2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
2 CFR 2900.4 gives regulatory effect to the Department of Labor for 2 CFR Subpart F § 200.510(b) which requires the auditee to prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not obtain the necessary assurances to form an opinion over the major federal programs' compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant and loan requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help ensure the Consortium is in compliance with grant and loan requirements, the Schedule is complete and accurate, and major federal programs are accurately identified for audit.
Condition: For the fiscal year ended June 30, 2022, we requested that Day One prepare and send us a Schedule of Expenditures of Federal Awards. Requested that the expenditures reported in the SEFA be reconciled to Day One’s accounting records. We reviewed the SEFA and compared them to the accounting records; we noted that the expenditures reported were inaccurate. Criteria: Recipients of federal awards are subject to requirements documented in section of the Uniform Guidance Sections 200.510, 200.502, and 200.302. The criteria for each are as follows: § 200.510 Financial statements (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502.” § 200.502 Basis for determining Federal awards expended (a) Determining Federal awards expended. The determination of when a federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. § 200.302 Financial management (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.The financial management system of each non-Federal entity must provide for (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements…..” Questioned Costs: None Cause: The Organization has not implemented policies and procedures requiring that the Schedule of Federal Awards to complete and accurate. Effect and Context: The Organization reported expenditures that exceeded $750,000 for 2022. In determining the major program to be audited for 2022, the auditor could not rely on the SEFA provided because the SEFA was not complete and expenditures reported were inaccurate. Which could have lead to an inaccurate reporting of federal expenditures for the Organization for 2022. Recommendation: We recommend that management implement policies and procedures requiring all federal expenditures be accurately reported in the year end Schedule of Federal Awards. Management’s Response and Corrective Action Plan: See management’s responses documented on page 46-47.
Condition: For the fiscal year ended June 30, 2022, we requested that Day One prepare and send us a Schedule of Expenditures of Federal Awards. Requested that the expenditures reported in the SEFA be reconciled to Day One’s accounting records. We reviewed the SEFA and compared them to the accounting records; we noted that the expenditures reported were inaccurate. Criteria: Recipients of federal awards are subject to requirements documented in section of the Uniform Guidance Sections 200.510, 200.502, and 200.302. The criteria for each are as follows: § 200.510 Financial statements (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502.” § 200.502 Basis for determining Federal awards expended (a) Determining Federal awards expended. The determination of when a federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force. § 200.302 Financial management (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.The financial management system of each non-Federal entity must provide for (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements…..” Questioned Costs: None Cause: The Organization has not implemented policies and procedures requiring that the Schedule of Federal Awards to complete and accurate. Effect and Context: The Organization reported expenditures that exceeded $750,000 for 2022. In determining the major program to be audited for 2022, the auditor could not rely on the SEFA provided because the SEFA was not complete and expenditures reported were inaccurate. Which could have lead to an inaccurate reporting of federal expenditures for the Organization for 2022. Recommendation: We recommend that management implement policies and procedures requiring all federal expenditures be accurately reported in the year end Schedule of Federal Awards. Management’s Response and Corrective Action Plan: See management’s responses documented on page 46-47.
Condition: During our review and reconciliation of the Schedule of Expenditures of Federal Awards (SEFA) as initially prepared by the County, we identified federal programs that were not listed accurately which resulted in federal expenditures being overstated stated by $2,412,977. • Expenditures reported on the SEFA for ALN 16.607 - Bulletproof Vest Partnership Program were $36,810. Actual federal expenditures obtained from the County’s records confirm $0 expended for a variance of $36,810. • Expenditures reported on the SEFA for ALN 21.019 - Coronavirus Relief Fund were $2,376,264. Actual federal expenditures obtained from the County’s records confirm $0 expended for a variance of $2,376,264. Expenditures reported on the SEFA for ALN 97.042 - Emergency Management Performance Grants were $24,864. Actual federal expenditures obtained from the County’s records confirm $24,961 expended for a variance of ($97). Additionally, the County failed to present $500,000 in subrecipient expenditures on the SEFA for ALN 21.027 - Coronavirus State and Local Fiscal Recovery Funds. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of the federal expenditures on the SEFA. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. The Board of County Commissioners (BOCC) should review and approve the SEFA in an open meeting. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the Board of County Commissioners conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the Board of County Commissioners and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, and the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The Board of County Commissioners, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of federal funds, will evaluate the processes and procedures currently in place to ensure the accuracy of SEFA reporting and detect potential inaccuracies and/or misstatements. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads, in part, as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. Further, GAO Standards – Section 2 – Objectives of an Entity - OV2.23 states in part: Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
2022-003: Breckinridge County Fiscal Court did not prepare their Schedule of Expenditures of Federal Awards The Breckinridge County Fiscal Court did not complete their Scheule of Expenditures of Federal Awards (SEFA) report in a timely manner. The deficiency is due to the lack of internal controls over SEFA reporting. Failure to complete the SEFA report caused the financial statement report to be incomplete. As a result of not preparing their SEFA report, the Breckinridge County Fiscal Court was not in compliance with 2 CFR 200.510(b), which states “The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502”. We recommend that the Breckinridge County Fiscal Court put internal controls in place to ensure proper and timely reporting. Views of Responsible Official and Planned Corrective Action: Judge Lucas Response: This was an oversight on our part. Steps have been taken to fully comply with all SEFA reporting in the future.
Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Head Start Cluster Federal Assistance Listing Number: 93.600 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Society is required to recognize expenses in the period in which they are incurred and revenues in the period in which they are earned and realizable in accordance with GAAP. The Society is required to assess the expenditure of federal awards in accordance with requirement in 2 CFR 200.502. Condition and Context: Vendor invoices received subsequent to May 31, 2022 were not properly reviewed to determine whether a liability and expense were incurred by the Society for the year ended May 31, 2022. As a result, this caused an understatement of approximately $87,000 to accounts payable and accrued expenses, as well as expenses recognized in the statement of activities for the year ended May 31, 2022. Due to a portion of these expenses qualifying for reimbursement under ALN 93.600, federal expenditures reported on the SEFA also excluded approximately $69,000 of allowable expenses from ALN 93.600 Head Start Cluster and approximately $11,000 of allowable expenses from two other non-major federal programs. Cause: In completing the financial close process for the year ended May 31, 2022, the Society did not perform a thorough review of all vendor invoices received subsequent to year end to identify those that would meet the criteria to be accrued for as of May 31, 2022. Effect: The initial trial balance prepared by management excluded transactions that should have been accrued for under GAAP and reported as current year federal expenditures on the SEFA. Questioned Costs: None Identification as a Repeat Finding: No Auditor's Recommendation: We recommend the Society strengthen internal controls over the expenditures cycle. Subsequent disbursements should be reviewed and evaluated thoroughly for accrual and procedures should be in place to approve and record the accruals. As part of this process, consideration should be given to the impact expense accruals have on the receivables and revenue recognized under federal and state grants and contracts. Views of Responsible Officials: The Society agrees with the auditor?s finding. As previously noted, the Society experienced turnover in the Chief Financial Officer position. A new Chief Financial Officer was hired on June 27, 2022. New procedures have been adopted to strengthen the monthly close cycle. The Society has also implemented additional controls to ensure proper cut-off and alignment with the Society?s SEFA and SESFA.
Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Head Start Cluster Federal Assistance Listing Number: 93.600 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Society is required to recognize expenses in the period in which they are incurred and revenues in the period in which they are earned and realizable in accordance with GAAP. The Society is required to assess the expenditure of federal awards in accordance with requirement in 2 CFR 200.502. Condition and Context: Vendor invoices received subsequent to May 31, 2022 were not properly reviewed to determine whether a liability and expense were incurred by the Society for the year ended May 31, 2022. As a result, this caused an understatement of approximately $87,000 to accounts payable and accrued expenses, as well as expenses recognized in the statement of activities for the year ended May 31, 2022. Due to a portion of these expenses qualifying for reimbursement under ALN 93.600, federal expenditures reported on the SEFA also excluded approximately $69,000 of allowable expenses from ALN 93.600 Head Start Cluster and approximately $11,000 of allowable expenses from two other non-major federal programs. Cause: In completing the financial close process for the year ended May 31, 2022, the Society did not perform a thorough review of all vendor invoices received subsequent to year end to identify those that would meet the criteria to be accrued for as of May 31, 2022. Effect: The initial trial balance prepared by management excluded transactions that should have been accrued for under GAAP and reported as current year federal expenditures on the SEFA. Questioned Costs: None Identification as a Repeat Finding: No Auditor's Recommendation: We recommend the Society strengthen internal controls over the expenditures cycle. Subsequent disbursements should be reviewed and evaluated thoroughly for accrual and procedures should be in place to approve and record the accruals. As part of this process, consideration should be given to the impact expense accruals have on the receivables and revenue recognized under federal and state grants and contracts. Views of Responsible Officials: The Society agrees with the auditor?s finding. As previously noted, the Society experienced turnover in the Chief Financial Officer position. A new Chief Financial Officer was hired on June 27, 2022. New procedures have been adopted to strengthen the monthly close cycle. The Society has also implemented additional controls to ensure proper cut-off and alignment with the Society?s SEFA and SESFA.
Condition: Federal expenses disbursed to subrecipients were reported in the period expensed under Generally Accepted Accounting Principles instead of the date when the cash was disbursed. Criteria: Metro Meals on Wheels is responsible to report federal expenditures on the Schedule of Expenditures of Federal Awards according to 2 CFR ? 200.510. In addition, this section refers to requirements in 2 CRF ? 200.502. It requires that MMOW report expenditures in specific ways, including reporting disbursements to subrecipients when the cash is disbursed. Cause: The requirement referenced in the criteria is a departure from GAAP which Metro Meals on Wheels did not recognize at the time of preparing the SEFA. Effect: The original SEFA submitted to the auditors contained an inaccurate amount of awards. Recommendation: We recommend that Metro Meals on Wheels track when Federal funds are disbursed to subrecipients and report these expenditures on the SEFA in the period of disbursement.
Condition: Federal expenses disbursed to subrecipients were reported in the period expensed under Generally Accepted Accounting Principles instead of the date when the cash was disbursed. Criteria: Metro Meals on Wheels is responsible to report federal expenditures on the Schedule of Expenditures of Federal Awards according to 2 CFR ? 200.510. In addition, this section refers to requirements in 2 CRF ? 200.502. It requires that MMOW report expenditures in specific ways, including reporting disbursements to subrecipients when the cash is disbursed. Cause: The requirement referenced in the criteria is a departure from GAAP which Metro Meals on Wheels did not recognize at the time of preparing the SEFA. Effect: The original SEFA submitted to the auditors contained an inaccurate amount of awards. Recommendation: We recommend that Metro Meals on Wheels track when Federal funds are disbursed to subrecipients and report these expenditures on the SEFA in the period of disbursement.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Issue: Identification of Federal Awards and Preparation of a Complete and Accurate Schedule of Expenditures of Federal Awards (SEFA) Classification: Material Weakness Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Community Development Block Grants/States Program Assistance Listing Number: 14.228 Pass-Through Agency: NYS Office of Community Renewal Criteria: The Uniform Guidance requires the auditee to prepare a SEFA for the period covered by the auditee's financial statement. It is the responibility of the auditee's management to design and implement internal controls that provide reasonable assurance over the completeness and accuracy of the SEFA. The SEFA is the basis for the auditor's identification of major programs. Condition: The City's initial SEFA provided for the audit was incomplete and contained inaccurate program expenditure amounts. In particular, there were multiple federal programs that were materially misstated; including the following major federal program for the year under audit: ALN 14.228 Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii In addition, there were multiple federal programs that were not identified, or had inaccurate amounts reported, on the initial SEFA for the year under audit: ALN 10.664 Cooperative Forestry Assistance - not identified ALN 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) - inaccurate amounts reported ALN 21.027 (COVID-19) Coronavirus State and Local Fiscal Recovery Funds - inaccurate amounts reported Cause: The City does not have a method to accurately track the related expenditures for reporting. Effect or Potential Effect: A Uniform Guidance compliance audit is based on the premise that management must comply with federal statutes, regulations and the terms and conditions of the federal awards it received. Without identifying the funds as federal, the auditee may not have complied with those requirements. In addition, there is increased risk regarding the accurate reporting of grant expenditures and noncompliance with policies and procedures surrounding the recording of federal awards. Questioned Costs: None. Context: The City was aware of the requirement to prepare a SEFA prior to the audit; however, they were not able to accumulate the appropriate records to correctly identify the source of funding for all ongoing projects. In addition, management was unable to accurately determine the amounts to be reported on the SEFA in accordance with 2 CFR §200.502. The adjustments to the SEFA amounted to an increase in Total Federal Expenditures reported of $366,330. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the City develop and implement procedures to ensure that information related to all federal awards is accumulated to assist in the preparation of the SEFA. In addition, we recommend management of the City verify the completeness and accuracy of the amounts reported on the SEFA. Views of Responsible Officials of the Auditee: The City agrees with the finding.
Federal Program Information U.S. Department of Housing and Urban Development Housing Trust Fund (ALN: 14.275) Criteria or specific requirement The Uniform Guidance 2 CFR section 200.303 states, “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” The Uniform Guidance 2 CFR section 200.510 states, “(b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.” Condition The Agency omitted federally-funded expenditures required to be reported as part of the Schedule for the year ended October 31, 2021. Cause The Agency’s internal controls in place over the preparation of the Schedule were not sufficient to accurately report all expenditures of federal awards. Effect The omission of expenditures resulted in a major program not being identified in a timely manner. Section III –Federal Awards Findings and Questioned Costs (continued) Questioned Costs None. Context Expenditures for ALN 14.275 Housing Trust Fund were understated by $53.3 million. Identification as a Repeat Finding, if applicable The finding is a repeat finding – Finding 2019-001 and Finding 2020-001. Recommendation The Agency should review its internal controls over the process of accumulating and reporting expenditures of federal awards. Views of Responsible Officials The Agency agrees with the finding and has developed internal controls to ensure accurate and complete reporting of federal expenditures.
Finding 2021-002 Federal Program: Transportation Infrastructure Finance and Innovation Act (TIFIA) Program ALN Number: 20.223 Federal Agency: U.S. Department of Transportation – Direct Program Federal Award Year: 2021 Grant number: N/A Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Conditions Found: The City did not have adequate internal controls related to the reporting of expenditures on the SEFA for the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program. In 2007, the City completed plans for the reconstruction of the Gerald Desmond Bridge (Harbor Bridge), which was a $1.6 billion design, development, and construction project that included multiple funding sources, including federal, state, and private funds. During fiscal year 2014, the City entered into a loan agreement with the U.S. Department of Transportation for $325,000,000 of TIFIA Program funds. During fiscal year 2020, the loan agreement was modified for $500,000,000 of TIFIA Program funds. The executed loan agreement contained a clause that the TIFIA Program loan funds were not available to be drawn until the Harbor Bridge was certified as substantially complete. In January 2021 (fiscal year 2021) the Harbor Bridge was certified as substantially complete and the TIFIA Program loan was made. As a result, the City should have reported the $500,000,000 TIFIA Program loan on the SEFA for the year ended September 30, 2021. Cause and Effect: In discussing these conditions with the City, they stated the error was primarily due to the TIFIA Program not being a traditional federal award where expenses were reimbursed as incurred. When the City certified the substantial completion of the Harbor Bridge project and the TIFIA Program loan was made during fiscal year 2021, the City was not aware the TIFIA Program loan was reportable on the SEFA. Additionally, the management review controls in place over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the City from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs: Not applicable. Statistical Sampling: Not applicable. Repeat Finding: A similar finding was reported in the prior year report. Recommendation: We recommend the City implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. View of Responsible Official: The Harbor Department was not aware that a TIFIA loan was required to be reported on the SEFA. Our understanding of the SEFA is to report the federal share of expenditures. TIFIA loan expenditures are comprised of the expenses for which no grant reimbursement was sought, therefore, these expenses are the cost share or local share, not the federal share. The Harbor Department now understands that all federal assistance including loans should be reported on the SEFA. KPMG has been the City’s auditor since 2001 and was aware of the TIFIA loan agreement in 2014 and the TIFIA loan draw down in 2021. KPMG did not inform us that the TIFIA loan was required to be reported on the SEFA when they performed the single audit in 2021.
Finding 2021-002 Federal Program: Transportation Infrastructure Finance and Innovation Act (TIFIA) Program ALN Number: 20.223 Federal Agency: U.S. Department of Transportation – Direct Program Federal Award Year: 2021 Grant number: N/A Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Conditions Found: The City did not have adequate internal controls related to the reporting of expenditures on the SEFA for the Transportation Infrastructure Finance and Innovation Act (TIFIA) Program. In 2007, the City completed plans for the reconstruction of the Gerald Desmond Bridge (Harbor Bridge), which was a $1.6 billion design, development, and construction project that included multiple funding sources, including federal, state, and private funds. During fiscal year 2014, the City entered into a loan agreement with the U.S. Department of Transportation for $325,000,000 of TIFIA Program funds. During fiscal year 2020, the loan agreement was modified for $500,000,000 of TIFIA Program funds. The executed loan agreement contained a clause that the TIFIA Program loan funds were not available to be drawn until the Harbor Bridge was certified as substantially complete. In January 2021 (fiscal year 2021) the Harbor Bridge was certified as substantially complete and the TIFIA Program loan was made. As a result, the City should have reported the $500,000,000 TIFIA Program loan on the SEFA for the year ended September 30, 2021. Cause and Effect: In discussing these conditions with the City, they stated the error was primarily due to the TIFIA Program not being a traditional federal award where expenses were reimbursed as incurred. When the City certified the substantial completion of the Harbor Bridge project and the TIFIA Program loan was made during fiscal year 2021, the City was not aware the TIFIA Program loan was reportable on the SEFA. Additionally, the management review controls in place over the completeness and accuracy of the SEFA were not designed to detect the error. Failure to establish effective internal controls regarding financial reporting for the preparation of the Schedule may prevent the City from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs: Not applicable. Statistical Sampling: Not applicable. Repeat Finding: A similar finding was reported in the prior year report. Recommendation: We recommend the City implement a system of internal control that is designed and operating at a level of precision to ensure the Schedule is complete and accurate. View of Responsible Official: The Harbor Department was not aware that a TIFIA loan was required to be reported on the SEFA. Our understanding of the SEFA is to report the federal share of expenditures. TIFIA loan expenditures are comprised of the expenses for which no grant reimbursement was sought, therefore, these expenses are the cost share or local share, not the federal share. The Harbor Department now understands that all federal assistance including loans should be reported on the SEFA. KPMG has been the City’s auditor since 2001 and was aware of the TIFIA loan agreement in 2014 and the TIFIA loan draw down in 2021. KPMG did not inform us that the TIFIA loan was required to be reported on the SEFA when they performed the single audit in 2021.
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the Consortium’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. (2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total Federal awards expended for each individual Federal program and the AL number or other identifying number when the AL information is not available. (4) Include the total amount provided to subrecipients from each Federal program. (5) For loan or loan guarantee programs described in § 200.502 Basis for determining Federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The Consortium chose to report their Schedule of Federal Awards on a cash basis. The fiscal agent's accounting system operated on a full accrual basis and the federal schedule that was presented for audit was taken from the CFIS system for tracking federal expenditures for the Ohio Department of Job and Family Services. However, the Consortium was not able to provide support from the accounting system to reconcile the amounts reported on the Schedule to the accounting system. Due to the lack of support for the federal schedule, we were unable to ensure that activity upon which we based our testing of the compliance for major federal programs was complete and therefore we could not pinion over the major federal programs’ compliance. Noncompliance with grant requirements as well as errors and omissions on the Schedule of Expenditures of Federal Awards could have an adverse effect on future grant awards by the awarding agency in addition to an inaccurate assessment of major federal programs that would be subjected to audit. Management should review all grant and loan award documents in order to execute policies and procedures which help ensure compliance with grant requirements, including Schedule reporting requirements. The Consortium should implement a system to track all federal expenditures and related information separately from other expenditures and report federal expenditures with proper support including, but not limited to, grant agreements, calculation of the expenditures, and any federal reporting requirements. This will help
Finding 2021-010 – Lack of Internal Controls over the Schedule of Expenditures of Federal Awards PASS-THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance QUESTIONED COSTS: $0 Condition: During the review of 100% of federal expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA), federal programs were identified that were not accurately reported. Actual federal expenditures for the major federal program Assistance Listing 21.019 - Coronavirus Relief Fund were $2,024,981 and the County reported $193,762. Therefore, expenditures were understated $1,831,219 for the major federal program Coronavirus Relief Fund. Further, actual federal expenditures for Assistance Listing 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEMA DR-4438 were $0 and the County reported $109,550. Therefore, the expenditures were overstated by $109,550. Actual federal expenditures for Assistance Listing 97.042 - Emergency Management Performance Grants were $7,177 and the County reported $15,000. Therefore, expenditures were overstated by $7,823. Additionally, the county reported expenditures of the Social Security Administration, overstating expenditures $1,200, although considered federally sourced, expenditures should not be reported on the SEFA. Reported Total Expenditures of Federal Awards $ 343,373 Add: Coronavirus Relief Fund (21.019) 1,831,219 Less: Disaster Grants – Public Assistance (Presidentially Declared Disasters) FEMA DR-4438 (97.036) (109,550) Less: Emergency Management Performance Grants (97.042) ( 7,823) Less: Social Security Administration ( 1,200) Actual Federal Expenditures of Federal Awards $2,056,019 SEFA Understated $1,712,646 Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for federal awards. Effect of Condition: This resulted in a material misstatement of the County’s Schedule of Expenditures of Federal Awards and could increase the potential for material noncompliance. Recommendation: OSAI recommends the County design and implement internal controls to ensure accurate reporting of federal expenditures on the SEFA. Management Response: Chairman of the Board of County Commissioners: The BOCC will work to design and implement internal controls to ensure accurate reporting of federal expenditures on the SEFA and ensure compliance with federal requirements. Criteria: The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Further, Title 2 CFR 200 § 200.510(a)(b) Financial Statements reads as follows: (a) Financial statements. The auditee must prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The financial statements must be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, non-Federal entity-wide financial statements may also include departments, agencies, and other organizational units that have separate audits in accordance with §200.514 Scope of audit, paragraph (a) and prepare separate financial statements. (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736. The following misstatements were noted: • The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304. • The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226. • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227. • The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183. Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230. Furthermore, the County did not prepare Notes to the SEFA. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required. Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements. Management Response: District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations. District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI. District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements. County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA. County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy. County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510 (b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….] 2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…” Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states: Definitions of Objectives Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma CARES PPE; SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review of the County’s fiscal year 2021 Schedule of Expenditures of Federal Awards (SEFA), we identified federal programs that were not listed accurately on the County’s SEFA resulting in federal expenditures being understated by $1,175,736. The following misstatements were noted: • The actual expenditures for National Wildlife Refuge Fund, ALN 15.659, were $6,767, the County reported $12,071, which overstated expenditures by $5,304. • The actual expenditures for Highway Planning and Construction, ALN 20.205 were $9,226, the County reported $0, which understated expenditures by $9,226. • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $1,269,227, the County reported $0, which understated expenditures by $1,269,227. • The actual expenditures for Emergency Management Performance Grants, ALN 97.042 were $25,000, the County reported $30,183, which overstated expenditures by $5,183. Additionally, the County reported $92,231 in expenditures for various grants that were not federal grants of the County, overstating federal expenditures by $92,230. Furthermore, the County did not prepare Notes to the SEFA. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of federal expenditures and that the Notes to the SEFA are prepared as required. Effect of Condition: These conditions resulted in the material misstatement of the SEFA and the Notes to the SEFA. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Okmulgee County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA, the Notes to the SEFA are prepared, and compliance with all applicable federal requirements. Management Response: District 1 County Commissioner: My tenure as an Okmulgee County Commissioner began, October 3, 2022. I will work with the other elected County Officials to review/follow OSAI recommendations. District 2 County Commissioner: I will work with the other elected officials to ensure that the federal revenues and expenditures are reported correctly on the SEFA by requiring all offices that receive federal grants to prepare a SEFA for their individual office and provide that SEFA and all supporting documentation for revenues and expenditures reported to the designated compiler of the SEFA. I will also work with the other elected officials to ensure the notes to the SEFA are prepared and that the SEFA and the Notes to the SEFA are reviewed for accuracy prior to being approved by the BOCC and presented to OSAI. District 3 County Commissioner: I took office January 3, 2023, I will work with the other County Officials and departments heads to gain an understanding of federal programs awarded to Okmulgee County and to design and implement internal control procedures to ensure an accurate reporting of revenues and expenditures on the SEFA, that the notes to the SEFA are prepared, and compliance with all applicable federal requirements. County Clerk: I did not take office until April, 2022; however, I will work with the other elected officials to get a better understanding of the grants that are being reported and establish and maintain an effective internal control over the SEFA. County Treasurer: I did not take office until July 3, 2023. However, I will work with the other elected officials to ensure compliance with applicable federal requirements and to ensure the SEFA and the Notes to the SEFA are timely prepared and reviewed for accuracy. County Sheriff: I will continue to work with the other elected officials to ensure the SEFA is accurately and timely prepared. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510 (b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….] 2 CFR § 200.510 (b) 6 provides that the auditee must also “include notes that describe that significant accounting policies used in preparing the schedule…” Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states: Definitions of Objectives Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standard-setting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
Completeness and accuracy of Schedule of Expenditures of Federal Awards (SEFA)- (Significant Deficiency) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: 2 CFR 200.510 Financial statements requires auditees to prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. The information presented should be consistent with the accounting records and other federal guidance. Condition: Not all federal expenditures were included on SEFA. Through our discussions with management, we identified federal expenditures that were excluded from SEFA. Cause The COVID-19 pandemic resulted in the receipt and expenditure of additional federal funds. There was a limited information regarding new awards and reliance on the prior year information. Effect A SEFA that is not complete and accurate could impact the scoping of an entity’s major programs and result in incomplete information being provided to the federal government.. Questioned Cost: None noted Recommendation: Review all grant agreements. Develop checklist of anticipated awards in advance of the year and also complete an interim SEFA to identify inconsistencies earlier in the fiscal year. We recommend a formal review of final year-end SEFA for completeness and accuracy evidenced by a formal sign-off/approval. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.
Finding 2021-006 – Lack of Internal Controls Over the Schedule of Expenditures of Federal Awards (SEFA) Condition: Total federal expenditures on the SEFA were understated by $375,034: • Expenditures reported on the SEFA for ALN 97.036 Disaster Grant – Public Assistance were $467,323. Actual federal expenditures obtained from the County’s records confirm $838,525 expended for an overstated variance of $371,202. • Expenditures reported on the SEFA for ALN 15.226 OMES/E911 GIS Tracking were $0. Actual federal expenditures obtained from the County’s records confirm $3,832 expended for an understated variance of $3,832. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures on the SEFA. Effect of Condition: This condition resulted in erroneous reporting and a material misstatement of the County’s SEFA and could result in material noncompliance. Recommendation: OSAI recommends County Officials and department heads gain an understanding of federal programs awarded to Grant County. Internal control procedures should be designed and implemented to ensure accurate and timely reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: County Commissioner District 1: We will discuss the SEFA completion in County Officers’ meeting. I will search for resources to aid in the completion of the SEFA. County Commissioner District 2: I will educate myself and do everything possible to become familiar with the requirements of the SEFA. County Commissioner District 3: We will address this issue as a County in the officers’ meetings. County Clerk: We have increased our understanding of the reporting requirement of the SEFA. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads, in part, as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. Further, GAO Standards – Section 2 – Objectives of an Entity – OV2.23 states in part: Compliance Objective Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.
Reference Number: 2021-001 Type of Finding: Material Weakness and Material Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Finance developed the Single Audit Expenditures Reporting Database (Database). Finance developed the Database to include all of the relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Due to the unprecedented impacts from the COVID-19 pandemic, the Employment Development Department (EDD) was unable to timely report to Finance through the Database with accurate and reliable federal cash basis expenditures for its largest federal award programs that it administers, the Unemployment Insurance (ALN 17.225) and Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (ALN 97.050) programs. The delay resulted in Finance being unable to compile and produce a complete and final approved Schedule until December 2022. Although initial estimated expenditure amounts were reported by EDD for both programs, $90.6 billion and $7.5 billion, respectively, the final amounts reported in the Schedule for both programs were ultimately updated to $92.7 billion and $6.5 billion, respectively. Cause Given the substantial increase in claimants seeking assistance under the Unemployment Insurance program resulting from the COVID-19 pandemic, EDD was overwhelmed with the overall administration of the Unemployment Insurance program. Also, EDD was still contending with accounting and control issues from the implementation of the State’s Financial Information System for California (FI$Cal), which replaced the legacy system. Effect The difficulties that EDD encountered from the COVID-19 pandemic and continuing FI$Cal implementation issues, resulted in the late reporting and submission of final federal cash basis expenditures to Finance. The untimely submission limited and constrained Finance from compiling and producing a final complete and accurate Schedule. Questioned Costs Questioned costs were not determinable. Recommendation EDD should continue to evaluate its existing process and controls related to its ability to properly account for, report, and timely submit complete and accurate federal award cash basis expenditures to the Database, which affords Finance the ability to timely compile and produce a final Schedule pursuant to the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan EDD agrees with this finding. The deferred transition to FI$Cal and the difficulties experienced thereafter have continued to cause EDD to be late with submitting year-end financials and its ability to submit timely the cash basis expenditures into the Single Audit Expenditures Reporting Database (Database). In addition, the onset of the COVID-19 pandemic created additional issues which ultimately impacted the EDD’s ability to submit timely year-end financials. However, the EDD is making progress and continues to gain ground in the department’s efforts to follow the State’s deadlines for submitting year-end financials and entering the cash basis expenditures into the Database. By the end of fiscal year 2021-22 and into fiscal year 2022-23, the EDD did a restructuring within the accounting area which realigned workload amongst the units and provided additional resources in critical areas. These changes will have a lasting effect and help the department to be better positioned going forward in processing the accounting workload and ultimately be able to catch up and submit year-end financials and enter the cash basis expenditures into the Database by the State’s deadlines. In addition, the EDD took lessons learned from the fiscal year 2019-20 financial audit to update processes and procedures and applied that knowledge going forward. Also, staff have been participating in various trainings offered by Finance and the Department of FISCal and staff continue to work with the control agencies when issues arise that would impact our accounting functions. While the EDD is still behind, the department is making great progress on catching up. The EDD submitted the last of its fiscal year 2020-21 financials in July 2022 and is targeting to submit the last of its fiscal year 2021-22 financials by the end of March 2023. The EDD’s goal is to submit fiscal year 2022-23 financials by the end of December 2023. Similar to the 2019-20 financial audit, the EDD will take the knowledge learned during the 2020-21 audit season, continue to engage with the control agencies, and continue to train and develop staff in order to keep progressing towards the department’s goal of becoming timely with the submission of the year-end financials and entering of the cash basis expenditures into the Database.
Reference Number: 2021-001 Type of Finding: Material Weakness and Material Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Finance developed the Single Audit Expenditures Reporting Database (Database). Finance developed the Database to include all of the relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Due to the unprecedented impacts from the COVID-19 pandemic, the Employment Development Department (EDD) was unable to timely report to Finance through the Database with accurate and reliable federal cash basis expenditures for its largest federal award programs that it administers, the Unemployment Insurance (ALN 17.225) and Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (ALN 97.050) programs. The delay resulted in Finance being unable to compile and produce a complete and final approved Schedule until December 2022. Although initial estimated expenditure amounts were reported by EDD for both programs, $90.6 billion and $7.5 billion, respectively, the final amounts reported in the Schedule for both programs were ultimately updated to $92.7 billion and $6.5 billion, respectively. Cause Given the substantial increase in claimants seeking assistance under the Unemployment Insurance program resulting from the COVID-19 pandemic, EDD was overwhelmed with the overall administration of the Unemployment Insurance program. Also, EDD was still contending with accounting and control issues from the implementation of the State’s Financial Information System for California (FI$Cal), which replaced the legacy system. Effect The difficulties that EDD encountered from the COVID-19 pandemic and continuing FI$Cal implementation issues, resulted in the late reporting and submission of final federal cash basis expenditures to Finance. The untimely submission limited and constrained Finance from compiling and producing a final complete and accurate Schedule. Questioned Costs Questioned costs were not determinable. Recommendation EDD should continue to evaluate its existing process and controls related to its ability to properly account for, report, and timely submit complete and accurate federal award cash basis expenditures to the Database, which affords Finance the ability to timely compile and produce a final Schedule pursuant to the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan EDD agrees with this finding. The deferred transition to FI$Cal and the difficulties experienced thereafter have continued to cause EDD to be late with submitting year-end financials and its ability to submit timely the cash basis expenditures into the Single Audit Expenditures Reporting Database (Database). In addition, the onset of the COVID-19 pandemic created additional issues which ultimately impacted the EDD’s ability to submit timely year-end financials. However, the EDD is making progress and continues to gain ground in the department’s efforts to follow the State’s deadlines for submitting year-end financials and entering the cash basis expenditures into the Database. By the end of fiscal year 2021-22 and into fiscal year 2022-23, the EDD did a restructuring within the accounting area which realigned workload amongst the units and provided additional resources in critical areas. These changes will have a lasting effect and help the department to be better positioned going forward in processing the accounting workload and ultimately be able to catch up and submit year-end financials and enter the cash basis expenditures into the Database by the State’s deadlines. In addition, the EDD took lessons learned from the fiscal year 2019-20 financial audit to update processes and procedures and applied that knowledge going forward. Also, staff have been participating in various trainings offered by Finance and the Department of FISCal and staff continue to work with the control agencies when issues arise that would impact our accounting functions. While the EDD is still behind, the department is making great progress on catching up. The EDD submitted the last of its fiscal year 2020-21 financials in July 2022 and is targeting to submit the last of its fiscal year 2021-22 financials by the end of March 2023. The EDD’s goal is to submit fiscal year 2022-23 financials by the end of December 2023. Similar to the 2019-20 financial audit, the EDD will take the knowledge learned during the 2020-21 audit season, continue to engage with the control agencies, and continue to train and develop staff in order to keep progressing towards the department’s goal of becoming timely with the submission of the year-end financials and entering of the cash basis expenditures into the Database.
Reference Number: 2021-001 Type of Finding: Material Weakness and Material Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Finance developed the Single Audit Expenditures Reporting Database (Database). Finance developed the Database to include all of the relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Due to the unprecedented impacts from the COVID-19 pandemic, the Employment Development Department (EDD) was unable to timely report to Finance through the Database with accurate and reliable federal cash basis expenditures for its largest federal award programs that it administers, the Unemployment Insurance (ALN 17.225) and Presidential Declared Disaster Assistance to Individuals and Households – Other Needs (ALN 97.050) programs. The delay resulted in Finance being unable to compile and produce a complete and final approved Schedule until December 2022. Although initial estimated expenditure amounts were reported by EDD for both programs, $90.6 billion and $7.5 billion, respectively, the final amounts reported in the Schedule for both programs were ultimately updated to $92.7 billion and $6.5 billion, respectively. Cause Given the substantial increase in claimants seeking assistance under the Unemployment Insurance program resulting from the COVID-19 pandemic, EDD was overwhelmed with the overall administration of the Unemployment Insurance program. Also, EDD was still contending with accounting and control issues from the implementation of the State’s Financial Information System for California (FI$Cal), which replaced the legacy system. Effect The difficulties that EDD encountered from the COVID-19 pandemic and continuing FI$Cal implementation issues, resulted in the late reporting and submission of final federal cash basis expenditures to Finance. The untimely submission limited and constrained Finance from compiling and producing a final complete and accurate Schedule. Questioned Costs Questioned costs were not determinable. Recommendation EDD should continue to evaluate its existing process and controls related to its ability to properly account for, report, and timely submit complete and accurate federal award cash basis expenditures to the Database, which affords Finance the ability to timely compile and produce a final Schedule pursuant to the Uniform Guidance. Views of Responsible Officials and Corrective Action Plan EDD agrees with this finding. The deferred transition to FI$Cal and the difficulties experienced thereafter have continued to cause EDD to be late with submitting year-end financials and its ability to submit timely the cash basis expenditures into the Single Audit Expenditures Reporting Database (Database). In addition, the onset of the COVID-19 pandemic created additional issues which ultimately impacted the EDD’s ability to submit timely year-end financials. However, the EDD is making progress and continues to gain ground in the department’s efforts to follow the State’s deadlines for submitting year-end financials and entering the cash basis expenditures into the Database. By the end of fiscal year 2021-22 and into fiscal year 2022-23, the EDD did a restructuring within the accounting area which realigned workload amongst the units and provided additional resources in critical areas. These changes will have a lasting effect and help the department to be better positioned going forward in processing the accounting workload and ultimately be able to catch up and submit year-end financials and enter the cash basis expenditures into the Database by the State’s deadlines. In addition, the EDD took lessons learned from the fiscal year 2019-20 financial audit to update processes and procedures and applied that knowledge going forward. Also, staff have been participating in various trainings offered by Finance and the Department of FISCal and staff continue to work with the control agencies when issues arise that would impact our accounting functions. While the EDD is still behind, the department is making great progress on catching up. The EDD submitted the last of its fiscal year 2020-21 financials in July 2022 and is targeting to submit the last of its fiscal year 2021-22 financials by the end of March 2023. The EDD’s goal is to submit fiscal year 2022-23 financials by the end of December 2023. Similar to the 2019-20 financial audit, the EDD will take the knowledge learned during the 2020-21 audit season, continue to engage with the control agencies, and continue to train and develop staff in order to keep progressing towards the department’s goal of becoming timely with the submission of the year-end financials and entering of the cash basis expenditures into the Database.
Reference Number: 2021-002 Type of Finding: Material Weakness and Instance of Noncompliance Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. Standards for Financial and Program Management. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart F - Audit Requirements. §200.510 Financial statements (2 CFR 200.510): (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. For example, when a Federal program has multiple Federal award years, the auditee may list the amount of Federal awards expended for each Federal award year separately. At a minimum, the schedule must: (3) Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. For a cluster of programs also provide the total for the cluster. (4) Include the total amount provided to subrecipients from each Federal program. Condition The State of California (State) has a decentralized financial reporting process, which requires State agencies and departments to provide specific financial information to the Department of Finance (Finance) in order to annually compile the Schedule of Expenditures of Federal Awards (Schedule). In its effort to more efficiently and accurately prepare the Schedule in accordance with the requirements of 2 CFR 200.510, Finance developed the Single Audit Expenditures Reporting Database (Database) to include all relevant data fields necessary to compile and produce the Schedule. Finance also created a Single Audit Database User Manual, which provides specific guidance to users for accessing and navigating through the database. Departments are given access to the centralized Database by Finance in order to upload and report federal award information for all federal award programs which they administer. The California Department of Public Health (Public Health) failed to include $479,996,082 of federal expenditures and $367,405,431 of subrecipient expenditures for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program (ALN No. 93.323) in the Database, which Finance uses to prepare the State’s annual Schedule. The error resulted in an additional major program that had to be audited in accordance with the Uniform Guidance and the State having to re-issue its federal compliance audit report for the fiscal year ended June 30, 2021. Cause Public Health entered into a Bona Fide Agent Designation arrangement with Public Health Foundation Enterprises, Inc., dba Heluna Health, for the submission of a grant application under the State of California’s eligibility in lieu of a direct State application for the U.S. Department of Health and Human Services (HHS), Centers for Disease Control and Prevention (CDC) funding opportunity: Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Cooperative Agreement. Subsequent to the bona fide agent arrangement, Public Health entered into a separate subrecipient agreement with Heluna Health on March 2, 2021, to provide Heluna Health with certain services related to the performance of its obligations under the ELC program grant award received from HHS. Since Public Health is typically not a subrecipient of federal awards and the accounting control for ELC program revenues and expenditures was established within the State’s General Fund rather than the Federal Trust Fund, which is State standard operating procedure, Public Health failed to identify and report the $479,996,082 of federal expenditures in the Schedule. Effect Because of the ELC program’s inclusion in the State’s Schedule for the fiscal year ended June 30, 2021, the ELC program had to be audited as a major program under requirements of the Uniform Guidance and the State’s federal compliance report had to be reissued. Questioned Costs No questioned costs were identified. Recommendation When infrequent and unusual arrangements occur impacting processes and procedures surrounding federal award programs, Public Health should ensure there is sufficient identification and understanding of the administrative and operational changes from standard operating procedures. Public Health should then design appropriate internal controls commensurate with such changes to ensure adherence to applicable laws and regulations. Views of Responsible Officials and Corrective Action Plan Management's response is reported in "Management's Response and Corrective Action Plan" included in a separate section at the end of this report.
Reference Number: 2021-007 Category of Finding: Subrecipient Monitoring Type of Finding: Significant Deficiency and Instance of Noncompliance State Administering Department: California Business, Consumer Services, and Housing Agency California Department of Education California Department of Social Services Federal Program Title: Coronavirus Relief Fund Assistance Listing Number: 21.019 Federal Award Number and Year: N/A; 2020 Criteria Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. §200.303 Internal controls (2 CFR 200.303): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 - Grants and Agreements. Subtitle A - Office of Management and Budget Guidance for Grants and Agreements. Chapter II - Office of Management and Budget Guidance. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D - Post Federal Award Requirements. §200.332 Requirements for pass-through entities (2 CFR 200.332): All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these date elements change, include the changes in subsequent subaward modification. When some of the information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient’s unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged per §200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the Federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the Federal award; Condition For 2 of 60 subawards tested, the State did not communicate required subaward information to its subrecipients of the Coronavirus Relief Fund (CRF) program at the time of the subaward, or when the State became aware of changes in subaward information, including identification that the subaward funds represented federal funding. Also, for 4 of 60 direct costs tested, the transactions were subsequently determined to be subawards, for which the required subaward information was not properly communicated to the subrecipients. The 4 direct costs transactions were from the Business, Consumer Services and Housing Agency; 1 of the subawards was from the California Department of Education; and 1 of the subawards was from the California Department of Social Services. Identification as a Repeat Finding This was not a repeat finding from the immediate prior year. Cause The State initially appropriated state General Fund dollars to various departments through an amendment to the 2019 State Budget Act for its coronavirus response. The initial communication to certain subrecipients identified the funding source as State General Fund monies. Subsequently, upon the State allocating its CRF award funds to be administered by various state departments, certain activities and related costs originally funded by the State General Fund, were replaced with CRF funding. Given the change in the source of funding, updated communication was not provided to the subrecipients informing them of the required federal award information. Additionally, the State did not make timely determinations identifying certain activities as subawards versus contracts for goods and/or services. Effect By not properly informing subrecipients that the funding provided represented federal financial assistance associated with the CRF program, there is an increased risk that subrecipients could potentially expend funds on ineligible activities, as well as subrecipients not accounting and reporting expenditures in accordance with the Federal statutes, regulations, and the terms and conditions of the federal award. Questioned Costs No questioned costs were identified. Context Disbursements to subrecipients for the CRF totaled $7,480,270,598, or 79.7% of total reported CRF program expenditures. Subrecipient expenditures for the 6 subawards with exceptions, the related State administering department, and the total department subrecipient expenditures for which the required subaward information was not communicated, is as follows: "See the Notes to the SEFA for the chart/table" The sample was not a statistically valid sample. Recommendation The state administering departments identified above should review all subawards provided which were funded using CRF program funds, provide the subrecipients with subaward information required by 2 CFR 200.332(a), and determine whether the subrecipients properly reported CRF subawards and related expenditures in their respective schedule of expenditures of federal awards pursuant to 2 CFR 200.502.If federal subawards were not reported, the state administering departments should perform appropriate follow-up monitoring procedures. Views of Responsible Officials and Corrective Action Plan Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Finding 2021-008 Improper Preparation of Schedule of Expenditures of Federal Awards U.S. Department of Health and Human Services COVID-19: HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund – Assistance Listing Number 93.461 Criteria: In accordance with 2 CFR 200 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Condition: The Corporation’s SEFA for the year ended June 30, 2021, was initially prepared without federal expenditures totaling $1,222,859 for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund, Assistance Listing number 93.461. Cause: The federal program expenditures for the HRSA COVID-19 Claims Reimbursement for the Uninsured Program and the COVID-19 Coverage Assistance Fund, Assistance Listing number 93.461, were omitted from the SEFA due to an oversight in the preparation of the SEFA. Effect: Improper reporting of federal expenditures resulted in a material error on the SEFA leading to inaccurate major program determination by the auditors. In this instance, the error did result in the identification of an additional major program. Questioned costs: None. Identification as a repeat finding, if applicable: 2020-005 Recommendation: We recommend the Corporation enhance the process and internal controls around the timely identification of federal awards and preparation of the SEFA to ensure accuracy and completeness of the SEFA. View of responsible officials of the auditee: Management agrees with the finding and recommendation.
Finding 2021-010 – Lack of Internal Controls Over Schedule of Expenditures of Federal Awards PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD NUMBER: Oklahoma Cares PPE – Reimbursement 2020; 4530-DR-OK SA-2242 FEDERAL AWARD YEAR: 2020 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our audit, we identified federal programs that were not listed accurately on the County’s Schedule of Expenditures of Federal Awards (SEFA). Federal expenditures were understated by $532,307. The following misstatements were noted: Expenditures: • The actual expenditures for Coronavirus Relief Fund, ALN 21.019, were $774,579, the County reported $241,966, which understated expenditures by $532,613. • The actual expenditures for Coronavirus State and Local Fiscal Recovery Funds, ALN 21.027, were $2,437, the County reported $2,807, which overstated expenditures by $370. • The actual expenditures for FEMA – Public Assistance DR-4438, Disaster Grants – Public Assistance (Presidentially Declared Disasters), ALN 97.036, were $$60,394, the County reported $46,703, which understated expenditures by $13,691. • The actual expenditures of FEMA – Category B DR-4438 ALN 97.067 were $0, the County reported $8,342, which overstated expenditures by $8,342. • The actual expenditures for FEMA – Public Assistance OEM DR – 4453 ALN 97.036 were $0, the County reported $870, which overstated expenditures by $870. • The actual expenditures for COVID-19 FEMA-Public Assistance DR-4530, Disaster Grants – Public Assistance (Presidentially Declared Disasters), ALN 97.036, were $28,063, the County reported $21,047, which understated expenditures by $7,016. • The actual expenditures for Emergency Management Performance Grant, ALN 97.042, were $45,000, the County reported $56,250, which overstated expenditures by $11,250. • The actual expenditures for Fire Management Assistance Grand, ALN 97.046, were $0, the County reported $181, which overstated expenditures by $181. Cause of Condition: Policies and procedures have not been designed and implemented to ensure an accurate reporting of expenditures for federal awards. Effect of Condition: These conditions resulted in the misstatement of the expenditures reported on the County’s SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Washington County. Internal control procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: District 1 County Commissioner: Not by way of excuse, but truly in response, the Federal programs associated with the COVID response were unnecessarily arduous and created confusion at all levels of government. While the monetary response was accepted, the premise of these programs was nothing more than an administrative shell game. From the outset of the response, guidance was termed as “interim”, then “final interim” and finally, “final” (redundancy intentional). The intent of our national level leadership became more apparent as these programs progressed with each iteration of programming being reliant on returned funds from the previous. Without grandstanding, I will simply say that no entity, regardless of their planning with these programs, will be found as fully compliant. As these programs have a sunset in the near term, I suspect these findings will disappear. District 2 County Commissioner: I was not in office at this time; however, I will work with other elected officials, county officials and department heads to ensure there is an understanding of federal programs awarded to Washington County, and the use of internal control procedures designed and implemented to ensure accurate reporting of expenditures and revenues on the SEFA and to ensure compliance with federal requirements. District 3 County Commissioner: These programs are temporary and difficult to navigate through. I will continue to press staff to report effectively as possible and to be responsive to specific requests that are made. County Clerk: I will work with the other Elected Officials to gain a better understanding of federal programs that are awarded to our County. I will work with the other offices to implement internal controls to ensure accurate reporting on the SEFA. County Sheriff: I have and will continue to work toward compliance in these areas of SEFA. I will continue to work with the other elected officials to gain proper understanding of Federal Programs and Requirements. Criteria: Title 2 CFR 200 § 200.210(a)(b) Financial Statements reads as follows: (a) Financial statements. The auditee must prepare financial statements that reflect its financial position, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year audited. The financial statements must be for the same organizational unit and fiscal year that is chosen to meet the requirements of this part. However, non-Federal entity-wide financial statements may also include departments, agencies, and other organizational units that have separate audits in accordance with §200.514 Scope of audit, paragraph (a) and prepare separate financial statements. (b) Schedule of expenditures of federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statement, which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510 (b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. [….] Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Furthermore, GAO Standards – Principle 6 – Define Objectives and Risk Tolerances – 6.05 states: Definitions of Objectives Management considers external requirements and internal expectations when defining objectives to enable the design of internal control. Legislators, regulators, and standardsetting bodies set external requirements by establishing the laws, regulations, and standards with which the entity is required to comply. Management identifies, understands, and incorporates these requirements into the entity’s objectives. Management sets internal expectations and requirements through the established standards of conduct, oversight structure, organizational structure, and expectations of competence as part of the control environment.
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the College’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the Schedule must: (1) List individual federal programs by Federal agency. (2) For federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total federal awards expended for each individual federal program and the ALN number or other identifying number when the ALN information is not available. (4) Include the total amount provided to subrecipients from each federal program. (5) For loan or loan guarantee programs described in § 200.502 basis for determining federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the Schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The College’s internal control procedures did not identify $839,935 of expenses in the Schedule of Expenditures of Federal Awards related to the CARES Act grant. Adjustments, to which management have agreed, are reflected in the accompanying Schedule. We recommend that management continue to analyze the federal revenues and expenditures and include them in the proper period for audit.
2 CFR Subpart F § 200.510(b) requires the auditee prepare a Schedule of Expenditures of Federal Awards (the Schedule) for the period covered by the College’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. At a minimum, the Schedule must: (1) List individual federal programs by Federal agency. (2) For federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. (3) Provide total federal awards expended for each individual federal program and the ALN number or other identifying number when the ALN information is not available. (4) Include the total amount provided to subrecipients from each federal program. (5) For loan or loan guarantee programs described in § 200.502 basis for determining federal awards expended, paragraph (b), identify in the notes to the schedule the balances outstanding at the end of the audit period. (6) Include notes that describe the significant accounting policies used in preparing the Schedule, and note whether or not the auditee has elected to use the 10 percent de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. The College’s internal control procedures did not identify $839,935 of expenses in the Schedule of Expenditures of Federal Awards related to the CARES Act grant. Adjustments, to which management have agreed, are reflected in the accompanying Schedule. We recommend that management continue to analyze the federal revenues and expenditures and include them in the proper period for audit.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.
PASS-THROUGH GRANTOR: Oklahoma Department of Emergency Management; Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Costs Principles; and Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the SEFA, as initially prepared by the County, we identified federal programs that were not reported accurately. These errors resulted in expenditures being understated by $3,828,046. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of expenditures on the SEFA and could increase the potential for material noncompliance. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Rogers County. Internal control procedures should be designed and implemented to ensure an accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Board of County Commissioners: The BOCC is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The BOCC, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. Additionally, the BOCC conducts meetings with all elected officials and officers responsible for the receipt and/or expenditure of county funds. These meetings address fiscal matters, including but not limited to, policy discussions and implementation, financial reports, budget oversight, SEFA reporting, and legal compliance. Policies and procedures, combined with fiscal oversight meetings, are intended to: 1) prevent or detect material misstatements in the financial statements; 2) prevent or detect fraud within the county; 3) increase communication between the BOCC and those elected officials and officers responsible for the receipt and/or expenditure of public funds; 4) provide oversight over the fiscal concerns of the county; 5) identify and address risks related to financial reporting; 6) ensure the accuracy of Rogers County’s financial statements, Estimate of Needs, the SEFA; and 7) ensure compliance with all applicable federal and state laws, regulations, and/or codes. The BOCC is responsible for preparing the financial statements. See OKLA. STAT. Title 68, § 3002(A). At the end of fiscal year 2020, the BOCC chose not to renew the contract with the budget maker. Beginning in fiscal year 2021, the BOCC and the Rogers County Treasurer developed and implemented a plan for the preparation and presentation of the financial statements by the Rogers County Treasurer beginning in fiscal year 2021. The purpose of this plan was to increase communication, involvement and oversight regarding the County’s financial condition and for better accuracy and timeliness of the preparation and presentation of the financial statements. The BOCC, with the cooperation of all elected officials and officers responsible for the receipt or expenditure of county funds, will evaluate the processes and procedures currently in place to detect and identify material misstatements in Rogers County’s financial statements, detect fraud, and identify and address risks related to Rogers County’s financial reporting. Where deficiencies are identified, processes and procedures will be implemented to identify fraud, detect material misstatements in the financial statements, and address risks related to financial reporting. County Clerk: The County Clerk works with the BOCC and all elected officials to develop and implement policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. These policies are intended to ensure the accuracy of the County’s financial statements, Estimate of Needs, SEFA, and compliance with all applicable federal and state laws, regulations, and/or codes. The County Clerk will continue to perform the duties of her office in accordance with Oklahoma law. Where appropriate, the County Clerk will participate in the development and implementation of policies and procedures to prevent material misstatements in Rogers County’s financial statements, detect fraud and identify and address risks related to Rogers County’s financial reporting. County Treasurer: The County Treasurer was engaged to compile the SEFA report. Each department is responsible for reporting its own Federal revenues and expenditures. County Sheriff: The County Sheriff will work with the BOCC and all elected officials to develop and implement policies and procedures to ensure Rogers County’s SEFA is prepared timely and accurately. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended.
Finding 2021-004 – Internal Controls and Noncompliance Over the Schedule of Expenditures of Federal Awards (SEFA) PASS THROUGH GRANTOR: Oklahoma Office of Management and Enterprise Services FEDERAL AGENCY: U.S. Department of the Treasury ASSISTANCE LISTING: 21.019 FEDERAL PROGRAM NAME: Coronavirus Relief Fund FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance QUESTIONED COSTS: $-0- Condition: During our review and reconciliation of the Schedule of Expenditures of Federal Awards (SEFA) as initially prepared by the County, we identified federal programs that were not listed accurately which resulted in federal expenditures being understated by $180,089. Cause of Condition: Policies and procedures have not been designed and implemented to ensure accurate reporting of expenditures for all federal awards. Effect of Condition: This condition resulted in inaccurate recording of the federal expenditures on the SEFA. This condition could result in the failure to identify Single Audit requirements. Recommendation: OSAI recommends county officials and department heads gain an understanding of federal programs awarded to Choctaw County. Internal control policies and procedures should be designed and implemented to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: We will adopt procedures and implement to ensure accurate reporting of expenditures on the SEFA and to ensure compliance with federal requirements. County Clerk: We will pay more attention to what is being put on SEFA schedule. County Treasurer: I will do my part in correcting this issue to make sure that all qualifying expenditures are reported accurately in the future. Criteria: 2 CFR § 200.303(a) Internal Controls reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR § 200.508(b) Auditee responsibilities reads as follows: The auditee must: Prepare appropriate financial statements, including the schedule of expenditures of Federal awards in accordance with §200.510 Financial statements. 2 CFR § 200.510(b) Financial statements reads as follows: Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with §200.502 Basis for determining Federal awards expended. Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System - Objectives of an Entity - OV2.23 states in part: Compliance Objective Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements.