FAC Explorer

Audit 337708

FY End
2021-12-31
Total Expended
$2.28M
Findings
6
Programs
1
Organization: 22nd District Agricultural Association (CA)
Year: 2021 Accepted: 2025-01-14
Auditor: Lance Soll & Lunghard LLP

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
519154 2021-001 Material Weakness - P
519155 2021-002 Material Weakness - P
519156 2021-003 Significant Deficiency - AB
1095596 2021-001 Material Weakness - P
1095597 2021-002 Material Weakness - P
1095598 2021-003 Significant Deficiency - AB

Programs

ALN Program Spent Major Findings
59.075 Shuttered Venue Operators Grant Program $2.28M Yes 3

Contacts

Name Title Type
MHP6X133GK24 Michael Sadegh Auditee
8587924201 Christian Townes Auditor
No contacts on file

Notes to SEFA

Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLICABLE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Accounting Policies: NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES APPLICABLE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS A. Scope of Presentation The accompanying schedule presents only the expenditures incurred by the 22nd District Agricultural Association and its Blended Component Units (the 22nd DAA), that are reimbursable under federal programs of federal financial assistance. For the purposes of this schedule, federal awards include both federal financial assistances received directly from a federal agency, as well as federal funds received indirectly by the 22nd DAA from a non-federal agency or other organization. Only the portion of program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying schedule. B. Basis of Accounting The expenditures included in the accompanying schedule were reported on the modified accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are incurred when the 22nd DAA becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures reported included any property or equipment acquisitions incurred under the federal program. The 22nd DAA has elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. De Minimis Rate Used: Y Rate Explanation: The 22nd DAA has elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. A. Scope of Presentation The accompanying schedule presents only the expenditures incurred by the 22nd District Agricultural Association and its Blended Component Units (the 22nd DAA), that are reimbursable under federal programs of federal financial assistance. For the purposes of this schedule, federal awards include both federal financial assistances received directly from a federal agency, as well as federal funds received indirectly by the 22nd DAA from a non-federal agency or other organization. Only the portion of program expenditures reimbursable with such federal funds is reported in the accompanying schedule. Program expenditures in excess of the maximum federal reimbursement authorized or the portion of the program expenditures that were funded with state, local or other non-federal funds are excluded from the accompanying schedule. B. Basis of Accounting The expenditures included in the accompanying schedule were reported on the modified accrual basis of accounting. Under the modified accrual basis of accounting, expenditures are incurred when the 22nd DAA becomes obligated for payment as a result of the receipt of the related goods and services. Expenditures reported included any property or equipment acquisitions incurred under the federal program. The 22nd DAA has elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

Finding Details

Finding 2021-001
Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-001 – Delays in Financial Reporting Evaluation of Finding Material Weakness and Noncompliance Criteria Management is responsible for providing timely and accurate financial information. Because the 22nd DAA has expended over $750,000 in federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), requires non-federal entities to submit their financial statements and single audit reports to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition The 22nd DAA did not submit its financial statements and single audit reports to the FAC within the required timeframe for the fiscal year ended December 31, 2021. The financial statements and single audit reports were submitted after the deadline of September 30, 2022. Cause of Condition Delays in preparing the schedule of expenditures of federal awards and preparation for the single audit report were caused by unfamiliarity with federal grant reporting requirements. Effect or Potential Effect of Condition The late submission of the financial statements and single audit reports impairs the ability of the federal awarding agencies and pass-through entities to monitor the 22nd DAA’s compliance with federal requirements and to make informed decisions regarding the continuation or modification of federal awards. The late submission also results in noncompliance with the Uniform Guidance, and increases the risk of fraud, waste, and abuse of federal funds. Questioned Costs None noted. Context The 22nd DAA’s financial statements and single audit reports are used by the federal awarding agencies and pass-through entities to assess the non-federal entity's financial condition, internal controls, and compliance with federal requirements. Repeat Finding No. Recommendation We recommend the 22nd DAA implement a tracking system for federal awards to allow for reconciliation to be performed on a continuous basis throughout the year. This will better allow the 22nd DAA to identify the need for a single audit timely, and ensure reporting requirements are met. Views of responsible officials Management concurs generally and will consult with subject-matter experts, including certified accountants and legal counsel, to ensure a system of proper filing and compliance for any future federal awards. The 22nd DAA does not typically receive federal grants; The SVOG grant was an extraordinary short-term program created during the COVID-19 pandemic, when mass gatherings - the foundation of the 22nd DAA’s business as a major events venue - were banned and severely restricted by law. During the grant period, and due in large part to the global financial crisis, the 22nd DAA experienced a high volume of turnover of its accounting and human resources staff. As these were the departments primarily responsible for record-keeping for the grant, the audit was not completed in a timely manner. Since then, management has worked diligently to fill these positions. The 22nd DAA will prioritize record-keeping systems and training for timely reporting for any future federal grant awards.
Finding 2021-002
Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-002 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance Criteria Uniform Guidance regulations, section 200.303 Internal Controls, requires recipients of federal awards to establish, document, and maintain effective internal control over the federal awards received to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This requirement includes the required preparation of a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) per section 200.510(b) Schedule of Expenditures of Federal Awards. Condition During our audit of the SEFA for the fiscal year ending December 31, 2021, we identified that the schedule was incomplete. Specifically, the total expenditures reported did not match the supporting documentation provided. Cause of Condition The primary cause of this finding appears to be a lack of familiarity with the required preparation and review of the SEFA. There was insufficient coordination between the departments responsible for managing federal awards and the accounting department responsible for preparing the SEFA. Effect or Potential Effect of Condition The incomplete SEFA can lead to inadequate reporting of federal expenditures, which may result in non-compliance with federal regulations. This can further lead to potential questioned costs and the risk of federal funds being reclaimed by the grantor agencies. Questioned Costs None noted. Context This finding was noted during the review of the SEFA and the supporting documentation. The discrepancies were observed in the one federal programs, affecting the overall accuracy and completeness of the SEFA. Repeat Finding No. Recommendation We recommend that the 22nd DAA establish and implement enhanced internal controls over the preparation of the SEFA. This should include: • Regular training for staff involved in federal awards management and SEFA preparation. • Periodic reconciliations of federal expenditures to ensure all awards are accounted for. • A thorough review process to detect and correct any omissions or discrepancies before finalizing the SEFA. Views of responsible officials Management concurs with the finding and has initiated steps to educate and improve its understanding of the steps required for the preparation of the SEFA. These steps include training sessions for relevant staff, a revised reconciliation process, consultations with subject-matter experts including CPAs and attorneys and an enhanced review protocol.
Finding 2021-003
Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-003 – Missing Supporting Documentation for Expenditures Evaluation of Finding Significant deficiency and Noncompliance Criteria Section 200.302, Financial Management, of the Uniform Guidance, states there must be documentation sufficient to track expenditure and establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition The 22nd DAA was unable to provide adequate support for some non-payroll (3 out of 25 transactions) and payroll items (8 out of 60 transactions). Cause of Condition The primary cause of this finding appears to be missing supporting evidence of expenditures and/or not retaining supporting evidence. Effect or Potential Effect of Condition The missing supporting evidence can lead to inaccurate expenditures getting recorded for federal expenditures, which may result in non-compliance with federal regulations. This can further lead to potential questioned costs and the risk of federal funds being reclaimed by the grantor agencies. Questioned Costs Potential questioned costs of $102,377. Context The documentation provided to support substantive testing did not contain adequate information for some of the expenditures tested during the single audit to allow verification of compliance. Repeat Finding No. Recommendation We recommend that the 22nd DAA verify that all transactions recorded are supported by underlying evidence and this evidence is retained for the appropriate timeframe to allow for verification of compliance activities. Views of responsible officials Management concurs with the finding and has initiated steps to improve the internal controls over the preparation of the SEFA. These steps include diligent hiring, training sessions for relevant staff, a revised reconciliation process, adopting a new and improved accounting and human resources electronic system, enhancing electronic documentation and record-keeping processes, and creating an enhanced review protocol.
Finding 2021-001
Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-001 – Delays in Financial Reporting Evaluation of Finding Material Weakness and Noncompliance Criteria Management is responsible for providing timely and accurate financial information. Because the 22nd DAA has expended over $750,000 in federal awards, Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance), requires non-federal entities to submit their financial statements and single audit reports to the Federal Audit Clearinghouse (FAC) within the earlier of 30 calendar days after receipt of the auditor's report(s), or nine months after the end of the audit period. Condition The 22nd DAA did not submit its financial statements and single audit reports to the FAC within the required timeframe for the fiscal year ended December 31, 2021. The financial statements and single audit reports were submitted after the deadline of September 30, 2022. Cause of Condition Delays in preparing the schedule of expenditures of federal awards and preparation for the single audit report were caused by unfamiliarity with federal grant reporting requirements. Effect or Potential Effect of Condition The late submission of the financial statements and single audit reports impairs the ability of the federal awarding agencies and pass-through entities to monitor the 22nd DAA’s compliance with federal requirements and to make informed decisions regarding the continuation or modification of federal awards. The late submission also results in noncompliance with the Uniform Guidance, and increases the risk of fraud, waste, and abuse of federal funds. Questioned Costs None noted. Context The 22nd DAA’s financial statements and single audit reports are used by the federal awarding agencies and pass-through entities to assess the non-federal entity's financial condition, internal controls, and compliance with federal requirements. Repeat Finding No. Recommendation We recommend the 22nd DAA implement a tracking system for federal awards to allow for reconciliation to be performed on a continuous basis throughout the year. This will better allow the 22nd DAA to identify the need for a single audit timely, and ensure reporting requirements are met. Views of responsible officials Management concurs generally and will consult with subject-matter experts, including certified accountants and legal counsel, to ensure a system of proper filing and compliance for any future federal awards. The 22nd DAA does not typically receive federal grants; The SVOG grant was an extraordinary short-term program created during the COVID-19 pandemic, when mass gatherings - the foundation of the 22nd DAA’s business as a major events venue - were banned and severely restricted by law. During the grant period, and due in large part to the global financial crisis, the 22nd DAA experienced a high volume of turnover of its accounting and human resources staff. As these were the departments primarily responsible for record-keeping for the grant, the audit was not completed in a timely manner. Since then, management has worked diligently to fill these positions. The 22nd DAA will prioritize record-keeping systems and training for timely reporting for any future federal grant awards.
Finding 2021-002
Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-002 – Incomplete Schedule of Expenditures of Federal Awards Evaluation of Finding Material Weakness and Noncompliance Criteria Uniform Guidance regulations, section 200.303 Internal Controls, requires recipients of federal awards to establish, document, and maintain effective internal control over the federal awards received to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This requirement includes the required preparation of a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) per section 200.510(b) Schedule of Expenditures of Federal Awards. Condition During our audit of the SEFA for the fiscal year ending December 31, 2021, we identified that the schedule was incomplete. Specifically, the total expenditures reported did not match the supporting documentation provided. Cause of Condition The primary cause of this finding appears to be a lack of familiarity with the required preparation and review of the SEFA. There was insufficient coordination between the departments responsible for managing federal awards and the accounting department responsible for preparing the SEFA. Effect or Potential Effect of Condition The incomplete SEFA can lead to inadequate reporting of federal expenditures, which may result in non-compliance with federal regulations. This can further lead to potential questioned costs and the risk of federal funds being reclaimed by the grantor agencies. Questioned Costs None noted. Context This finding was noted during the review of the SEFA and the supporting documentation. The discrepancies were observed in the one federal programs, affecting the overall accuracy and completeness of the SEFA. Repeat Finding No. Recommendation We recommend that the 22nd DAA establish and implement enhanced internal controls over the preparation of the SEFA. This should include: • Regular training for staff involved in federal awards management and SEFA preparation. • Periodic reconciliations of federal expenditures to ensure all awards are accounted for. • A thorough review process to detect and correct any omissions or discrepancies before finalizing the SEFA. Views of responsible officials Management concurs with the finding and has initiated steps to educate and improve its understanding of the steps required for the preparation of the SEFA. These steps include training sessions for relevant staff, a revised reconciliation process, consultations with subject-matter experts including CPAs and attorneys and an enhanced review protocol.
Finding 2021-003
Shuttered Venue Operators Grant Program – 59.075 Grant Agreement No.: SBAHQ21SV012760 U.S. Small Business Administration Reference Number 2021-003 – Missing Supporting Documentation for Expenditures Evaluation of Finding Significant deficiency and Noncompliance Criteria Section 200.302, Financial Management, of the Uniform Guidance, states there must be documentation sufficient to track expenditure and establish that funds have been used in accordance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition The 22nd DAA was unable to provide adequate support for some non-payroll (3 out of 25 transactions) and payroll items (8 out of 60 transactions). Cause of Condition The primary cause of this finding appears to be missing supporting evidence of expenditures and/or not retaining supporting evidence. Effect or Potential Effect of Condition The missing supporting evidence can lead to inaccurate expenditures getting recorded for federal expenditures, which may result in non-compliance with federal regulations. This can further lead to potential questioned costs and the risk of federal funds being reclaimed by the grantor agencies. Questioned Costs Potential questioned costs of $102,377. Context The documentation provided to support substantive testing did not contain adequate information for some of the expenditures tested during the single audit to allow verification of compliance. Repeat Finding No. Recommendation We recommend that the 22nd DAA verify that all transactions recorded are supported by underlying evidence and this evidence is retained for the appropriate timeframe to allow for verification of compliance activities. Views of responsible officials Management concurs with the finding and has initiated steps to improve the internal controls over the preparation of the SEFA. These steps include diligent hiring, training sessions for relevant staff, a revised reconciliation process, adopting a new and improved accounting and human resources electronic system, enhancing electronic documentation and record-keeping processes, and creating an enhanced review protocol.