Type of Finding (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards (G) Instance of Non-Compliance Related to Federal Awards Programs Affected Federal Agencies: U.S. Executive Office of the President Title: High Intensity Drug Trafficking Areas Program (HIDTA) ALNs: 95.001 Award #s: G24SN0005A Compliance Requirement: Reporting Award Period: 01/01/2024-12/31/2025. Questioned Costs: None Noted Compliance Requirement—Reporting Condition During FY2025, the Department submitted certain required reports after their due dates: • HIDTA (95.001): 2 of 4 SF-425s were filed late as follows: due dates: 10/30/2024, 1/31/2025 submission dates: 11/15/2024, 2/3/2025 Criteria The Uniform Guidance requires timely submission of financial reports (FFR/SF-425) Financial reports must be submitted no later than 30 days after quarterly/semiannual periods and 90 days after annual periods, with the final financial report due within 120 days after the period of performance. Program terms for HIDTA additionally require SF-425s and periodic progress reports. Cause The Department lacked a centralized reporting calendar and monitoring control to track due dates across awards. Effect/Potential Effect Noncompliance with award terms and Uniform Guidance reporting timeliness. Risks include delayed reimbursements, potential enforcement actions, or adverse program decisions. Recommendation The Grants Accounting Manager should implement an entity-wide reporting controls: (1) maintain a system-based calendar of all SF-425 and progress-report due dates by award; (2) automated reminders at 30/10/3 days pre-due; (3) preparer checklist with documented supervisory review; (4) monthly compliance dashboard to executive management; (5) evidence retained (calendar export, emails, review sign-offs). Success criteria: 100% on-time submissions for two consecutive quarters.
PREPARATION OF SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA) Type of Finding (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards Programs Affected Federal Agencies: 1) U.S. Department of Homeland Security and 2) U.S. General Services Administration. Title: 1) Disaster Grants - Public Assistance (Presidentially Declared Disasters) 2) Donation of Federal Surplus Personal Property ALNs: 1) 97.036 and 2) 39.003 (Not Major Federal Programs) Award #s: 1) DPS24FEMASFSP, DPS25FMAROSFL, 2) Robots Compliance Requirement: Reporting Award Period: Various Questioned Costs: None Noted Condition The Department prepares its Schedule of Expenditures of Federal Awards (SEFA) using a quarterly reconciliation process in SHARE that focuses on reviewing grant-related transactions for invoicing and monitoring purposes. This process provides a strong foundation for grant oversight and expense allowability. The SEFA originally provided for audit totaled $15,677,562 and was subsequently corrected to $16,736,829, resulting in an understatement of $1,059,269 (6.33%). The adjustments primarily consisted of: • $583,271 related to AL 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters), • $450,000 of federal noncash surplus property (equipment/robots) related to AL 39.003, and • $25,998 of other net adjustments These differences occurred because certain federal award activity was not fully captured or reported through the quarterly expense-focused reconciliation process. Specifically: • Noncash federal assistance was not identified and valued for inclusion in the SEFA, and • Federal award activity associated with a presidentially declared disaster was not fully reflected in the original SEFA, in part due to the timing and complexity of the declaration and award identification. The audit team worked collaboratively with key members of the Department’s grant management and finance teams to identify these items, evaluate applicable guidance, and confirm the accuracy and completeness of the final SEFA. Criteria The auditee is required to prepare a Schedule of Expenditures of Federal Awards for the period covered by the financial statements in accordance with 2 CFR 200.502. Federal awards expended include cash and noncash assistance, including the receipt of property (such as surplus property), which must be valued at fair market value at the time of receipt (or at the assessed value provided by the federal agency) and included in the SEFA. Effect If SEFA amounts are incomplete or inaccurate, errors may not be prevented or detected in a timely manner and could affect major federal program determination and Single Audit planning and execution, which may adversely impact compliance oversight and future funding decisions. Cause While the Department’s quarterly SHARE reconciliation process is effective for reviewing expense allowability and supporting reimbursement requests, it was not designed to fully address SEFAspecific completeness requirements. In particular: • The process did not include a formal reconciliation of SEFA totals by AL/award to federal revenue recorded in the general ledger and grant support, and • Procedures were not in place to consistently identify, value, and document noncash federal assistance and certain complex or timing-sensitive award activity for SEFA purposes. As a result, differences between expenses reviewed for reimbursement and federal revenue recorded in the accounting records were not identified during SEFA preparation. Recommendation We recommend the Department enhance its SEFA preparation documentation and review procedures. The procedures should include the following: • Reconciliation of SEFA totals – Performing and documenting a reconciliation of SEFA totals by AL/award to the general ledger, grant subledger, and other supporting documentation. • Noncash and complex award identification – Implementing procedures to identify, value, and document noncash federal assistance and other complex or timing-sensitive award activity (such as disaster-related awards) for inclusion in the SEFA. • Revenue-based SEFA completeness review – In addition to the Department’s existing expense-level review of allowability (which should continue), performing a SEFA-specific review from a revenue perspective to confirm that federal revenue recorded in the general ledger and requests for reimbursement are complete and consistent with grant-related expenses. This review would help identify situations where expenses are evaluated or adjusted for reimbursement purposes but remain recorded within grant activity in the accounting records. • Independent supervisory review – Documenting independent supervisory review and approval of the SEFA prior to submission, evidenced by sign-off.