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The ‘Fine Print’ in Arlington County’s CAFR

Beginning on page 200 of Arlington County’s FY 2010 Comprehensive Annual Financial Report (CAFR) is the “Independent Auditor’s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133.”

The report by Clifton Gunderson LLP begins with over two pages of text describing Compliance, Internal Control Over Compliance, and Schedule of Expenditures of Federal Awards.” Most of the text is self-explanatory, and I won’t include any of it here. That text is followed by a six-page “schedule of expenditures of federal awards.” For example, Arlington County spent $10.3 million of money from 36 separate Department of Health and Human Services program, including 18 social services programs, 9 aging programs, and 7 mental health and mental retardation programs.

Finally, there is the “Summary of Independent Auditor’s Results,” which includes both the “Financial Statement Findings” and “Federal Award Findings and Questioned Costs.” There are no financial statement findings, but there are two “current year” federal award findings and three “prior year” federal award findings:

  • Finding No. 2010-01, Internal control over compliance. Specifically, the auditors reported, “The County’s procedures for supervisory review of child care and adoption case folders were not consistently performed.” According to the auditors, “8 out of 40 child care files and 31 out of 40 Adoption case files did not have evidence of supervisory review of participant’s eligibility determination.” There were no questioned costs. County management responded: “Procedures will be created to ensure supervisory or designee signature on  the service application . . . .”
  • Finding No. 2010-02, “The County’s suspension and debarment verification procedures were not performed for subrecipients” of the Community Development Block Grant (CDBG). Specifically, the auditors reported: “Suspension and debarment verification was not performed for subrecipients participating in the CDBG program.” Why didn’t the county do the verification? Apparently, “The County was not aware that the suspension and debarment requirement was applicable to subrecipients.” The auditors did not question any costs.
  • There were also three “prior year findings,” two of which were resolved. One involved provision of Title I services to ineligible APS students and the second involved the County’s failure to consistently determine participant eligibility for Adoption Services. A third prior year finding could not be resolved, and the auditors repeated it as a current year finding,  i.e, 2010-01.

OK, so current and prior year findings may only excite accounting geeks. However, unless County staff routinely comply with basic internal control requirements, sloppiness soon intrudes, and wasteful spending becomes ever more problematic.

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