Finding Number 2023-205: The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202.
Federal Programs: 21.027 - Coronavirus State and Local Fisca...
Finding Number 2023-205: The Department understated total federal expenditures on the Schedule of Expenditures of Federal Awards (SEFA) closing package by $24,824,862 and understated amounts passed through to subrecipients by $39,901,202.
Federal Programs: 21.027 - Coronavirus State and Local Fiscal Recovery Funds; 66.458 - Clean Water State Revolving Fund; 66.468 - Drinking Water State Revolving Fund; 66.419 - Water Pollution Control State, Interstate, and Tribal Program Support; 66.432 - State Public Water System Supervision; 66.460 - Nonpoint Source Implementation Grants; 66.708 - Pollution Prevention Grants; 66.040 - Diesel Emissions Reduction Act State Grants; 81.214 - Environmental Monitoring/Cleanup, Cultural and Resource Management, Emergency Response Research, Outreach, Technical Analysis
Related to Prior Finding: N/A
Agency’s view: The Department agrees with this finding.
Corrective Action:
1. Identify Root Causes:
With the aid of LSO, we identified errors and are acting on a thorough analysis to pinpoint the
root causes of the reporting errors on the Schedule of Expenditures of Federal Awards (SEFA)
identified during the recent audit. As noted by the auditors, the errors were due to significant
turnover-related knowledge gaps, staff being tasked with unfamiliar processes, lack of written
desk manuals and other documentation, and issues with maintaining the internal reporting tool.
This identification was completed by Rob Sepich, Chief Financial Officer, and Jeri Ann Fogg,
Accounting Supervisor, in tandem with the audit.
2. Implement Training and Guidance:
DEQ will provide comprehensive training sessions for staff involved in preparing and reviewing
SEFA reports, considering the high turnover rate experienced in the department. We are in the
process of developing detailed guidelines and documentation outlining SEFA reporting
requirements, including specific instructions on categorizing federal awards, allowable
expenditures, and reporting formats, to address any knowledge gaps resulting from turnover.
As part of the statewide ERP move to LUMA from STARS, staff will utilize new reporting
platforms and tools in LUMA to streamline SEFA reporting processes and mitigate potential
errors associated with manual data entry or outdated systems. One significant improvement over our legacy reporting will be the use of front-end splits (FES) in LUMA that will automatically
split out the state match from the federal component of our expenditures at the time in which they are spent, which was not as clearly defined under STARS. The new accounting system will be clearer to auditors and staff. Rob Sepich, Chief Financial Officer will create reconciliation
reports for the SEFA by June 2024, with SEFA reporting compiled and completed in July 2024.
3. Enhance Internal Controls:
Moving forward we will significantly strengthen internal controls and review processes to detect
and prevent reporting errors in the future, particularly considering the turnover challenges. We
anticipate requiring multiple additional review checkpoints and validation procedures within the
new reporting platforms to verify the accuracy and completeness of SEFA data that will be
reconciled before submission. We will also assign clear responsibilities and designate individuals
responsible for overseeing SEFA reporting activities, ensuring continuity and consistency despite
turnover and reduce the amount of unfamiliar work given to staff. This will include a review by
Doug McRoberts, Grants Manager, Heather Hodges, Principal Budget Analyst, Rob Sepich,
Chief Financial Officer, and Jeri Ann Fogg, Accounting Manager. Lastly, we are in the process
of developing improved documentation on the new LUMA processes for our day-to-day
operations so that we have up to date and accurate desk manuals should we experience additional turnover. These desk manuals are expected to be completed in June 2024.
4. Conduct Comprehensive Review:
As part of the audit, we conducted a comprehensive review of the FY 2023 SEFA reports to
identify any additional errors or discrepancies that may have been overlooked, considering the
turnover-related knowledge gaps. The department was able to resubmit our SEFA closing
package, including the list of sub recipients to the State Controller’s Office and LSO Auditors on
March 9th, 2024 due to the efforts of Jeri Ann Fogg, Accounting Manager and Rob Sepich, Chief
Financial Officer.
5. Continuous Monitoring and Improvement:
We will establish a process for ongoing monitoring and periodic review of SEFA reporting
activities, leveraging the capabilities of the new reporting platforms in LUMA to streamline
processes and enhance accuracy. This will bring us closer to the work processes that other
agencies do through the statewide reporting systems and reduce our dependency on reporting
tools developed in-house that are unfamiliar to other state agencies. This should reduce the risk
of losing key institutional knowledge during turnover and will make it easier for an employee
with experience from another agency to be able to quickly pick up our reporting needs.
To foster a culture of continuous improvement and knowledge sharing within the department, we will have additional meetings to encourage collaboration and communication to address SEFA reporting and ensure that we are not missing key input from staff.
Anticipated Corrective Action Date: See corrective action above for timeline.
Responsible for Corrective Action: Rob Sepich, Chief Financial Officer
Rob.Sepich@deq.idaho.gov
208-373-0292