http://www.in.gov/sboa/WebReports/B42998.pdf-44-
CITY OF HAMMOND
AUDIT RESULTS AND COMMENTS
(Continued)
INTERNAL CONTROLS AND COMPLIANCE OVER REPORTING FEDERAL
EXPENDITURES IN THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
The City did not have a proper system of internal controls in place to prevent or detect and correct
errors on the Schedule of Expenditures of Federal Awards (SEFA). The City should have proper controls in
place over the preparation of the SEFA to ensure accurate reporting of federal awards. Without an effective
system of internal controls in place, material misstatements of the SEFA could remain undetected.
The City has not established controls to effectively identify, manage, and report federal financial
assistance. Under the current system, each department independently monitors their grant activities. Grant
agreements and requests for advances or reimbursements of federal funds are not always provided to the
City Controller.
Federal and state grant monitoring reports are prepared by each department based upon the
records of grant activities maintained by the departments. The City Controller relies on each department to
report their federal assistance activities for use in preparing the SEFA.
In failing to establish controls to effectively identify, manage, and report federal financial assistance,
the City materially misrepresented the federal assistance expended in 2012 on the SEFA presented for audit.
During the audit of the SEFA, we noted the following material errors and/or omissions which we
believe constitute material weaknesses:
1. The City initially reported federal expenditures of $3,848,615. Audit adjustments to the
SEFA were $1,039,784. The total of federal expenditures for 2012 has been determined to
be $4,888,399.
2. The City failed to report Capitalization Grants for Clean Water State Revolving Funds which
were passed through the Indiana Finance Authority in the amount of $1,049,369. The
receipts and disbursements associated with this grant were accounted for by the Hammond
Sanitary District.
3. The City failed to report expenditures associated with the Highway Safety Cluster of $61,537
which passed through the Indiana Criminal Justice Institute. These funds were administered
by the Hammond Police Department and accounted for in the official records of the City
Controller.
4. The City made additional errors and/or omissions which totaled $71,122.
5. The City failed to correctly identify pass-through entities.
6. The City failed to report that the Energy
Efficiency and Conservation Block Grant Program was funded with American Recovery and
Reinvestment Act of 2009 funds (ARRA).
Audit adjustments were proposed, accepted by the City, and made to the SEFA presented in this
report. These adjustments resulted in a presentation of the SEFA that is materially
correct in relation to the financial statement. A similar finding appeared in the prior report.