Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Identification of federal programs: • ALN 98.001: USAID Foreign Assistance for Programs Overseas awarded by the U.S Agency for International Development, specifically contract 72061522CA00003 for fiscal year 2024. • ALN 19.705: Trans-National Crime awarded by the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs, specifically contract SINLEC21GR3379, and the indirect award passed though the Humane Society of the United States for fiscal year 2024. Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The Schedule of Expenditures of Federal Awards for the year ended June 30, 2024 improperly excluded the awards provided to sub-recipients from the total expenditures reported for the federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas and ALN 19.705 Trans-National Crime. Cause: There was an error in the formula that linked the supporting schedule to the schedule of expenditures of federal awards. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: Total federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas improperly excluded subrecipient awards from the total in the amount of $143,937. Total federal awards for ALN 19.705 Trans-National Crime improperly excluded subrecipient awards from the total in the amount of $166,877. Repeat Finding: No Recommendation: We recommend that the Organization review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
Finding 2024-001: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Identification of federal programs: • ALN 98.001: USAID Foreign Assistance for Programs Overseas awarded by the U.S Agency for International Development, specifically contract 72061522CA00003 for fiscal year 2024. • ALN 19.705: Trans-National Crime awarded by the U.S. Department of State Bureau of International Narcotics and Law Enforcement Affairs, specifically contract SINLEC21GR3379, and the indirect award passed though the Humane Society of the United States for fiscal year 2024. Criteria: The Uniform Guidance (2 CFR 200.510b) requires that the auditee (typically a non-federal entity receiving federal funds) must prepare a Schedule of Expenditures of Federal Awards for the period covered by its financial statements which must include the total Federal Awards expended as determined in accordance with 2 CFR 200.502. Condition: The Schedule of Expenditures of Federal Awards for the year ended June 30, 2024 improperly excluded the awards provided to sub-recipients from the total expenditures reported for the federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas and ALN 19.705 Trans-National Crime. Cause: There was an error in the formula that linked the supporting schedule to the schedule of expenditures of federal awards. Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: Total federal awards for ALN 98.001 USAID Foreign Assistance for Programs Overseas improperly excluded subrecipient awards from the total in the amount of $143,937. Total federal awards for ALN 19.705 Trans-National Crime improperly excluded subrecipient awards from the total in the amount of $166,877. Repeat Finding: No Recommendation: We recommend that the Organization review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding. See corrective action plan.
2024 – 002: Schedule of Expenditure of Federal Awards (SEFA) Preparation Type of Finding: • Material Weakness in Internal Control Over Financial Reporting Condition: During testing, it was noted the School’s prepared SEFA did not properly reconcile to the underlying School records, which required additional adjustments of approximately $583,000. Criteria or specific requirement: 2 CFR 200.510(b) states: 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: • List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For R&D, total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. For example, the National Institutes of Health is a major subdivision in the Department of Health and Human Services. • 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. • Provide total Federal awards expended for each individual Federal program and the Assistance Listing number or other identifying number when the Assistance Listing information is not available. For a cluster of programs also provide the total for the cluster. • Include the total amount provided to subrecipients from each Federal program. • 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. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. • Include notes that describe that significant accounting policies used in preparing the schedule, and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in § 200.414 Indirect (F&A) costs. Effect: Without a proper system of internal controls in place that operated effectively, material misstatements of the SEFA remained undetected. Cause: Management had not established an effective system of internal controls that would have ensured proper reporting of the SEFA. Repeat finding: Yes – 2023-004. Recommendation: We recommend the school implement internal controls over the SEFA including a reconciliation and review process before submission. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding.
Finding 2024-003 - Material Weakness in Internal Control over Compliance and Material Noncompliance (Qualified Opinion) - Inadequate Tracking of Expenditures and Retention of Documentation: Activities Allowed or Unallowed: Allowable Costs/Cost Principles and Reporting (A/B/L) for Assistance Listing Number 19.510 and 93.567 Criteria: The Code of Federal Regulations (CFR) Section 200.510(b) states in part, “The auditee must also prepare a schedule of federal expenditures for the period covered by the auditee’s consolidated financial statements which must include the total Federal awards expended as determined in accordance with 200.502.” Also, in accordance with CFR Section 200.302(b) - Financial Management, the auditees financial management system must provide 1) identification of all federal awards received and expended; 2) accurate, current, and complete disclosure of the financial results of each federal award or program; 3) records that identify adequately the source and application of funds for federally‐funded activities; 4) effective control over, and accountability for, all funds, property, and other assets; 5) comparison of expenditures with budget amounts for each Federal award; 6) written procedures to implement the requirements of section 200.305 and; 7) written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of the Federal award. Recipients of federal awards must submit accurate, complete and timely financial and performance reports. The Organization should have internal controls designed to ensure compliance with those provisions. The Organization should retain sufficient documentation such as invoice and allocation support for expenditures to retain documentation for audit purposes. Condition: During detail testing of expenditures, it was noted that the Organization did not maintain adequate documentation to support how certain costs were allocated to the federal program. Several transactions lacked sufficient detail, such as invoice or expense reimbursement form. Several expenditures selected for testing did not obtain sufficient approval by an individual at the Organization. There was one instance of employee compensation being processed at an approved pay rate and the Center could not provide any supporting documentation such as an offer letter, to substantiate the rate paid. It was noted that quarterly reports provided to the federal program were not reviewed by an individual at the Organization prior to submission to ensure accurate report of expenditures. 2 of the 8 monthly reports sampled were not submitted timely to the grantor. Cause: The Organization does not have an adequate system in place to ensure quarterly reports have sufficient supporting documentation, proper approval/review, and accurate reporting prior to submission. Responsibilities for expenditure tracking were not clearly assigned, and there was no formal review process in place. The Organization is not following their Document Retention Policy. Effect: The effect of this condition increases the possibility that quarterly financial reports are misstated or inaccurate and increase the risk of noncompliance with federal requirements. The effect of this condition also increases the risk that expenditures are unallowable per the grant, federal regulations, or cost principles due to the insufficient support of proper approval retained. Questioned costs: None Repeat Finding: Yes - 2023-003 Recommendation: Policies and procedures should be in place to ensure quarterly financial reports are properly supported, accurately reported, and adequately approved and reviewed. A formal review process should be established to ensure compliance. The Organization should follow the Document Retention Policy that was put in place and required by law and submit the required reporting documentation timely to the grantor to ensure compliance. Views of Responsible Officials: Management agrees with this finding and their response is included in the Corrective Action Plan.
Federal Expenditures Not Reported in the Schedule of Federal Expenditures of Federal Awards and State Financial Assistance (“SEFA”) Federal Program: Coronavirus State and Local Fiscal Recovery Funds CFDA / Assistance Listing Number: 21.027 Federal Agency: U. S. Department of Treasury Pass-Through Entity: Tennessee Department of Environment and Conservation Fiscal Year Ended June 30, 2024 Criteria Per 2 CFR §200.510(b) and 2 CFR §200.502, entities expending federal awards must accurately identify all federal awards expended during the period and prepare a complete and accurate SEFA that is consistent with amounts recorded in the financial statements. Condition and Context During a subsequent audit, it was identified that federal expenditures totaling $867,515 were not recorded as federal grant revenue or accounts receivable in the financial statements and were also omitted from the SEFA. The amounts were material to total federal expenditures reported under the Uniform Guidance. Cause The omission occurred due to oversight in year-end closing and grant reconciliation procedures, which did not capture the unrecorded federal expenditures at fiscal year-end. Effect The SEFA originally issued was incomplete and understated total federal expenditures by $867,515. As a result, the fiscal year 2024 financial statements were reissued to include the omitted federal expenditures and to present an accurate SEFA in accordance with the Uniform Guidance. Questioned Costs None. Recommendation Management should strengthen year-end grant reconciliation and review procedures to ensure that all federal expenditures are properly recorded and included in the SEFA prior to issuance. Views of Responsible Officials and Planned Corrective Actions See management’s corrective action plan.
FINDING 2024-225 Amounts reported as provided to subrecipients by financial services on the Schedule of Expenditures of Federal Assistance (SEFA) are not properly supported. Type of Finding: Significant Deficiency, SEFA Misstatement Related to Prior Finding: 2023-208; 2022-211; 2021-206 AL Title: Special Supplemental Nutrition Program for Women, Infants, and Children, Temporary Assistance for Needy Families, Child Care and Development Block Grant, Child Care Mandatory and Matching Funds of the Child Care and Development Fund AL Number: 10.557, 93.558, 93.575, 93.596 Federal Award Number: Various Program Year: Various Federal Agency: Department of Health and Human Services Requirement: Code of Federal Regulations (CFR) 2 CFR 200.510(b) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. Management objectives should include the preparation and fair presentation of the SEFA in relation to the basic financial statements as a whole and in compliance with requirements contained in 2 CFR 200.510(b), which states, in part, it must include: • Total federal awards expended as determined in accordance with 2 CFR 200.502, and • Total amount provided to subrecipients from each federal program (2 CFR 200.510(b)(4)) The Office of the State Controller (Office) requires agencies to complete the SEFA closing package and uses the reported information to compile the statewide SEFA. Condition: Amounts reported on the SEFA closing package as expenditures to subrecipients did not agree to amounts provided by program staff to auditors for testing purposes. The following programs had discrepancies between what was reported on the SEFA closing package and what was retained by program personnel: • An overstatement of $4,503,700 for the Child Care and Development Block Grant (Assistance Listing Number (AL) 93.575) • An overstatement of $29,079 for the Child Care and Development Block Grant (AL 93.596) • An understatement of $1,014,475 for the Temporary Assistance for Needy Families (AL 93.558) • An understatement of $362,470 for the Special Supplemental Nutrition Program for Women, Infants, and Children (AL 10.557) Cause: Contradicting information was provided by financial services personnel and program personnel related to expenditures to subrecipients reported on the Schedule of Expenditures of Federal Awards (SEFA) closing package for three major programs. A new statewide accounting system (Luma) was implemented in July 2023. The Office provided guidance to the Department on how to code expenditures to subrecipients, using specific account codes. According to financial services personnel, some expenditures to subrecipients were incorrectly coded causing incorrect amounts to be included on the SEFA. The Department has a review process in place for closing packages that is intended to detect and correct errors. However, the review of the fiscal year 2024 SEFA closing package was not completed at a level of detail sufficient to properly identify and correct errors. In addition, Department financial services personnel and program personnel are not communicating effectively to discover and resolve any discrepancies related to expenditures to subrecipients reported on the SEFA. Effect: The amounts provided to subrecipients were misstated in the Department’s SEFA closing package as detailed in the condition section above. The net overstatement is a combination of over and under statements that total $3,155,834 in the Department’s SEFA closing package. Recommendation: We recommend that the Department improve the process of gathering information to prepare the SEFA closing package and review for accuracy at a level of detail sufficient to detect and correct errors in the SEFA closing package. In addition, we recommend that the Department improve training of program personnel regarding the proper coding of the expenditures to subrecipients. Management’s View: The Department Agrees with this finding. Corrective Action: For major grants, Financial Services staff will send a summary of transactions coded as subrecipient payments to the program manager to review prior to inclusion in the SEFA closing package. The review will be requested to be twofold: to ensure that everything that should be included as a subrecipient payment is and to ensure that nothing that should not be considered a subrecipient payment is included. This process helps to identify that we are reporting the accurate amount of expenditures for each subrecipient. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
Finding 2024-004 – Material Weakness Award No.: Various Federal Grantor: Various Compliance Requirement: Other compliance requirements. Condition: The Schedule of Expenditures of Federal Awards (SEFA) was not complete, and expenditures reported on the SEFA were revised during the single audit. Criteria: 2 CFR Part 200, Subpart F (Uniform Guidance) Section 200.502 states, “The auditee should prepare a Schedule of Expenditures of Federal Awards for the period covered by the auditee’s financial statements.” Internal controls over the SEFA should be in place to ensure accrual basis expenses incurred under the federal program are properly reported as expenses on the SEFA and are properly reported as revenue in the financial statements prior to the start of the single audit. Cause: The SEFA was not fully reconciled and finalized until after the single audit began. Effect: The expenses included on the SEFA were revised during the single audit, which could have resulted in the auditor not selecting the correct major program or expenses for testing and could have resulted in the single audit not satisfying the requirements of the Uniform Guidance. Recommendation: We recommend additional review procedures be implemented to ensure the SEFA is complete and accurate when the single audit begins and that the schedule is reconciled to the revenue recorded in the general ledger. Views of Responsible Officials and Planned Corrective Action: We agree with the finding and the Town is implementing a comprehensive corrective action plan focused on stabilizing Finance staffing, improving processes, and strengthening internal controls to ensure the Town can prepare accurate financial statements and the SEFA in a timely manner and meet all federal reporting deadlines going forward.
Reference Number: 2024-024 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services State Agency: Department of Human Services Federal Program: Refugee and Entrant Assistance State Administered Programs Assistance Listing Number: 93.566 Award Number and Year: 2201MDRSSS (10/1/2021 – 9/30/2024) 2301MDRSSS (10/1/2022 – 9/30/2026) 2301MDRCMA (10/1/2022 – 9/30/2024) 2401MDRCMA (10/1/2023 – 9/30/2025) Compliance Requirement: SEFA Reporting Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees 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. Internal Control: Per 2 CFR section 200.303(a), a 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 comply 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). Condition: A material error was made by the Department of Human Services (Department) in the amount reported for the program on the Schedule of Expenditures of Federal Awards (SEFA). Context: The Department made a late adjustment to their SEFA reporting for the program which reduced total expenditures by $3.77 million, or approximately 10%. Cause: The General Accounting Department consulted with Department to “reasonably” determine the current year federal program expenditures. However, the Department incorrectly accounted for and reported the federal program expenditures as part of their closing reporting package and subsequently reduced expenditures by approximately 10%. Effect: The SEFA was not prepared in accordance with OMB requirements which could impact the major program risk assessment. Questioned costs: None noted. Recommendation: We recommend that the Department review and enhance its reporting procedures and internal controls to ensure that expenditures reported on the SEFA are accurate. Views of responsible officials: Management agrees with the finding.
2024-001 SEFA REPORTING Federal Program Information: Federal Agency and Program Name U.S. Department of Health and Human Services Every Student Succeeds Act/Preschool Development Grants Grant Award G240352 Federal Assistance Listing Number 93.434 Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.510(b) states that “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 2 CFR 200.502.” Condition: The Organization’s internal controls are not adequate to ensure that the schedule of expenditures of Federal awards (SEFA) accurately reports Federal assistance. The Organization did not identify its expenditures under Assistance Listing 93.434 in fiscal year 2024. Questioned Costs: $0 Context: Total federal expenditures for Assistance Listing 93.434 were $2,860,000 for the year ended June 30, 2024. Cause: The Organization does not have adequate internal controls in place to ensure the accuracy of the SEFA. Effect: The Organization is not reporting accurate financial information in its SEFA. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement additional controls over financial reporting, including the SEFA, to ensure accuracy of financial data. Views of Responsible Officials: Management acknowledges the finding. See corrective action plan.
US Department of the Treasury Passed through Missouri Department of Higher Education and Workforce Development Program Name: Coronavirus State and Local Fiscal Recovery Fund / American Rescue Plan Act / MoExcels Grant Assistance Listing #: 21.027 Finding: 2024 – 001 SIGNIFICANT DEFICIENCY Reporting Condition: During our original audit, the College initially failed to include $768,053 of Coronavirus State and Local Fiscal Recovery Fund (ARPA) funding received from the State of Missouri on the Schedule of Expenditures of Federal Awards. Additionally, the College incorrectly included $78,539 of 2024-25 SEOG funding that was drawn but not expended in the 2023-24 SEFA, resulting in an overstatement of SEOG expenditures. These errors were identified subsequent to the issuance of the report and require a re-issuance of the related audit reports. The internal control system did not prevent or detect these errors during the SEFA preparation process. Cause: The College's procedures for identifying and reporting federal expenditures were insufficient. The MoExcels grant application was submitted outside of the finance office without early communication to finance personnel regarding the federal funding source. Since the College rarely receives federal funding beyond routine Student Financial Aid programs, finance personnel were initially unaware that the MoExcels funding originated from a federal source and therefore required inclusion on the SEFA. Additionally, the College lacked adequate cutoff procedures to ensure federal expenditures were reported in the correct period based on when costs were incurred rather than when funds were drawn down from federal systems. The absence of formal communication protocols between program staff and the finance staff who prepared the SEFA, combined with insufficient review procedures for year-end federal drawdown cutoff, contributed to these oversights. Effect: The initial errors resulted in an understatement of federal expenditures on the originally issued SEFA by $768,053 for ARPA funds and an overstatement by $78,539 for SEOG funds, for a net understatement of $689,514. While these errors have been corrected, the control deficiency increases the risk that future federal awards could be incorrectly reported on the SEFA, potentially resulting in noncompliance with federal reporting requirements and incomplete or inaccurate identification of major programs subject to audit. Questioned Costs: $0 Criteria: 2 CFR 200.510(b) requires that the auditee 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 that non-federal entities establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-federal entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the related awards. Recommendation: We recommend the College implement written procedures for SEFA preparation that include: (1) obtaining and reviewing all grant agreements to identify federal funding sources; (2) establishing regular communication between program and finance departments to identify all federal awards received; (3) maintaining a master listing of all grants that identifies the funding source (federal/state/local) and applicable Assistance Listing Numbers; (4) implementing cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred, not when funds are drawn down from federal systems; and (5) requiring independent review of the SEFA by someone knowledgeable about federal compliance requirements who verifies completeness against grant documentation and proper period reporting. We note that the College's finance office maintains good communication practices with auditors regarding federal funding when they are aware of such awards; therefore, strengthening the internal identification and cutoff processes will enhance the College's ability to provide complete, accurate, and timely information to auditors about all federal funding sources. Views of responsible personnel and planned corrective actions: Management concurs with this finding. The College has implemented immediate corrective actions including development of a comprehensive grant tracking spreadsheet and establishment of regular meetings between program and finance staff. Additionally, effective immediately, all grant applications must be reviewed and approved by the Controller prior to submission to ensure proper identification of funding sources and compliance requirements. The College will also implement cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred. The Controller will review all G5 drawdowns near year-end to verify proper period reporting. Formal written procedures for SEFA preparation will be implemented by October 15, 2025. The Controller will maintain the master grant listing and review all grant agreements to determine federal funding sources. Beginning with fiscal year 2026 SEFA preparation, the CFO will perform an independent review for completeness and accuracy, including verification of proper period reporting for all federal expenditures.
US Department of the Treasury Passed through Missouri Department of Higher Education and Workforce Development Program Name: Coronavirus State and Local Fiscal Recovery Fund / American Rescue Plan Act / MoExcels Grant Assistance Listing #: 21.027 Finding: 2024 – 001 SIGNIFICANT DEFICIENCY Reporting Condition: During our original audit, the College initially failed to include $768,053 of Coronavirus State and Local Fiscal Recovery Fund (ARPA) funding received from the State of Missouri on the Schedule of Expenditures of Federal Awards. Additionally, the College incorrectly included $78,539 of 2024-25 SEOG funding that was drawn but not expended in the 2023-24 SEFA, resulting in an overstatement of SEOG expenditures. These errors were identified subsequent to the issuance of the report and require a re-issuance of the related audit reports. The internal control system did not prevent or detect these errors during the SEFA preparation process. Cause: The College's procedures for identifying and reporting federal expenditures were insufficient. The MoExcels grant application was submitted outside of the finance office without early communication to finance personnel regarding the federal funding source. Since the College rarely receives federal funding beyond routine Student Financial Aid programs, finance personnel were initially unaware that the MoExcels funding originated from a federal source and therefore required inclusion on the SEFA. Additionally, the College lacked adequate cutoff procedures to ensure federal expenditures were reported in the correct period based on when costs were incurred rather than when funds were drawn down from federal systems. The absence of formal communication protocols between program staff and the finance staff who prepared the SEFA, combined with insufficient review procedures for year-end federal drawdown cutoff, contributed to these oversights. Effect: The initial errors resulted in an understatement of federal expenditures on the originally issued SEFA by $768,053 for ARPA funds and an overstatement by $78,539 for SEOG funds, for a net understatement of $689,514. While these errors have been corrected, the control deficiency increases the risk that future federal awards could be incorrectly reported on the SEFA, potentially resulting in noncompliance with federal reporting requirements and incomplete or inaccurate identification of major programs subject to audit. Questioned Costs: $0 Criteria: 2 CFR 200.510(b) requires that the auditee 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 that non-federal entities establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-federal entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the related awards. Recommendation: We recommend the College implement written procedures for SEFA preparation that include: (1) obtaining and reviewing all grant agreements to identify federal funding sources; (2) establishing regular communication between program and finance departments to identify all federal awards received; (3) maintaining a master listing of all grants that identifies the funding source (federal/state/local) and applicable Assistance Listing Numbers; (4) implementing cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred, not when funds are drawn down from federal systems; and (5) requiring independent review of the SEFA by someone knowledgeable about federal compliance requirements who verifies completeness against grant documentation and proper period reporting. We note that the College's finance office maintains good communication practices with auditors regarding federal funding when they are aware of such awards; therefore, strengthening the internal identification and cutoff processes will enhance the College's ability to provide complete, accurate, and timely information to auditors about all federal funding sources. Views of responsible personnel and planned corrective actions: Management concurs with this finding. The College has implemented immediate corrective actions including development of a comprehensive grant tracking spreadsheet and establishment of regular meetings between program and finance staff. Additionally, effective immediately, all grant applications must be reviewed and approved by the Controller prior to submission to ensure proper identification of funding sources and compliance requirements. The College will also implement cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred. The Controller will review all G5 drawdowns near year-end to verify proper period reporting. Formal written procedures for SEFA preparation will be implemented by October 15, 2025. The Controller will maintain the master grant listing and review all grant agreements to determine federal funding sources. Beginning with fiscal year 2026 SEFA preparation, the CFO will perform an independent review for completeness and accuracy, including verification of proper period reporting for all federal expenditures.
III – Findings and questioned costs for Federal awards US Department of the Treasury Passed through Missouri Department of Higher Education and Workforce Development Program Name: Coronavirus State and Local Fiscal Recovery Fund / American Rescue Plan Act / MoExcels Grant Assistance Listing #: 21.027 Finding: 2024 – 001 SIGNIFICANT DEFICIENCY Reporting Condition: During our original audit, the College initially failed to include $768,053 of Coronavirus State and Local Fiscal Recovery Fund (ARPA) funding received from the State of Missouri on the Schedule of Expenditures of Federal Awards. Additionally, the College incorrectly included $78,539 of 2024-25 SEOG funding that was drawn but not expended in the 2023-24 SEFA, resulting in an overstatement of SEOG expenditures. These errors were identified subsequent to the issuance of the report and require a re-issuance of the related audit reports. The internal control system did not prevent or detect these errors during the SEFA preparation process. Cause: The College's procedures for identifying and reporting federal expenditures were insufficient. The MoExcels grant application was submitted outside of the finance office without early communication to finance personnel regarding the federal funding source. Since the College rarely receives federal funding beyond routine Student Financial Aid programs, finance personnel were initially unaware that the MoExcels funding originated from a federal source and therefore required inclusion on the SEFA. Additionally, the College lacked adequate cutoff procedures to ensure federal expenditures were reported in the correct period based on when costs were incurred rather than when funds were drawn down from federal systems. The absence of formal communication protocols between program staff and the finance staff who prepared the SEFA, combined with insufficient review procedures for year-end federal drawdown cutoff, contributed to these oversights. Effect: The initial errors resulted in an understatement of federal expenditures on the originally issued SEFA by $768,053 for ARPA funds and an overstatement by $78,539 for SEOG funds, for a net understatement of $689,514. While these errors have been corrected, the control deficiency increases the risk that future federal awards could be incorrectly reported on the SEFA, potentially resulting in noncompliance with federal reporting requirements and incomplete or inaccurate identification of major programs subject to audit. Questioned Costs: $0 Criteria: 2 CFR 200.510(b) requires that the auditee 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 that non-federal entities establish and maintain effective internal control over Federal awards that provides reasonable assurance that the non-federal entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the related awards. Recommendation: We recommend the College implement written procedures for SEFA preparation that include: (1) obtaining and reviewing all grant agreements to identify federal funding sources; (2) establishing regular communication between program and finance departments to identify all federal awards received; (3) maintaining a master listing of all grants that identifies the funding source (federal/state/local) and applicable Assistance Listing Numbers; (4) implementing cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred, not when funds are drawn down from federal systems; and (5) requiring independent review of the SEFA by someone knowledgeable about federal compliance requirements who verifies completeness against grant documentation and proper period reporting. We note that the College's finance office maintains good communication practices with auditors regarding federal funding when they are aware of such awards; therefore, strengthening the internal identification and cutoff processes will enhance the College's ability to provide complete, accurate, and timely information to auditors about all federal funding sources. Views of responsible personnel and planned corrective actions: Management concurs with this finding. The College has implemented immediate corrective actions including development of a comprehensive grant tracking spreadsheet and establishment of regular meetings between program and finance staff. Additionally, effective immediately, all grant applications must be reviewed and approved by the Controller prior to submission to ensure proper identification of funding sources and compliance requirements. The College will also implement cutoff procedures to ensure federal expenditures are reported in the correct period based on when eligible costs are incurred. The Controller will review all G5 drawdowns near year-end to verify proper period reporting. Formal written procedures for SEFA preparation will be implemented by October 15, 2025. The Controller will maintain the master grant listing and review all grant agreements to determine federal funding sources. Beginning with fiscal year 2026 SEFA preparation, the CFO will perform an independent review for completeness and accuracy, including verification of proper period reporting for all federal expenditures.
Criteria or Specific Requirement: Under 2 CFR Part 200.502, the auditee must prepare the Schedule of Federal Awards to cover the appropriate audit period and to include all applicable federal expenditures expended during the audit period. Condition: The City has not historically created or provided a Schedule of Federal Awards for audit purposes and did not include all federa expenditures as required under 2 CFR Part 200.502. Context: The City did not have all federal expenditures recorded in their trial balance, and did not have accurate records of all expenditures spent during the audit period. In addition, they did not have all of the necessary information or training to create the Schedule of Federal Awards. Questioned Costs: None Effect: The City was unable to provide auditors with a complete Schedule of Federal Awards, and could not verify the completeness of expenditures recorded in their financial statements as provided for the audit. Cause: The City does not have processes in place to track all grant spending. Repeat: Yes Auditor's Recommendation: We recommend that the City create processes and procedures that capture all federal funding received, and track applicable expenditures. This report should be reconciled regularly (at least monthly) when requests for reimbursement are made, and should include all applicable information necessary to identify the funding agency, assistance listing number, and any other pertinent passthrough information. With this process in place, the City will be better able to track and monitor grant funding, plan future projects or future funding needs, and prepare for the annual audit. View of Responsible Officials: Management agrees with the auditor's finding and has developed a corrective action plan. See last pages of this report.
Finding 2024-001--Reporting of the Schedule of Expenditure of Federal Awards Federal Agency: U.S. Department of Health and Human Services Federal Program: ALN 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) – Passed through Health Research, Inc. Grant Period: Year ended April 30, 2024 Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Condition: The Organization’s internal controls did not identify amounts expended under the ELC program as federal expenditures. The related grant was inadvertently identified as a state grant and was initially excluded from the schedule of expenditures of federal awards (SEFA). As a result, the Organization should have reported ELC expenditures totaling $1,167,015 on the SEFA for the year ended April 30, 2024. 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 recipient’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. In addition, 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. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Cause: The grant was originally coded as a state grant was overlooked when management prepared the SEFA. Effect: The SEFA was understated by $1,167,015. In addition, the inaccurate preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines established in the Uniform Guidance. Questioned Costs: Not applicable Statistical Sampling: Not appliable Repeat Finding: No Recommendation: We recommend that the Organization implement additional processes and procedures to ensure that the SEFA is complete and accurate. Views of Responsible Officials: We agree with the finding noted above. Although the grant income was federally sourced, our contract was with a state department and was classified as such in our books and records. As soon as the error was realized, we notified the auditors so the necessary corrections could be made. This incident is isolated and not recurring. The grant for which this finding is associated was a temporary grant that has since ended. To prevent future errors from occurring, all new contracts will be reviewed prior to submitting the summary of federal awards to the auditor to ensure that any federally sourced funding is properly identified regardless of grantor. CARES of NY, Inc. will implement a check and balance procedure where the grants director will review the listing prior to audit submission for accuracy.
Criteria or Specific Requirement: Under 2 CFR Part 200.502, the auditee must prepare the Schedule of Federal Awards to cover the appropriate audit period and to include all applicable federal expenditures expended during the audit period. Condition: The City has not historically created or provided a Schedule of Federal Awards for audit purposes and did not include all federa expenditures as required under 2 CFR Part 200.502. Context: The City did not have all federal expenditures recorded in their trial balance, and did not have accurate records of all expenditures spent during the audit period. In addition, they did not have all of the necessary information or training to create the Schedule of Federal Awards. Questioned Costs: None Effect: The City was unable to provide auditors with a complete Schedule of Federal Awards, and could not verify the completeness of expenditures recorded in their financial statements as provided for the audit. Cause: The City does not have processes in place to track all grant spending. Repeat: Yes Auditor's Recommendation: We recommend that the City create processes and procedures that capture all federal funding received, and track applicable expenditures. This report should be reconciled regularly (at least monthly) when requests for reimbursement are made, and should include all applicable information necessary to identify the funding agency, assistance listing number, and any other pertinent passthrough information. With this process in place, the City will be better able to track and monitor grant funding, plan future projects or future funding needs, and prepare for the annual audit. View of Responsible Officials: Management agrees with the auditor's finding and has developed a corrective action plan. See last pages of this report.
Finding 2024-001--Reporting of the Schedule of Expenditure of Federal Awards Federal Agency: U.S. Department of Health and Human Services Federal Program: ALN 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) – Passed through Health Research, Inc. Grant Period: Year ended April 30, 2024 Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Condition: The Organization’s internal controls did not identify amounts expended under the ELC program as federal expenditures. The related grant was inadvertently identified as a state grant and was initially excluded from the schedule of expenditures of federal awards (SEFA). As a result, the Organization should have reported ELC expenditures totaling $1,167,015 on the SEFA for the year ended April 30, 2024. 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 recipient’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. In addition, 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. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Cause: The grant was originally coded as a state grant was overlooked when management prepared the SEFA. Effect: The SEFA was understated by $1,167,015. In addition, the inaccurate preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines established in the Uniform Guidance. Questioned Costs: Not applicable Statistical Sampling: Not appliable Repeat Finding: No Recommendation: We recommend that the Organization implement additional processes and procedures to ensure that the SEFA is complete and accurate. Views of Responsible Officials: We agree with the finding noted above. Although the grant income was federally sourced, our contract was with a state department and was classified as such in our books and records. As soon as the error was realized, we notified the auditors so the necessary corrections could be made. This incident is isolated and not recurring. The grant for which this finding is associated was a temporary grant that has since ended. To prevent future errors from occurring, all new contracts will be reviewed prior to submitting the summary of federal awards to the auditor to ensure that any federally sourced funding is properly identified regardless of grantor. CARES of NY, Inc. will implement a check and balance procedure where the grants director will review the listing prior to audit submission for accuracy.
Federal Agency: United States Department of the Treasury Federal Program: COVID-19 – State Small Business Credit Initiative Technical Assistance Grant Program (21.031) Federal Award Number: SSBCI-21031-0037 Federal Award Year: 2024 State Agency: Department of Economic Development and Office of the State Comptroller Reference: 2024-002 Criteria Reporting In accordance with Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.510(b), 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 section 200.502. For reporting purposes, State Small Business Credit Initiative (SSBCI) capital funds are not considered federal financial assistance. The SSBCI statute, 12 U.S.C. section 5702(c)(5), specifically states that capital funds transferred to jurisdictions are not considered federal financial assistance for the purposes of 31 U.S.C. subtitle V. Funds given to provide technical assistance, however, are considered federal financial assistance. Internal controls Lastly, 2 CFR 200.303(a) states 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). Condition The Office of the State Comptroller (OSC) is responsible for the preparation of the schedule of expenditures of federal awards (SEFA). Annually, OSC provides the New York State agencies with a proposed SEFA with their respective expenditures by assistance listing number and each agency is charged with reviewing and providing adjustments and feedback. The proposed agency SEFA subschedule for State fiscal year 2024 provided to the Department of Economic Development (DED) did not include the expenditures for the SSBCI program. Upon DED review of the proposed agency SEFA subschedule, DED did not identify and report any expenditures for the SBBCI program that had been disbursed by DED. OSC utilized information in the Statewide Financial System (SFS) to populate the SEFA and which included expenditures totaling $154,792,221 for the SSBCI program. The amount was comprised of $151,191,199 related to capital funds and $3,601,022 of technical assistance funds. In accordance with 12 U.S.C. § 5702(c)(5), capital funds are not considered Federal financial assistance and therefore for reporting purposes should not be included on the SEFA. The preliminary SEFA including SBBCI expenditures of $154,792,221 was provided to the auditors and the SBBCI program was selected as a high-risk B program to be audited as a major program for State fiscal year 2024. Upon audit inquiry, it was determined that $151,191,199 related to capital funds and should not have been included on the SEFA. OSC appropriately adjusted the SEFA prior to finalizing the audit. DED did not properly review and report expenditures related to the SSBCI program on their SEFA subschedule. The communication between the Agencies was not sufficient to uncover the improper reporting on the SEFA. Cause DED did not properly review and report expenditures related to the SSBCI program to OSC. Possible Asserted Effect The effect was the incorrect reporting of federal expenditures, which necessitated adjustments on the SEFA during the audit process and highlighted potential compliance and oversight issues. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation To address the identified issues and prevent future occurrences of improper reporting on the SEFA, we recommend that DED thoroughly review and report federal expenditures on their SEFA subschedule. We also recommend OSC review and enhance its guidelines provided to the Agencies to specifically highlight the Agencies responsibility to communicate to OSC any specific requirements of the programs, and the classification and reporting of different types of funds, such as capital funds and technical assistance funds, in accordance with relevant statutes and regulations. By implementing these recommendations, the State can enhance the accuracy and reliability of SEFA reporting, ensure compliance with federal regulations, and improve overall internal controls and communication between the Agencies.
Federal Agency: United States Department of the Treasury Federal Program: COVID-19 – State Small Business Credit Initiative Technical Assistance Grant Program (21.031) Federal Award Number: SSBCI-21031-0037 Federal Award Year: 2024 State Agency: Department of Economic Development and Office of the State Comptroller Reference: 2024-002 Criteria Reporting In accordance with Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.510(b), 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 section 200.502. For reporting purposes, State Small Business Credit Initiative (SSBCI) capital funds are not considered federal financial assistance. The SSBCI statute, 12 U.S.C. section 5702(c)(5), specifically states that capital funds transferred to jurisdictions are not considered federal financial assistance for the purposes of 31 U.S.C. subtitle V. Funds given to provide technical assistance, however, are considered federal financial assistance. Internal controls Lastly, 2 CFR 200.303(a) states 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). Condition The Office of the State Comptroller (OSC) is responsible for the preparation of the schedule of expenditures of federal awards (SEFA). Annually, OSC provides the New York State agencies with a proposed SEFA with their respective expenditures by assistance listing number and each agency is charged with reviewing and providing adjustments and feedback. The proposed agency SEFA subschedule for State fiscal year 2024 provided to the Department of Economic Development (DED) did not include the expenditures for the SSBCI program. Upon DED review of the proposed agency SEFA subschedule, DED did not identify and report any expenditures for the SBBCI program that had been disbursed by DED. OSC utilized information in the Statewide Financial System (SFS) to populate the SEFA and which included expenditures totaling $154,792,221 for the SSBCI program. The amount was comprised of $151,191,199 related to capital funds and $3,601,022 of technical assistance funds. In accordance with 12 U.S.C. § 5702(c)(5), capital funds are not considered Federal financial assistance and therefore for reporting purposes should not be included on the SEFA. The preliminary SEFA including SBBCI expenditures of $154,792,221 was provided to the auditors and the SBBCI program was selected as a high-risk B program to be audited as a major program for State fiscal year 2024. Upon audit inquiry, it was determined that $151,191,199 related to capital funds and should not have been included on the SEFA. OSC appropriately adjusted the SEFA prior to finalizing the audit. DED did not properly review and report expenditures related to the SSBCI program on their SEFA subschedule. The communication between the Agencies was not sufficient to uncover the improper reporting on the SEFA. Cause DED did not properly review and report expenditures related to the SSBCI program to OSC. Possible Asserted Effect The effect was the incorrect reporting of federal expenditures, which necessitated adjustments on the SEFA during the audit process and highlighted potential compliance and oversight issues. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation To address the identified issues and prevent future occurrences of improper reporting on the SEFA, we recommend that DED thoroughly review and report federal expenditures on their SEFA subschedule. We also recommend OSC review and enhance its guidelines provided to the Agencies to specifically highlight the Agencies responsibility to communicate to OSC any specific requirements of the programs, and the classification and reporting of different types of funds, such as capital funds and technical assistance funds, in accordance with relevant statutes and regulations. By implementing these recommendations, the State can enhance the accuracy and reliability of SEFA reporting, ensure compliance with federal regulations, and improve overall internal controls and communication between the Agencies.
2023-001 Internal Controls Over Compliance and Compliance with Reporting - Preparation of the Schedule of Expenditures of Federal Awards Information on the Major Federal Program - Federal Agency: Department of Health and Human Services Assistance Listing Number: 93.855 Assistance Listing Name: Research and Development Cluster Award Number: 1G20AI174721-01 Award Period: 09/16/2022 – 02/29/2024 Criteria: The Uniform Guidance in 2 CFR Section 200.510 (b) states in part: “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 2 CFR Section 200.502 Basis for determining Federal awards expended.” The Schedule must provide total Federal awards expended for each individual Federal program. Condition: Expenditures for a grant under the Department of Health and Human Services program of approximately $1.3 million were incurred in 2023, but improperly not included in the Schedule. These expenditures were incurred but not billed to the federal awarding agency at December 31, 2023. Cause: The internal controls established for the review and reconciliation of the Schedule to the underlying accounting records were not consistently followed to ensure accurate reporting of expenditures to the Schedule. Questioned Costs: None. Context: We reviewed the Schedule and found the exception as noted in the condition. Effect: Failure to properly review and support expenditures reported in the Schedule can result in inaccurate reporting and non-compliance with laws and regulations. Repeat Finding: This is not a repeat finding. Recommendation: Internal controls should be designed to prevent, detect and correct errors and/or omissions in a timely manner. Without adequate controls, the Organization cannot provide reasonable assurance that the Schedule is fairly presented. See management’s response for further details.
Identification of the federal programs 12.800 - Air Force Defense Research Sciences Program - FA8650-20-2-5506. Criteria or Specific Requirement Per 2 CFR Part 200 Subpart F section 200.502, amounts provided to subrecipients should be reported as expended when the disbursement is made to the subrecipient. Condition The Organization recorded disbursements made to subrecipients in the incorrect fiscal year period on the Schedule of Expenditures of Federal Awards. Cause The Organization recorded the expenses in accordance with GAAP rather than with the CFR compliance on the Schedule of Expenditures of Federal Awards. As such the Organization incorrectly incurred expenses in the wrong fiscal year period for the purposes of the single audit. Effect or potential effect Subrecipient expenditures are recorded in the incorrect year. Questioned Costs None noted. Context The condition noted above was identified during the audit procedures related to Subrecipient Monitoring. Identification as a Repeat Finding None Recommendation The Organization should have a formal process put in place to ensure subrecipient expenditures are being recorded in the proper period. Views of Responsible Officials Management concurs with the finding. The Organization revised its review procedures and controls so that subrecipient expenditures are recorded in the proper accounting fiscal year according to 2 CFR Part 200 Subpart F section 200.502, whereby amounts will be reported as expended when the disbursement is made to the subrecipient for single audit purposes. These steps should correct the deficiency.
Finding 2023-001: Internal Controls over Compliance and Other Matters Identification of Federal Funds for Purposes of Assembling the Schedule of Expenditures of Federal Awards – Other U.S. DEPARTMENT OF TRANSPORTATION Highway Planning and Construction (Federal-Aid Highway Program) – ALN 20.205 U.S. DEPARTMENT OF TREASURY COVID-19 - Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “the auditee must 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, Basis for determining Federal awards expended. Condition: Prior to correction, certain federal expenditures were not properly identified on the schedule of expenditures of federal awards (SEFA). During our audit, it was determined total federal expenditures for the Highway Planning and Construction program were overstated by approximately $481,000 and federal expenditures for the Coronavirus State and Local Fiscal Recovery Funds program were understated by approximately $340,000 on the SEFA. Cause: Internal controls were not in place to ensure program related revenues (which are used to prepare the federal expenditures for the SEFA) were properly recorded for the Highway Planning and Construction program and that calculations for the Coronavirus State and Local Fiscal Recovery Funds program were reviewed for accuracy. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not accurately reflect the total amount of federal dollars expended during a particular year. Context: The SEFA was originally overstated by $481,000 for the Highway Planning and Construction program due to reporting $377,000 of expenditures as federal instead of local, reporting $120,000 of remaining encumbrances as 2023 expenditures, and excluding $16,000 of expenditures incurred as a result of recording retainage on a project. The Coronavirus State and Local Fiscal Recovery Funds program expenditures were originally understated on the SEFA by $340,000 due to a formula error relating to the calculation of total federal expenditures for the program. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend staff review procedures related to revenue recognition of its highway construction programs to ensure amounts are properly reported on the SEFA, and that federal expenditure calculations are reviewed for accuracy. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are made on the deficiency noted. Additional details can be found in the City of Bloomington’s Corrective Action Plan.
Finding 2023-001: Internal Controls over Compliance and Other Matters Identification of Federal Funds for Purposes of Assembling the Schedule of Expenditures of Federal Awards – Other U.S. DEPARTMENT OF TRANSPORTATION Highway Planning and Construction (Federal-Aid Highway Program) – ALN 20.205 U.S. DEPARTMENT OF TREASURY COVID-19 - Coronavirus State and Local Fiscal Recovery Funds – ALN 21.027 Criteria: Per 2 CFR 200.510(b) Schedule of expenditures of Federal awards, “the auditee must 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, Basis for determining Federal awards expended. Condition: Prior to correction, certain federal expenditures were not properly identified on the schedule of expenditures of federal awards (SEFA). During our audit, it was determined total federal expenditures for the Highway Planning and Construction program were overstated by approximately $481,000 and federal expenditures for the Coronavirus State and Local Fiscal Recovery Funds program were understated by approximately $340,000 on the SEFA. Cause: Internal controls were not in place to ensure program related revenues (which are used to prepare the federal expenditures for the SEFA) were properly recorded for the Highway Planning and Construction program and that calculations for the Coronavirus State and Local Fiscal Recovery Funds program were reviewed for accuracy. Effect: By not having proper controls over SEFA preparation, there is a risk that the SEFA will not accurately reflect the total amount of federal dollars expended during a particular year. Context: The SEFA was originally overstated by $481,000 for the Highway Planning and Construction program due to reporting $377,000 of expenditures as federal instead of local, reporting $120,000 of remaining encumbrances as 2023 expenditures, and excluding $16,000 of expenditures incurred as a result of recording retainage on a project. The Coronavirus State and Local Fiscal Recovery Funds program expenditures were originally understated on the SEFA by $340,000 due to a formula error relating to the calculation of total federal expenditures for the program. Questioned Costs: $0 Identification of Repeat Finding: Not a repeat finding. Recommendation: We recommend staff review procedures related to revenue recognition of its highway construction programs to ensure amounts are properly reported on the SEFA, and that federal expenditure calculations are reviewed for accuracy. Views of Responsible Officials and Corrective Action Plan: Management agrees with this finding and is in the process of developing internal controls to ensure timely and appropriate actions are made on the deficiency noted. Additional details can be found in the City of Bloomington’s Corrective Action Plan.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS: FINDING TYPE: MATERIAL NONCOMPLIANCE/MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE (REPORTING, CASH MANAGEMENT AND ALLOWABLE COSTS/COST PRINCIPLES. PROGRAMS: SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN; ASSISTANCE LISTING NUMBER 10.557; AWARD NUMBERS 50022 AND 50035, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. ELC CONTRACT TRACING, INVESTIGATION, TESTING COORD., AND INFECTION PREVENTION; ASSISTANCE LISTING NUMBER 93.323; AWARD NUMBER 251126, PASSED-THROUGH THE MICHIGAN DEPARTMENT OF COMMUNITY HEALTH. CRITERIA: THE CODE OF FEDERAL REGULATIONS (CFR) SECTION 200.303(B) REQUIRES NON-FEDERAL ENTITIES TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROL OVER THE FEDERAL AWARD THAT PROVIDES REASONABLE ASSURANCE THAT THE NON-FEDERAL ENTITY IS MANAGING BY THE FEDERAL AWARD IN COMPLIANCE WITH FEDERAL STATUTES, REGULATIONS, AND TERMS AND CONDITIONS OF THE FEDERAL AWARD. CFR SECTION 200.502(A) STATES THAT THE DETERMINATION OF WHEN A FEDERAL AWARD IS EXPENDED SHOULD 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 GRANT AWARDS. THE HEALTH DEPARTMENT REPORTS EXPENDITURES ON THE SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA WHEN THE EXPENDITURE HAS BEEN INCURRED, OR ON THE ACCRUAL BASIS OF ACCOUNTING, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. CFR SECTION 200.510(B) REQUIRES THE AUDITEE TO PREPARE A SEFA FOR THE PERIOD COVERED BY THE AUDITEE'S FINANCIAL STATEMENTS WHICH MUST INCLUDE TH TOTAL FEDERAL AWARDS EXPENDED AS DETERMINED IN ACCORANCE WITH CRF SECTION 200.502(A), AS STATED ABOVE, AND MUST RECONCILE AMOUNTS REPORTED IN THE SEFA TO THE AMOUNTS REPORTED IN THE AUDITEEE'S FINANCIAL STATEMENTS. CONDITION: THE SEFA WAS NOT APPROPRIATELY RECONCILED TO THE FEDERAL GRANT REVENUES AND EXPENDITURES RECORDED IN THE FINANCIAL STATEMENTS. CHANGES WERE MADE TO MAJOR PROGRAM EXPENDITURES, AS WELL AS EXPENDITURES OF OTHR PROGRAMS DURING THE CLOSING PROCESS AND DURING COMPLETION OF THE SINGLE AUDIT TO PROPERLY REPORT EXPENDITURES ON THE SEFA. CLOSING PROCEDURES SHOULD BE IN PLACE TO RECONCILE GRANT EXPENDITURES INCURRED AT YEAR-END, CONFIRM THE AMOUNT AS ELIGIBLE WITH THE GRANTOR, CLAIM THE GRANT REVENUES ON A TIMELY BASIS, RECONCILE THE CLAIM TO THE GENERAL LEDGER, AND ENSURE THE EXPENDITURES THAT WILL BE CLAIMED UNDER FEDERAL AWARDS ARE PROPERTLY REPORTED ON THE SEFA AND AUDITED FINANCIAL STATEMENTS PRIOR TO THE START OF THE SINGLE AUDIT. IF EXPENDITURES REPORTED ON THE SEFA ARE MISSTATED, THE COUNTY COULD FAIL TO HAVE A PROGRAM APPROPRIATELY INDENTIFIED AS A MAJOR PROGRAM AND TESTED AS A MAJOR PROGRAM DURING THE SINGLE AUDIT. FAILURE TO HAVE A PROGRAM AUDITED DURING THE SINGLE AUDIT WOULD RESULT IN NONCOMPLIANCE WITH TITLE 2 U.S. CODE OF FEDERAL REGULATIONS PART 200, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (UNIFORM GUIDANCE). CAUSE: THE WAS THE HEALTH DEPARTMENT'S FIRST STANDALONE AUDIT AND MANAGEMENT HAD NOT PREPARED A SEFA IN THE PAST. EFFECT: THE SEFA RQUIRED MATERIAL ADJUSTMENTS TO INCLUDE ALL FEDERAL EXPENDITURES PRIOR TO THE SINGLE AUDIT BEGINNING, WHICH RESULTED IN A MISSTATED PRELIMINARY SEFA AND INEFFICIENCIES DURING THE SINGLE AUDIT. QUESTIONED COSTS: NO COSTS HAVE BEEN QUESTIONED AS A RESULT OF THIS FINDING. RECOMMENDATION: WE RECOMMEND THAT THE HEALTH DEPARTMENT TRACT THEIR FEDERAL AWARDS MORE REGULARLY AND RECONCILE IT TO THE GENERAL LEDGER. VIEW OF RESPONSIBLE OFFICIALS: THE HEALTH DEPARTMENT WILL REVISIT THEIR PROCEDURES AND METHOD OF FEDERAL AWARDS.
Federal agency: All agencies in the SEFA Assistance Listing Number: See SEFA Award Period: 01/01/2023 to 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Financial Reporting Criteria or Specific Requirement: 2 CFR Section C: Subpart F Audit Requirements § 200.510 Financial statements Part (b) 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 – Basis for determining Federal awards expended. Condition: Adjustments to the SEFA were necessary due to the internal controls not recognizing and correcting expenditures initially reported in the SEFA provided for audit. The SEFA as presented has been adjusted and is correct. Cause: The internal preparation and review processes did not identify the misstatement of the SEFA prepared for audit purposes. Effect or potential effect: If the SEFA is misstated related to the programs and expenditures incurred for the program. This could impact the scope of the audit and therefore the federal agencies’ reliance on the audit results. In addition, inaccurate tracking of federal expenditures may prevent the Organization from identifying when an audit in accordance with Government Auditing Standards and Uniform Guidance is required. Repeat Finding: No Auditor’s Recommendation: We recommend the auditee prepare supporting documentation for the calculation of the SEFA programs and amounts. We also recommend that the supporting documentation is reviewed and agreed with the SEFA for completeness and accuracy. Finally, we recommend that the Organization include fiscal training related to Uniform Guidance if federal programs continue to be a source of revenue. Views of Responsible Officials and Planned Corrective Actions: We agree that, due to data entry errors, the SEFA provided at the start of the single audit did not include the appropriate and applicable federal expenditures. We will be more diligent in the preparation of the SEFA to help prevent the potential for inadvertently misrepresenting the total federal expenditures and avoid the necessity for adjustments to the SEFA in future audits. At the issuance of the reports, we have enhanced our internal controls and processes related to the preparation of the SEFA to prevent this situation in future years. Our goal is to eliminate any errors to ensure that all applicable federal expenditures are complete and accurate.
Federal agency: All agencies in the SEFA Assistance Listing Number: See SEFA Award Period: 01/01/2023 to 12/31/2023 Type of Finding: Significant Deficiency in Internal Control Over Financial Reporting Criteria or Specific Requirement: 2 CFR Section C: Subpart F Audit Requirements § 200.510 Financial statements Part (b) 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 – Basis for determining Federal awards expended. Condition: Adjustments to the SEFA were necessary due to the internal controls not recognizing and correcting expenditures initially reported in the SEFA provided for audit. The SEFA as presented has been adjusted and is correct. Cause: The internal preparation and review processes did not identify the misstatement of the SEFA prepared for audit purposes. Effect or potential effect: If the SEFA is misstated related to the programs and expenditures incurred for the program. This could impact the scope of the audit and therefore the federal agencies’ reliance on the audit results. In addition, inaccurate tracking of federal expenditures may prevent the Organization from identifying when an audit in accordance with Government Auditing Standards and Uniform Guidance is required. Repeat Finding: No Auditor’s Recommendation: We recommend the auditee prepare supporting documentation for the calculation of the SEFA programs and amounts. We also recommend that the supporting documentation is reviewed and agreed with the SEFA for completeness and accuracy. Finally, we recommend that the Organization include fiscal training related to Uniform Guidance if federal programs continue to be a source of revenue. Views of Responsible Officials and Planned Corrective Actions: We agree that, due to data entry errors, the SEFA provided at the start of the single audit did not include the appropriate and applicable federal expenditures. We will be more diligent in the preparation of the SEFA to help prevent the potential for inadvertently misrepresenting the total federal expenditures and avoid the necessity for adjustments to the SEFA in future audits. At the issuance of the reports, we have enhanced our internal controls and processes related to the preparation of the SEFA to prevent this situation in future years. Our goal is to eliminate any errors to ensure that all applicable federal expenditures are complete and accurate.
FINDING 2023-001 Program Information: Temporary Assistance for Needy Families (ALN #93.558) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): L. Reporting- The auditee must prepare a schedule of expenditures of Federal awards (the “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 Basis for determining Federal awards expended. At a minimum, the schedule must: (1) List individual Federal programs by Federal agency. For a cluster of programs, provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For Research and Development (“R&D”), total Federal awards expended must be shown either by individual Federal award or by Federal agency and major subdivision within the Federal agency. (2) For Federal awards received as a subrecipient, the name of the passthrough 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 Assistance Listing number or other identifying number when the Assistance Listing 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. (5) For loan or loan guarantee programs described in 2 CFR 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule. (6) Include notes that describe that significant accounting policies used in preparing the schedule and note whether or not the auditee elected to use the 10% de minimis cost rate as covered in 2 CFR 200.414. Condition: The SEFA as prepared by management did not originally include all expenditures for one federal grant. Cause: The Organization has a process where administrative expenses and management travel expenses are charged to a general fund code. A portion of those expenses related to the TANF program are then reclassed to the TANF fund code. We note some of those administrative and travel expenses did not get reclassed into the TANF fund code and as a result, the draft SEFA was not fully complete. Effect or Potential Effect: The original draft SEFA was incomplete. Questioned Costs: None. Context: During the process to compile and prepare the draft SEFA, certain administrative and travel costs were excluded from the draft SEFA, which resulted in the SEFA being understated by approximately $14,000. Identification as a Repeat Finding: Similar findings noted in the prior year. Recommendation: We recommend that the Alliance enhance its procedures and internal controls with respect to general ledger coding of expenses, preparation and review of the SEFA. Views of Responsible Officials and Planned Corrective Actions: Management will review SEFA for proper inclusion of all federal grant expenditures, and Alliance Director will ensure all invoices are properly coded to grants as applicable.
Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grants Assistance Listing Number: 14.228 Federal Award Identification Number and Year: B-21-DC-08-0001 2021 Pass-Through Agency: Colorado Department of Local Affairs Pass-Through Number: F20CDBG20630 Award Period: April 1, 2020 – March 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Criteria or Specific Requirement: 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), the Council should report all federal expenditures in the schedule of expenditures of federal awards (SEFA) each fiscal year. Additionally, per 2 CFR section 200.502(a)-(d), the determination of when a federal award is expended must be based on when the activity related to the federal award occurs, including the value of new loans made during the audit period. Condition: In reviewing the expenditure detail and supporting documentation for the 2023 SEFA, the Council included $150,000 of excess federal expenditures that were not disbursed in 2023. Questioned Costs: None Context: The inclusion of excess expenditures to be reported in 2024 was identified during completeness testing of the current year major program. Cause: SEFA expenditures for the CDBG program were not reconciled to loan disbursements in 2023. Management misinterpreted the loan amount report provided by NLF’s loan management software. One loan for $150,000 was disbursed during 2023 and another $150,000 loan was disbursed to the same borrower in 2024. However, all $300,000 was initially reported on the 2023 SEFA. Effect: The 2023 SEFA was initially overstated by $150,000, and was subsequently adjusted. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-003. Recommendation: We recommend that the Council record federal expenditures on the SEFA under the program in the year upon which the loan disbursement occurs using the proper report from NLF’s loan management software. Views of Responsible Officials: There is no disagreement with the audit finding.
Condition: This finding is repeated from the financial statement section. Before beginning the audit, inquiry was made of management about the amount of federal funds expended in the audit year ending December 31, 2023. Management indicated $160,000 in grant funds had been expended by forwarding an eamil from GWADD. In the course of our audit, we determined the district spent $1,764,760 in Federal loan funds, along with $6,933 in Rural Develoment grant proceeds. Managment was unable to provide evidence of proper internal controls over expenditures of Federal funds, i.e. written procedures. Criteria: 2 CFR 200.510 (b) states in part, "Schedule of expenditures of Federal awards. The auditee must also prepare a schedul of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as detrmined in accordance with 2 CFR 200.502." Effect: Failure to disclose the correct amount of federal funds expended. Cause: Failure to implement proper internal controls. Recommendation: We recommend the District implement proper internal controls over expenditures of Federal funds, including written procedures. We also recommend the District compete a schedule of expenditures of Federal awards (SEFA) in any year federal funds are expended.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
Significant Deficiency in Compliance and Internal Control over Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards). Criteria: CFR Section §200.510(b) states in part: “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 CFR Section §200.502 Basis for determining Federal awards expended.” For a cluster of programs, the schedule must provide the cluster name, list individual Federal programs within the cluster of programs, and provide the applicable Federal agency name. For a cluster of programs, the total for the cluster must also be provided. Condition: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed. BDO identified the following matters during our testing of the SEFA: During our testing of management’s preparation of the Schedule of Expenditures of Federal Awards (the SEFA), BDO identified 22 awards that were incorrectly classified as research and development. In each case, the federal awarding agency or pass-through entity noted in the award agreement the award was not classified or considered as research and development. Management subsequently updated the classifications on the SEFA and corrected the presentation of various programs presented as both clusters and nonclusters on the SEFA. The SEFA, as presented, includes the corrections made by management. Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Any samples selected as part of the overall SEFA review were performed using a non-statistical method. Cause: The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not fully operate as designed. Urban prepares the SEFA once per year in conjunction with the annual audit and did not include a procedure to properly identify research and development classification. Effect: The SEFA provided to BDO required several awards to be removed from the research and development cluster. Failure to present the SEFA correctly would have resulted in incorrect major program selection and an incorrect presentation of the overall SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend management continue to focus on training for both preparer and reviewers of the SEFA to ensure the identification of research and development classification from federal awarding agencies or pass-through entities is properly captured on the schedule. We suggest this review process begin before the Institute signs an award agreement to determine whether the agreement states whether it is considered to be research and development. The Institute would then be aware of the classification prior to committing to the terms of the award. This will ensure that the SEFA presents all relevant information as prescribed to ensure proper reporting on the SEFA and major program determination. Views of Responsible Officials: Management of the Institute agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.