Views of Responsible Officials and Planned Corrective Action In coordination with detailed discussions with the auditors, DPS has determined that its existing quarterly reconciliation process within SHARE remains an appropriate and effective control for the preparation of the Schedule of Expenditure...
Views of Responsible Officials and Planned Corrective Action In coordination with detailed discussions with the auditors, DPS has determined that its existing quarterly reconciliation process within SHARE remains an appropriate and effective control for the preparation of the Schedule of Expenditures of Federal Awards (SEFA). This process is designed to review grant-related transactions for invoicing accuracy, monitoring, and compliance and provides reasonable assurance over grant oversight and expense allowability. In addition, at fiscal year-end, DPS will perform a SEFA-specific review from a revenue perspective to confirm that federal revenue recorded in the general ledger and reimbursement requests are complete, accurate, and consistent with grant-related expenditures. This layered review process is intended to identify and resolve any instances in which expenses may be evaluated or adjusted for reimbursement purposes while remaining appropriately recorded within grant activity in the accounting records. Management concurs that the expenditure amounts reported on DPS’ final SEFA submitted to auditors related to AL 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) were inaccurate. While DPS had carefully and accurately tracked the allowable expenditures of $583,271 for two FEMA events (DR 4795 Roswell South Fork Salt Fire $543,587.72 & DR 4843 NM Roswell Flood $39,683.22) and discussed in detail with the auditors how allowable costs were determined, our submitted SEFA had a formula error which resulted in the two FEMA events not being accurately included in the total. Furthermore, management concurs that the preparation and analysis of a revenue-based SEFA, performed in addition to the expenditure-based SEFA, resulted in net adjustments of $25,998 to the previously submitted FY25 SEFA. Management concurs that DPS did not have a pre-existing formal procedure specific to the receipt and processing of federally donated surplus and usable personal property at the time of this transaction. However, management emphasizes that the donation of three federally provided robots—valued by the donor at $150,000 each for a total of $450,000—was highly unusual in nature and outside the scope of DPS’s routine grant and property transactions. As a result, DPS undertook extensive research and consultation to ensure compliance with all applicable federal requirements, as well as GASB and GAAP standards, prior to final accounting and reporting treatment. Management has created procedures to ensure the donated assets are correctly valued and included in DPS’s capital asset listing. DPS will record the donated capital assets in the government wide financial statements as capital assets and record as a revenue and expense transaction in the fund financial statements. Management further notes that DPS will follow GASB 33 and GASB 72 for non-exchange transactions when this type of transaction reoccurs. Corrective Action Plan Timeline: Process for federally donated useable personal property/assets has been implemented as of December 1, 2025. Updated SEFA process to be completed no later than October 9, 2026. Designation Of Employee Position Responsible For Meeting Deadline: CFO Deputy ASD Director ASD Director