Audit 373089

Finding 2024-001: Reportable finding considered a significant deficiency - Inaccurate and Incomplete Schedule of Expenditures of Federal Awards (SEFA) and Delay in Reporting Program names: ARPA Workforce development and Workforce Innovation and Opportunity Act (WIOA) Adult 24-25 - Cluster Assistance Listings and Award Number: 21.027 (24-25 ACWDB-MP-01) and 17.258 (24343) Federal awarding agency: United States Department of the Treasury for American Rescue Plan Act (ARPA) of 2021 and United States Department of Labor Pass-through Entities: Alameda County Workforce Development Board and City of Oakland Workforce Development Board Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a complete and accurate Schedule of Expenditures of Federal Awards (SEFA) that includes the total federal awards expended for each federal program, the assistance listing number (ALN), the name of the federal agency, and the pass-through entity identifying number. Accurate SEFA reporting is essential to support the auditor’s responsibility under 2 CFR 200.518 major program determination and for federal oversight. In addition this error resulted in a delay in financial reporting. 2 CFR §200.512(b) requires that the Uniform Guidance report be submitted "no later than 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period," whichever comes first. Timely reporting is essential for compliance with federal grant requirements and for maintaining eligibility for future funding. Condition: The Organization failed to include two federal pass-through awards received from state and local governmental entities in the current years’ SEFA. These awards were only identified as federal during the current audit year. After additional inquiry, they were determined to fall under ALN 21.027 and 17.258. Cause: There were deficiencies in the Organization’s internal controls over SEFA preparation, specifically in identifying, classifying, and documenting pass-through federal awards. The absence of award documentation and misclassification of the assistance listing number further indicate inadequate review and verification procedures. Effect: Incomplete and inaccurate SEFA reporting may lead to noncompliance with Uniform Guidance requirements and increases the risk of omitted or misclassified programs subject to audit. Misreporting ALNs may also hinder proper audit coverage and oversight by federal and pass-through entities. In addition the error resulted in a delay in financial reporting. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: This issue affected two federal awards and represents a systemic control issue over SEFA preparation. There is a reasonable possibility that similar issues could recur if not addressed. Recommendation: We recommend that the Organization:  Implement procedures to require written documentation (e.g., subaward agreements) for all federal pass-through funding received.  Enhance internal controls over the SEFA preparation process to ensure federal programs are accurately identified, classified, and reported, including verification of ALNs and funding sources.  Designate responsibility within the finance team for verifying the federal nature of all awards and ensure ongoing training on SEFA and Uniform Guidance requirements.