the coordination and record readiness necessary to begin and complete the audit and FAC submission process.

Repeated finding of Internal Control over Reporting related to Allowable Costs and Cost Principles. In accordance with 10 TAC Section 1.403(e), if Subrecipient expends $750,000 or more in federal and/or state awards or has an outstanding loan balance associated with federal or state sources of $750,000 or more with continuing compliance requirements, or a combination thereof must have a Single Audit or Program-Specific Audit conducted. If the Subrecipient’s Single Audit is required by 2 CFR Part 200, Subpart F, the report must be submitted to the Federal Audit Clearinghouse (FAC) the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of its fiscal year. The Subrecipient is required to submit a notification to the Federal Agency within 5 business days of submission to the FAC. Along with the notice, indicate if the auditor issued a management letter and submitted a copy of the letter to the Federal Agency. During my testing of internal controls, it was identified that the City did not comply with the timely submission of the report to the Federal Audit Clearinghouse (FAC) the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the fiscal year end 2024. Not submitting the FAC in a timely manner could impact the timeliness of the agency’s review and monitoring of related grant activity, and/or could negatively impact future funding or create increased monitoring. Due to the timing of when the 2023 audit was completed and other finding matters related to financial statements, the corrective action plans were not implemented in time to resolve those findings prior to commencement of the current year audit.

Repeated finding of Internal Control over Reporting related to Allowable Costs and Cost Principles for Home Investment Partnerships Program under the federal agency name US Dept. of HUD. In accordance with 10 TAC Section 1.403(e), if Subrecipient expends $750,000 or more in federal and/or state awards or has an outstanding loan balance associated with federal or state sources of $750,000 or more with continuing compliance requirements, or a combination thereof must have a Single Audit or Program-Specific Audit conducted. If the Subrecipient’s Single Audit is required by 2 CFR Part 200, Subpart F, the report must be submitted to the Federal Audit Clearinghouse (FAC) the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of its fiscal year. The Subrecipient is required to submit a notification to the Federal Agency within 5 business days of submission to the FAC. Along with the notice, indicate if the auditor issued a management letter and submitted a copy of the letter to the Federal Agency. During my testing of internal controls, it was identified that the City did not comply with the timely submission of the report to the Federal Audit Clearinghouse (FAC) the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the fiscal year end 2022. There were no questioned costs and this was a prior year finding as well. The effect of this finding could impact on the timeliness of the agency’s review and monitoring of related grant activity, and/or could negatively impact future funding or create increased monitoring due to the non submital of the audit to the FAC timely. The cause of this finding was due to the timing of when the 2022 audit was completed and other finding matters related to financial statements, the corrective action plans were not implemented in time to resolve those findings prior to commencement of the current year audit. The City did not have its prior year audit completed due to a loss of the previous auditor and not being able to find another until late in the year. My firm was not engaged to perform the 2022 audit until November of 2023, which was the same time the predecessor informed them that he could not perform the engagement. It was recommended by the audtior that the City’s management implement controls and processes to ensure the timeliness of filing reports when due and improve its methods for documenting them by maintaining adequate records that support the transactions in the financial statements.