State of Missouri Single Audit Corrective Action Plan Year Ended June 30, 2025 State Agency: Department of Economic Development Audit Finding Number: 2025-016 – DED FFATA Reporting Name of the contact person responsible for corrective action: Christopher McCormick Anticipated completion date for cor...
State of Missouri Single Audit Corrective Action Plan Year Ended June 30, 2025 State Agency: Department of Economic Development Audit Finding Number: 2025-016 – DED FFATA Reporting Name of the contact person responsible for corrective action: Christopher McCormick Anticipated completion date for corrective action: June 30, 2026 The Department partially agrees with the auditor's findings. The Departments Corrective Action Plan below includes an explanation and specific reasons for our disagreement and any planned actions to address the finding. The Department agrees that we need to strengthen internal controls to ensure information is timely and accurately reported for the CDBG program and complete FFATA reporting in accordance with the applicable requirements. The one (1) award that was not reported as required was a clerical error and was not repeated. The Department disagrees with the findings that exceed the scope of the current audit period (July 1, 2024 – June 30, 2025). The correct audit population comprises new subawards, and amendments executed during the audit period, rather than all active subawards. The reported items were submitted before June 30, 2024, and correspond to prior award periods that are now closed. Furthermore, the Department's internal control mechanisms identified the FFATA reporting discrepancy in September 2024. The Department subsequently conducted a retrospective review and reported all outstanding amendments. Because the Department discovered and corrected the breakdown through its own internal controls, we believe the finding is inconsistent with the regulatory intent regarding systemic non-compliance. The Department maintains that FFATA does not require the reporting of deobligations or a reconciliation with USASpending.gov. Per 2 CFR §170 Appendix A, the regulatory requirement is as follows: “…the recipient must report each subaward that equals or exceeds $30,000 in Federal funds... The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward.” The Department adheres to the literal language of this regulation. The requirement specifies reporting the total amount of the subaward, rather than a "net" amount or a "remaining balance." In accounting and auditing standards, "Total," "Balance," and "Net" are distinct terms with specific applications; had the regulation intended for deobligations to be factored into the reported figure, it would have specified a "net", “balance”, or "liquidated" balance. The Department disagrees with the finding that subawards were reported in the incorrect year. For annual federal funds, the Department operates on a First-In, First-Out (FIFO) basis. In the standard course of business, subaward invoices are typically paid from the specific pool of funds from which they were awarded. However, as older funding streams approach expiration, an invoice for a subaward originally awarded and properly reported to FFATA in FY2022 may be relieved using FY2019 funds. Since the subawards were reported accurately at the time of the award action, they remain in compliance with FFATA regulations. Corrective Plan of Action: The CDBG program will implement the following measures to ensure ongoing compliance and strengthen oversight: • Training and Regulatory Review: The Department will conduct comprehensive FFATA training for the reporting team, specifically focusing on the requirements set forth in 2 CFR Part 170. This review will ensure that all staff are aligned with federal reporting standards and the literal requirements of the regulation. • Internal Control Enhancement: A thorough evaluation of existing internal controls related to FFATA reporting is underway. The Department will identify and implement any necessary improvements to provide reasonable assurance that all reporting remains accurate and compliant. • Best Practice Research and Benchmarking: The Department will engage with peer agencies in other states to determine if a reconciliation process with USAspending.gov is utilized as a best practice. • Process Implementation: If an effective reconciliation model is identified through this benchmarking, the Department will evaluate its feasibility and integrate a similar reconciliation process into the State of Missouri’s standard operating procedures to further bolster reporting integrity.