Audit 369450

Criteria: In accordance with 2 CFR § 200.510(b), recipients of federal awards are required to prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements. The SEFA must include all federal awards expended during the fiscal year and must be prepared in accordance with the requirements of the Uniform Guidance. Condition: During our audit of the SEFA, we noted that approximately $1.2 million in federal expenditures were initially omitted from the draft schedule provided by management. These expenditures were related to pass-through awards and were not identified or reported until audit inquiries were made. Cause: The entity did not have adequate internal control procedures in place to ensure that all federal expenditures were identified and included in the SEFA prior to audit. Effect: The initial SEFA provided for audit was materially misstated. Failure to accurately report all federal expenditures on the SEFA could result in noncompliance with Uniform Guidance reporting requirements, misrepresentation of the scope of federal activity, and potential exclusion of federal programs from audit coverage under the Single Audit Act. This increases the risk that material noncompliance in major programs may go undetected.Questioned Costs: None. Recommendation: We recommend that management implement stronger internal controls over the preparation of the SEFA, including reconciliation procedures between the general ledger and grant records, periodic reviews during the year, and oversight by personnel with a thorough understanding of federal reporting requirements. Management should ensure that all departments responsible for federal programs provide complete and timely information to accounting personnel for SEFA preparation. Organization Response: Management agrees with this finding.