Audit 377149

SA2024-001: Discrepancy in Expenses Reported to Cal-OES– Significant Deficiency AL number: 97.039 AL Title: Hazard Mitigation Grant Name of Federal Agency: Department of Homeland Security Criteria The District is responsible for a timely and accurate reporting of eligible grant expenses. Condition During the performance of the audit, we noted that District‘s reported expenses to Cal-OES exceeded the actual expenses by $484,041. Cause The District’s incorrectly recorded duplicate expenditures entries resulting in overstatement of reported expenditures. Questioned Costs: We question all costs noted above in the total amount of $484,041. Effect Because of overstatement of expenses, District received federal funds for which it was not entitled in addition to non-compliance of grant terms and uniform guidance reporting compliance requirements. Recommendation We recommend that the District simplify its structure of accounting records and properly review reports before submission. Management Response The duplicate reporting of costs occurred during a time when the District was transitioning grant financial reporting from the engineering department to the finance department. At the same time as this transition, the role assigned to grant financial reporting experienced turnover which required temporary workload redistribution. Because multiple employees across different departments were assisting with grant reporting during this period, there was an increased opportunity for error, and expenditures that had already been reported were inadvertently captured again on a later reimbursement request. Responsibility for financial expenditure reporting has now been formally transitioned to the Finance Department. This change minimizes errors in expenditure reporting due to Finance staff’s specialized knowledge of the financial system, and their experience in researching variances and verifying financial data. Engineering staff remain the program specialists and continue to provide programmatic narrative, technical context, and compliance reporting. This restructuring also centralizes financial reporting, and allows Finance to export data directly from the financial system rather than relying on a reporting tool that summarizes information separately. Additionally, after Engineering completes its programmatic review, the Finance Manager and the Finance Director provides review and approval of all grant-related financial reporting. This added layer of review and approval, ensures that all data is verified by multiple parties and accurately reported.