Audit 377566

SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2025-001 Federal Award Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance - Reporting ALN and Name: 81.042 - Weatherization Assistance for Low Income Persons Federal Agency: Department of Energy (DOE), Passed through the Alaska Housing Finance Corporation Criteria Per 2 CFR 200.510(b) and Uniform Guidance, the auditee is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate, and to provide information reconciling the SEFA to the financial statements and underlying accounting records. Auditors are required to obtain sufficient appropriate audit evidence regarding the completeness and accuracy of the SEFA and underlying population data. Condition During the audit, it was noted that the Organization did not perform reconciliation procedures between the population data used for federal program reporting of direct client expenditures and the financial accounting records. As a result, the audit team performed additional procedures to assess the completeness of the population and identified an unreconciled difference of $8,254 between the population and the trial balance. Cause The Organization did not have adequate procedures in place to ensure that the population data for federal program reporting was reconciled to the financial accounting records. Effect Due to the lack of reconciliation and the resulting unreconciled difference, the auditor was unable to obtain sufficient appropriate audit evidence regarding the completeness and accuracy of the population data for the federal program. This constitutes a scope limitation and may affect the auditor’s ability to express an unmodified opinion on compliance for the program. Questioned Costs $8,254. This amount represents the unreconciled difference between the population and the trial balance. Context The population data consisted of a listing of all clients (homes weatherized by the Organization, including readiness) with expenditures charged to the major program during the fiscal year being audited. The organization’s procedures did not include reconciling the population data used for federal program reporting to the financial accounting records. Such expenditures in the population data consisted of direct client costs which totaled $495,220 and reconciled direct expenditures reported on the Organization's trial balance totaled $503,474, resulting in an unreconciled difference of $8,254 between the population and the trial balance. This deficiency affects the reporting and internal control over compliance requirements for the program. The lack of reconciliation procedures increases the risk that errors or omissions in federal expenditures may not be detected or corrected in a timely manner, potentially impacting the completeness and accuracy of the SEFA. Recommendation We recommend that the Organization implement procedures to ensure that all population data used for federal program reporting is reconciled to the financial accounting records. This should include periodic reconciliations and documentation of any differences identified and resolved. Views of responsible officials and planned corrective actions Interior Weatherization, Inc. agrees with the finding and will implement monthly reconciliation procedures to ensure that direct client expenditures reconcile and adequately support the financial accounting records and reporting submitted to the grantor. See the corrective action plan.