Audit 402649

Finding 2025-003 – Completeness of the Schedule of Expenditures of Federal Awards Criteria: Title 2 CFR 200.302(b)(2) of the Uniform Guidance requires nonfederal entities to maintain records that identify all federal awards received and expended and to ensure accurate, current, and complete reporting of expenditures for each federal program, including the SEFA. Condition: During our audit of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2025, we noted the SEFA was incomplete and required adjustment. Specifically, expenditures for the following program were understated:  ALN 14.228 – Community Development Block Grant/State Program and Non-Entitlement Grants in Hawaii: understated by $587,345 The SEFA was subsequently corrected by management. Effect: An incomplete or inaccurate SEFA may result in misstated federal expenditures, which could impact the identification of major programs and the scope of the Single Audit. As a result, noncompliance with federal requirements may not be identified or reported. Cause: Controls over the preparation and review of the SEFA were not operating effectively. The SEFA was not adequately reconciled to the general ledger, grant records, and supporting documentation prior to submission for audit. Recommendation: We recommend the Town strengthen SEFA preparation procedures by:  Performing a detailed reconciliation of the SEFA to the general ledger and grant records  Implementing a documented review process prior to submission for audit  Ensuring all federal expenditures are supported and accurately reported Management’s Response: See Corrective Action Plan.