Indiana Auditor Finds Fault with County Auditor’s Internal Controls

March 31, 2014 | By Jerry Ashworth | Post a Comment

files-204799-mIt’s one thing for an auditor to come down hard on a grant recipient for lacking internal controls — that we’ve seen before. But it’s another when an auditor takes another auditor to task for that same offense. When I saw this the other day, my eyes widened.

According to a recent article in the Chicago Post Tribune, the Indiana State Board of Accountants found in a recent audit that the Porter County auditor’s office lacked internal controls that would have identified errors or instances of fraud in county government reports.

The audit notes that some of the problems in the reporting came from county departments not providing the auditor’s office with what it needed. “The lack of submission of grant documents and accurate information by the various departments to the county auditor’s office weakens internal controls over grant reporting and hinders the ability of the county auditor’s office to accurately prepare the Schedule of Expenditures of Federal Awards,” according to audit. “Additionally, the completed SEFA (prepared by the county auditor’s office) was not reviewed by someone other than the individual that prepared it.”

A lack of internal controls over the reporting “could jeopardize future federal funding,” the audit states according to the article. Some grants in the SEFA were overstated by more than $939,000, while others were understated by almost $1 million, the audit added.

The article states that the county auditor offered several procedural changes including compiling financial reports on a quarterly basis, instead of annually; refining requests for financial information from grant administrators; convening a workshop so grant administrators understand the reporting requirements; and having greater oversight of the reports.

Having appropriate internal controls, even among auditor’s offices, will become even more critical under the Office of Management and Budget’s grants reform guidance when it goes into effect for nonfederal entities at the end of the year. This is only one county of many that needs to get its internal controls in order. Hopefully the changes the county auditor plans to make will prove effective.

What issues are you dealing with in establishing internal controls for your entity? We’d like to hear them.



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