Audit 403818

Federal Grantor: Multiple; Pass-through Grantor: Multiple; Federal Assistance Listing No.: All federal programs included in the SEFA. Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires auditees to prepare an accurate and complete Schedule of Expenditures of Federal Awards (SEFA) containing awards expended, assistance listing title and number, award number, name of the Federal agency, name of pass-through entity, and awards paid to subrecipients. Condition: The SEFA prepared by the City contained material misstatements identified during the audit. Specifically, expenditures for certain programs were overstated or understated due to errors in accumulation or classification of federal activity. Audit adjustments were required to correct the SEFA to fairly state federal expenditures in accordance with Uniform Guidance. Cause: The condition resulted from deficiencies in internal controls over preparation and review of the SEFA including lack of a comprehensive reconciliation between the general ledger and SEFA amounts and insufficient review procedures to ensure completeness and accuracy of SEFA information. Effect: As a result of these deficiencies, the initial SEFA was materially misstated, which could have impacted the auditor's determination of major programs and testing scope. Questioned Costs: None reported. The finding relates to reporting and internal control deficiencies over the SEFA; no questioned costs were identified as part of this issue. Context: The errors identified affected multiple federal programs and were material in aggregate to the SEFA. Repeat Finding: No. Recommendation: We recommend that the City strengthen internal controls over SEFA preparation by implementing a formal reconciliation process between the general ledger and the SEFA and establishing a documented review process to verify completeness and accuracy prior to submission. Management's Response: Management agrees with the finding. The City will implement procedures to improve the accuracy and completeness of the SEFA, including enhanced reconciliation processes and supervisory review. A corrective action plan has been developed to address the identified deficiencies.