Audit 372652

Finding 2024-002: Information on the Federal Program: Compliance Requirements: Other—Schedule of Expenditure of Federal Awards Preparation Type of Finding: Material Noncompliance and Material Weakness in Internal Control over Compliance. Criteria: 2 CFR 200.510 indicates that the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended as determined in accordance with 200.502 Basis for Determining Federal Awards Expended. Per 2 CFR 200.502, the determination of when a federal award is expended should be based on when the activity related to the federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with federal statutes, regulations, and the terms and conditions of federal awards, such as: expenditure/expense transactions associated with awards. In addition, 2 CFR Part 200.303 requires the program establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: The Organization failed to prepare a complete and accurate SEFA for the year ended December 31, 2024. The SEFA is a required supplementary schedule that provides detailed information on all federal awards received and expended during the fiscal year, in accordance with 2 CFR 200.510. Cause: The noncompliance resulted from a deficiency in the Organization’s internal controls. The Organization does not have established policies and procedures to ensure all federal awards are properly identified, tracked, and included in the SEFA preparation process. Effect or Potential Effect: Due to the control deficiencies described above, if not for auditor assistance, inaccurate expenditures result in a high risk that material noncompliance with federal regulations could occur and not be detected and corrected in a timely manner; inaccurate reporting to federal agencies on the Organization’s federal expenditures; and persistent noncompliance can lead to potential loss of funding. Questioned costs: No questioned costs were identified as a result of this compliance finding. Context: The Organization mistakenly omitted to report expenditures of federal award expenditures on an accrual basis under the Sexual Risk Avoidance, ALN 93.060, and Title V Sexual Risk Avoidance Education Program (Discretionary Grants), ALN 93.787. Recommendation: We recommend that the Organization establish formal procedures to ensure SEFA preparation along with all federally funded contracts included in the SEFA as expenditures; implement a robust process to track all federal awards under government auditing standards, provide training on Uniform Grant Guidance, including SEFA preparation; perform management review to ensure the SEFA is accurate, complete, and prepared in a timely manner. Views of responsible officials and planned corrective actions: Management acknowledges the omission of the auditee’s prepared SEFA. Management is committed to properly preparing the SEFA, and to address this oversight, management will identify trainings for accounting personnel related to SEFA reporting and for those reviewing the schedule, to ensure its accuracy.