Audit 409252

Finding 2025-001 – Reporting Significant Deficiency Condition: During our testing of the reporting compliance requirement, we noted that the Executive Director prepares the profit and loss detail used to complete the Federal Financial Report (SF-425), completes the SF-425, and submits the report to the Economic Development Administration. An independent review of the completed SF-425 is not performed prior to submission. Questioned Costs: None. Criteria: Based on the terms and conditions of the Economic Adjustment Assistance (EDA) grant award, Federal Financial Reports (SF-425) are required to be submitted to the Economic Development Administration (EDA) on a semi-annual basis. In accordance with 2 CFR § 200.303, the entity is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance the award is managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Such controls should include an independent review of required federal reports prior to submission. Cause: The entity has not established a formal review process over the preparation and submission of the SF-425. As a result, responsibility for preparing, reviewing, and submitting the report is concentrated with one individual. Effect: Without an independent review of the SF-425 prior to submission, errors or omissions may not be identified before the report is submitted to the federal awarding agency. This increases the risk that inaccurate or incomplete financial information could be reported. Recommendation: We recommend that management strengthen internal controls over the preparation and submission of the SF-425 by assigning preparation of the report to the Program and Finance Manager. The Executive Director should independently review the completed SF-425 for accuracy, completeness, and compliance with grant reporting requirements prior to submission. The review should be documented to provide evidence that the control was performed. Views of Responsible Officials: Management agrees with the finding. Please refer to the Corrective Action Plan for management’s views and planned corrective action.