Criteria: Per 2 CFR 200.510(b), the auditee must include in the SEFA “the total Federal awards expended for each individual Federal program and the Assistance Listing number”. Statement of Condition: During our audit, we noted that expenditures reported for Assistance Listing 14.251 – Economic Development Initiative, Community Project Funding, and Miscellaneous Grants were understated by approximately $155,000 on the FY 2025 SEFA. This understatement resulted in the SEFA not accurately reflecting the total federal expenditures for this program as required. Cause: The understatement appears to be due to errors in compiling and reconciling federal expenditures during SEFA preparation. Effect or Potential Effect: An understated SEFA can result in: Federal expenditures being misclassified or omitted; Incorrect major program determination; Potential noncompliance with Uniform Guidance reporting requirements; and inaccurate reporting to the Federal Audit Clearinghouse. Questioned Costs: $- Recommendation: We recommend that management: Strengthen its SEFA preparation procedures to ensure all federal expenditures are captured, reconciled, and accurately assigned to the correct Assistance Listing; implement an internal review process verifying completeness of expenditures, including comparison of SEFA totals to the general ledger and grant-level schedules; and review all federal program totals prior to finalizing the SEFA to ensure compliance with 2 CFR 200.510(b). Management Response: See corrective action plan.
Finding: 2025-001. Insufficient Controls Over Monitoring Federal Expenditures and SEFA Preparation Federal Agency: Federal Highway Administration Pass-through Agency: Texas Department of Transportation Assistance Listing Number: 20.205 Federal Program Name: Highway Planning and Construction Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR §200.303 requires entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance the entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the awards. 2 CFR §200.501 requires a Single Audit when a non-Federal entity expends $1,000,000 or more in Federal awards during the current fiscal year (or $750,000 during the prior year). 2 CFR §200.510(b) requires the preparation of a complete and accurate Schedule of Expenditures of Federal Awards (SEFA). Applicable GAAP requires recognition of grant revenue and related receivables when allowable expenditures are incurred. Condition: The City incurred reimbursable federal expenditures in the prior year but did not submit reimbursement requests or record the related receivable and revenue. As a result, certain federal expenditures were omitted from the SEFA, and total federal expenditures were understated below the $750,000 threshold for a Single Audit in the prior year. Cause: Grant administration is decentralized across multiple departments, and formal controls were not in place to reconcile grant expenditures to reimbursement requests or to monitor total federal expenditures and review the SEFA for completeness. Effect: Grant revenue and related receivables were understated, and the prior year SEFA was incomplete. As a result, the City did not include this grant award in the Single Audit in the prior year as required by Uniform Guidance. Questioned costs: N/A Context: N/A Repeat finding reference: N/A Recommendation: The City should strengthen oversight of federal grant activity by implementing procedures to monitor federal expenditures and ensure the SEFA is complete and accurate. This may include centralizing grant oversight within the finance function or designating a responsible grant administrator. Procedures should include periodic reconciliations of grant expenditures to reimbursement requests and a formal year-end review of total federal expenditures and the SEFA, with coordination between the finance function and departments administering federal programs. Personnel involved in grant administration should receive training on Uniform Guidance requirements. View of Responsible Officials Management’s response and corrective action plan are included in the accompanying corrective action plan.
Condition: The City has not adopted procedures (controls) to ensure compliance with 2 CFR 200 regarding the preparation and completion of the schedule of expenditures of federal awards and the accompanying notes and disclosures required by Uniform Guidance. Criteria: 2 CFR 200.510(b) Cause of Condition: Unfamiliarity with requirements stated in 2 CFR 200 of Uniform Guidance. Effect of Condition: Effect is potential errors in reporting and preparation of the schedule of expenditures of federal awards which could cause non-compliance with 2 CFR 200. Recommendation: Adopt and implement procedures (controls) to become compliant with Uniform Guidance.
Criteria: In accordance with 2 CFR section 200.510(b) (Uniform Guidance), “the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with § 200.502.” Condition: The College did not have controls in place to ensure the Schedule of Expenditures of Federal Awards (SEFA) was accurately reconciled with the general ledger. As a result, there were discrepancies between the amounts reported on the SEFA and the actual expenditures in the College’s accounting records. Cause: The College does not have a process in place to reconcile the SEFA to the general ledger to ensure accurate records. Expense entries (expenditures) are posted by several people across the campus when funds are spent. Revenue entries (drawdowns) are posted by the business office, however there is no process to ensure these drawdowns are the same as the amounts expended. Revenue is also not deferred to the appropriate period when necessary as part of a SEFA reconciliation process. Effect: Without proper reconciliation procedures, there is an increased risk that the SEFA may be materially misstated. The current year SEFA contained net adjustments of $209,443 made by the auditors to reconcile to the general ledger and award letters. Repeat Finding from Prior Year: Yes Recommendation: We recommend management establish an informal procedure to reconcile grant funds received with funds expended on a regular basis. We also recommend management implement a formal procedure to reconcile the SEFA with the general ledger at year end. Views of Responsible Officials: The Comptroller will reconcile this report on a monthly basis making sure that all grants and other Federal / State expenditures are on the SEFA and that the two numbers reconcile with the general ledger. This will be kept in a notebook and the calendar kept in the Comptroller’s desk. The Comptroller will also create a folder in the business office folder on the server and input the current SEFA in this folder and show any discrepancies on a monthly basis and every time this report is run for drawdowns. This process will start immediately. The Comptroller will also make sure at year end that all items are on this report and they have been reconciled with the general ledger. This process will also be in the notebook and calendar within the desk of the Comptroller
2025-002 SEFA Presentation Error – Prior Year Program Name/Assistance Listing Number: 93.788 Opioid STR Federal Agency: Department of Health and Human Services Type of Finding: Significant Deficiency Compliance Requirement: Reporting Criteria: Uniform Guidance (2 CFR §200.510(b)) requires that the Schedule of Expenditures of Federal Awards (SEFA) accurately present all federal awards, including the correct identifying numbers assigned by pass-through entities for each award. Accurate reporting is essential to ensure compliance with funding requirements and enable proper tracking and monitoring of federal awards. Condition: During the current year audit, it was noted that the prior year’s SEFA contained an underreporting of $206,206.41 related to Grant ID 2401119 – Think Act and Live 2.0. While the total expenditures under the correct Assistance Listing Number (ALN) were accurate, the amounts assigned to this specific Grant ID were misclassified or omitted. Cause of Condition: The error occurred due to insufficient review procedures over SEFA preparation, specifically related to the accuracy of pass-through identifying numbers and grant-level allocations. Potential Effect of Condition: Although the error did not impact major program determination or the prior year audit opinion, it led to an incomplete and inaccurate SEFA presentation, which could affect tracking and monitoring of specific awards. Questioned Cost: Not applicable – the expenditures were allowable but misclassified. Recommendation: We recommend that management strengthen SEFA preparation and review controls by the following: a. Performing a detailed verification of grant-specific information, including Grant IDs, pass through numbers, and related allocations. b. Implementing a formal review process to ensure accuracy and completeness of the SEFA prior to submission. Description of the Nature and Extent of Issues Reported: During the current year audit, all misclassified expenditures related to Grant ID 2401119 – Think Act and Live 2.0 in the prior year SEFA were identified. The total underreported amount is $206,206.41, which exceeds both the program-level materiality threshold of $91,000 (based on a 5% benchmark of total awards expended for the major program 93.788) and the $25,000 SEFA reporting threshold under 2 CFR §200.516(a)(3). Management Response: Management concurred with the finding. The Organization has implemented the necessary internal controls to ensure that the grant reporting accurately reflects the expenditures for each of the respective grants.
Assistance Listing Number, Federal Agency, and Program Name ALN 14.251, U.S. Department of Housing and Urban Development, Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Federal Award Identification Number and Year B 23 CP CO 0287 (2024) and B 23 CP WY 1616 (2024) Pass through Entity None Finding Type Material weakness Repeat Finding No Criteria The Organization should report its federal expenditures in the schedule in accordance with Uniform Guidance 2 CFR 200.510(b). Condition The 2025 schedule was initially overstated to include federal awards relating to ALN 14.251, Economic Development Initiative, Community Project Funding, and Miscellaneous Grants, expended during the year ended June 30, 2024. Questioned Costs None If Questioned Costs Are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported N/A Identification of How Questioned Costs Were Computed N/A Context During audit testing over ALN 14.251, Economic Development Initiative, Community Project Funding, and Miscellaneous Grants, auditors identified $666,783 of expenditures related to fiscal year 2024 that were improperly included in the fiscal year 2025 schedule. The Organization subsequently amended the fiscal year 2025 schedule to exclude the fiscal year 2024 expenditures. Cause and Effect The Organization did not identify certain expenditures relating to fiscal year 2024 that were improperly included on the schedule during fiscal year 2025. The initial schedule provided to the auditors was overstated by $666,783, which impacted the initial major program determination. Recommendation We recommend the Organization evaluate its accounting policies to ensure federal awards are properly recognized in the schedule in the year of expenditure in accordance with Uniform Guidance 2 CFR 200.510(b). Views of Responsible Officials and Corrective Action Plan Food Bank of the Rockies, Inc. received a reimbursement grant for vehicles from the Department of Housing and Urban Development (HUD). While we purchased the vehicles in fiscal year 2024, we could not file the claim for reimbursement until fiscal year 2025. Guidance on the HUD claims process was greatly delayed for multiple reasons. We posted the cost and asset when ordered, following accounting principles generally accepted in the United States (GAAP). However, we did not include the funding on the 2024 schedule, as we had not yet filed the reimbursement claims, nor been given assurance they would be paid. Instead, we included it in the fiscal year 2025 schedule, as that was when the claims were filed and we had confirmation they would be paid in full. We understand now that, per Uniform Guidance 2 CFR 200.51(b), those funds should have been shown in the fiscal year 2024 schedule. With this understanding, moving forward we will include in the schedule amounts that have been spent for which we have an agreement for reimbursement, regardless of timing of the claim being filed or level of certainty of reimbursement.
Assistance Listing Number, Federal Agency, and Program Name - N/A, Schedule of Expenditures of Federal Awards (SEFA) Reporting Federal Award Identification Number and Year - N/A Pass through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - Uniform Guidance (2 CFR 200.510(b)) requires a schedule of expenditures of federal awards (SEFA) that must provide total federal awards expended for the period covered by the auditee's financial statements. Federal awards expended in accordance with §200.502 should be based on when the underlying activity related to the federal award occurs. Condition - During our review of the schedule of expenditures of federal awards, we noted that certain federal program expenditures were included in the SEFA for the fiscal year ended June 30, 2025 even though the underlying activity occurred in 2024. The College did not have adequate controls in place to ensure the SEFA was prepared to include appropriate expenditures for the Economic Development Cluster in the proper period. Questioned Costs - N/A Identification of How Questioned Costs Were Computed - N/A Context - During our review of the College's SEFA, we noted expenditures of $318,814 that were improperly included within the Economic Development Cluster in 2025. Based on review of underlying expenditures on vendor pay applications, expenditures should have been included on the SEFA in 2024. Cause and Effect - The College did not have adequate processes and internal control structure in place to ensure SEFA expenditures were recorded in the appropriate period. As a result, the SEFA is overstated by $318,814 in 2025. If the SEFA does not accurately reflect federal expenditures for the audit period, this could lead to misinterpretation of compliance requirements and inaccurate reporting to federal agencies. Recommendation - We recommend management implement procedures to ensure the SEFA preparation is based on the timing of the underlying activity rather than payment dates. Views of Responsible Officials and Planned Corrective Actions - The College will establish the proper controls to ensure that the SEFA is prepared based on the timing of the underlying activity rather than payment dates.
The City is required to have internal controls in place that enable it to prepare complete financial statements, including the schedule of expenditure of federal awards in accordance with generally accepted accounting standards and in accordance with the Uniform Guidance at 2 CFR 200.510(b).
Assistance Listing Number, Federal Agency, and Program Name - ALN 66.202, U.S. Environmental Protection Agency - Congressionally Mandated Projects Federal Award Identification Number and Year - CG-00E03697-0, 2024 Pass through Entity - N/A Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.510(b), 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. 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. Condition - Controls were not in place to ensure that the schedule of expenditures of federal awards (SEFA) was complete and accurate. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not Be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - In fiscal year 2025, the Village expended approximately $935,000 of federal funding from various federal agencies. The Village accumulates the financial data and other required information to complete the SEFA. Expenditures under grant ALN 66.202, Congressionally Mandated Projects, were originally overstated by $40,088 due to duplication of costs. No controls were in place to identify incompleteness or inaccuracy of the SEFA. Cause and Effect - No review or other control was in place to ensure the SEFA was complete and accurate. As a result, ALN 66.202, Congressionally Mandated Projects, expenditures were overstated by $40,088. This error has been corrected on the SEFA as of June 30, 2025. Recommendation - The Village should implement controls to ensure the SEFA is reviewed for completeness and accuracy. Views of Responsible Officials and Planned Corrective Actions - The Village has hired an outside contractor to assist with review of audit documents.
Management acknowledged its responsibility to establish and maintain effective internal controls to reasonably assure compliance with federal statutes, regulations and terms and conditions of federal awards and controls relating to preparing the Schedule of Expenditures of Federal Awards (the Schedule), as required by Uniform Guidance (2 CFR § 200.303(a)), in the audit engagement letter. Furthermore, Uniform Guidance (2 CFR Subpart F § 200.510(b)) requires the auditee prepare the Schedule for the period covered by the District’s financial statements which must include the total federal awards expended as determined in accordance with § 200.502. Due to insufficient controls over the monitoring of grant activity, the District did not retain appropriate support on the dates of the determination to charge prior year costs to the American Rescue Plan Elementary and Secondary School Emergency Relief Fund (ARP ESSER) grant in the amount of $678,544. The grant award was for $1,019,060, which had a grant period spanning calendar years 2020 through 2024. Lack of maintaining such documentation could result in expenditures determined to be unallowable under grant guidelines and funds required to be returned. Ineffective internal controls related to federal grants could lead to noncompliance with program requirements. Additionally, the determination of unallowable costs could have an adverse effect on future grant awards by the awarding agency or agencies in addition to an inaccurate assessment of major federal programs that would be subjected to audit. District management should implement a system to review the Schedule for errors and omissions as well as a method to monitor the related internal controls over compliance with federal grant requirements. This will help ensure the Schedule is complete and accurate, major federal programs are accurately identified for audit, and internal controls over compliance requirements are implemented and operating effectively.
Finding 2025-003 – Misreporting of Pass-Through Grant Expenditures in SLFRF Compliance Report Criteria: Per Uniform Guidance (2 CFR 200.331 and 2 CFR 200.510), pass-through entities must clearly identify federal awards to subrecipients, including the source of funding, applicable federal requirements, and the Assistance Listing number (21.027 for SLFRF). Subrecipients are required to report only those federal expenditures they directly administer on their Schedule of Expenditures of Federal Awards (SEFA), and not those administered by the pass-through entity. Expenditures of federal pass-through funds should be reported by the pass-through entity (e.g., OWRB) and not by the subrecipient (the City of Sand Springs). Condition: During review of the ARPA Funds Project Spending for March 2025, it was identified that the City of Sand Springs reported $2,392,701.84 in current period expenditures for project #479952 in the SLFRF Compliance report. However, only $1,109,205.41 should have been reported. The discrepancy resulted from the mistaken inclusion of expenditures from the OWRB Grant (a federal pass-through grant from ARPA) in the City of Sand Springs's SLFRF report. Cause and Effect: The Finance Director was unaware that the City of Sand Springs was utilizing OWRB funds (ARPA pass-through) first, followed by direct ARPA funds. As a result, expenditures from the OWRB Grant were incorrectly included in the City of Sand Springs's SLFRF Compliance report, rather than being reported by OWRB as the pass-through entity. The City of Sand Springs's SLFRF Compliance report overstated federal expenditures by $1,283,496.43 for the period. This misreporting could result in inaccurate federal reporting, potential questioned costs, and noncompliance with Uniform Guidance and SLFRF requirements. It also constitutes a significant deficiency in internal controls over federal award reporting. Recommendation: We recommend that the City of Sand Springs implement procedures to ensure that only expenditures of direct federal awards are reported in the SLFRF Compliance report. Expenditures from federal pass-through grants should be tracked separately and reported by the appropriate pass-through entity. Staff responsible for federal reporting should receive training on the distinction between direct and pass-through federal funds and related reporting requirements. Management Response: Management concurs with the finding. The Finance Department will update its procedures to ensure that only direct ARPA funds are reported in the SLFRF Compliance report. Expenditures from OWRB pass-through grants will be tracked separately and excluded from the City of Sand Springs's SLFRF reporting. Staff will receive additional training on federal grant reporting requirements. The City of Sand Springs will coordinate with OWRB to ensure proper reporting of pass-through funds.
Federal Agency: Department of Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Agency: Wood County ADAMH Board Award Period: May 8, 2024 – September 29, 2026 Type of Finding: Significant Deficiency in Internal Control Over Compliance and Other Matter Criteria or Specific Requirement: Uniform Guidance (2 CFR Part 200.510) provides requirements over procurement and suspension & debarment for grantees when entering into contracts funded by federal programs. Questioned Costs: None Condition: No suspension and debarment exclusion check was performed for one of the two contractors paid with funds under the federal program. Cause: No formal procurement and suspension and debarment policies were in place for the year under audit. Context: Of the two contracts entered into for the program, suspension and debarment checks were not performed for one of the two contractors. Effect: Federal funds could have been paid to a federally suspended and debarred entity. Per review of the federal suspension and debarred list, both entities contracted with under the grant are not suspended or debarred. Repeat Finding: No Recommendation: Implementation of a formal procurement and suspension and debarment policy that includes procedures over review of the federal suspension and debarred listing, that is in compliance with the Uniform Guidance. Procurement policy should include general procurement standards as described by the Uniform Guidance, that include standards on conduct covering conflicts of interest; method of procurement for micro-purchases, small purchases, sealed bids, and proposals; and all other criteria as outlined in 2CFR 200.318 through 200.327. Views of Responsible Officials and Planned Corrective Actions: Management will develop and implement a procurement policy that is in compliance with the Uniform Guidance.
2025-003 (2023-002) – INACCURATE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition The Schedule of Expenditures of Federal Awards (SEFA) was provided timely to the auditors; however, several adjustments were identified during the audit process: • The SEFA incorrectly included match expenditures, requiring an reduction to the federal expenses of $324,936. Without accurate recording of federal award expenditures, auditors cannot appropriately assess and select federal programs for testing as mandated by the Single Audit Act. Management’s Progress Toward Prior Year Corrective Action Plan: The County has made progress toward addressing the prior year’s SEFA accuracy finding; however, additional corrections remain necessary, as noted above. Criteria 2 CFR § 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements. Good internal control practices require the entity to have documented procedures for: • Properly identifying federal, state, and other funding sources. • Classifying expenditures accurately under the correct federal assistance listing numbers. • Ensuring expenditures reported on the SEFA are accurate and presented according to requirements. Additionally, 2 CFR 200.510(b) mandates the preparation of an accurate and complete SEFA for the audit period, including federal expenditures as determined in accordance with 2 CFR 200.502. Cause The County did not have comprehensive controls to ensure that all federal expenditures are correctly tracked, accurately classified, and properly reported on the SEFA. Effect Without accurate, timely tracking and reporting of federal expenditures, the County is at risk of improperly accounting for federal awards, potentially leading to noncompliance, questioned costs, or repayment obligations. Recommendation We recommend that the County establish, document, and implement a comprehensive internal control structure specifically designed to: • Clearly identify, track, and report grant expenditures. • Accurately distinguish between federal and non-federal expenditures. • Prepare and review the SEFA regularly to ensure completeness, accuracy, and compliance with the Uniform Guidance (2 CFR 200.502 and .510) accrual-basis requirements.
Condition: The SEFA was inaccurately prepared and did not fully reconcile to the general ledger. Cause: Insufficient reconciliation and review procedures over SEFA preparation. Effect: Federal expenditures may be misstated, resulting in noncompliance with reporting requirements. Criteria: 2 CFR 200.510(b) and 200.302 require the SEFA to be accurate and supported by underlying accounting records. Recommendation: Implement documented reconciliation and review procedures to ensure the SEFA agrees to the general ledger prior to issuance.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Reference Number: 2025-001 Schedule of Expenditures of Federal Awards Presentation Significant Deficiency and Noncompliance Condition The audit found that the City did not include a Federal Emergency Management Agency (FEMA) award, assistance listing number 97.036, totaling $101,355, on the Schedule of Expenditures of Federal Awards (SEFA). The FEMA funds were obligated during fiscal year 2025, after the related expenditures had been incurred and approved, so they should have been reported on the SEFA for the June 30, 2025 year-end audit according to the Office of Management and Budget Compliance Supplement. Consequently, the total federal expenditures were initially reported as less than the actual amount. Criteria All federal awards, including those provided by FEMA, must be reported on the SEFA. According to 2 CFR Section 200.510 (b) of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), the auditee must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements. This schedule must include all federal awards expended as defined in 2 CFR section 200.502. Excluding federal awards from this reporting may result in noncompliance with federal regulations and audit requirements. Cause The exclusion of the FEMA award from the SEFA was due to a misrepresentation of the reporting requirements for federal disaster assistance. Effect or Potential Effect Omitting any federal awards from the SEFA can result in the failure to recognize when a single audit is required, potentially leading to the City missing this crucial audit. Without a complete SEFA and the associated single audit, there is a heightened risk of noncompliance with federal regulations, which may jeopardize the City’s eligibility for future federal funding. Additionally, the absence of a single audit increases the likelihood that mismanagement or misuse of federal funds remain undetected. Federal agencies may also respond by imposing sanctions or demanding repayment of any costs deemed questionable due to incomplete reporting and lack of proper oversight. Recommendation It is recommend that the City: Review and update policies and procedures for identifying, recording, and reporting all federal awards, including disaster assistance. Implement a formal review process to ensure completeness and accuracy of the SEFA prior to submission and annual audit engagement. Consult with external auditors or grant specialists when uncertainty exists regarding the inclusion of specific awards. Management’s Response The expenditure occurred in calendar year 2020 and 2021. Since these funds were emergency funds, no deferred revenue was accrued since staff was uncertain of whether costs would be eligible for reimbursement. Final revenues of $101,355 were received in FY2025, and staff recorded the revenue received on the SEFA, but not the expenditure. Going forward, staff will report expenditures on the SEFA when eligible expenditures are approved by FEMA.
2025-013: Improve Financial Management of Federal Grants Applicable to: Department of Wildlife Resources Assigned Topic: Federal Grants Management Prior Finding Number: N/A Finding Type: Internal Control and Compliance Finding Severity: Material Weakness Financial Statement Finding: No Federal Awards Finding: Yes ALPT - ALN: Sport Fish Restoration - 15.605; Wildlife Restoration and Basic Hunter Education and Safety - 15.611; Enhanced Hunter Education and Safety - 15.626 Federal Award ID (Year): F20AF10048 (2020); F20AF11897 (2020); F21AF02409 (2021); F22AF01121 (2022); F23AF00654 (2023); F23AF03173 (2023); F23AF03185 (2023); F24AF02770 (2024); F24AF02896 (2024); F24AF02903 (2024) Federal Agency: U.S. Department of the Interior Compliance Requirement: Allowable Costs/Cost Principles - 2 CFR § 200.302; 2 CFR § 200.303(a); 2 CFR § 200.305; 2 CFR § 200.510(b); 31 CFR § 205.33 Known Questioned Costs: $0 The Department of Wildlife Resources (Wildlife Resources) should improve its financial management of federal grants and documentation of internal controls to ensure compliance with state and federal requirements. Wildlife Resources has experienced recent turnover in its grants staff positions. Wildlife Resources has hired new staff; however, there was no transition period with the previous staff, and the previous grants staff did not sufficiently document internal controls over the federal programs. Staff have started documenting desk procedures, but agency-wide policies and procedures remain lacking. As such, grants staff did not appear to have sufficient knowledge of statewide policies and procedures to adequately perform the federal grants management processes in accordance with federal regulations and the Commonwealth Accounting Policies and Procedures (CAPP) Manual. We identified the following issues: Wildlife Resources should amend its procedures to comply with CAPP Manual requirements for cash management of federal funds. CAPP Manual Topic 20605 states that two methods of recording "split" funded expenses are acceptable. The method preferred by the State Comptroller is to establish procedures to "split code" the expenses by allocating the disbursement between a state fund and the federal fund at the matching ratio prescribed by the grant or contract. A second, and temporary, funding method allows the agency to charge the original expense to a state fund and subsequently, within seven business days, prepare and submit a general ledger journal in the Commonwealth’s accounting and financial reporting system to charge the federal fund for the federal portion of the original expense, referencing the original voucher in the journal reference line for transparency. If a state agency cannot comply, the agency must request approval from the State Comptroller. Wildlife Resources follows the temporary funding method to record its federal expenses. Wildlife Resources spends from state funds and then performs journal entries to move transactions to the federal fund in bulk with some journal entries representing hundreds of individual transactions, which does not allow for transparency regarding the nature of Wildlife Resources federal expenses. Further, our analysis found that Wildlife Resources enters journal entries for federal drawdowns up to three months after the original transaction date which is not consistent with the seven-day requirement in CAPP Manual Topic 20605. Per 2 Code of Federal Regulations (CFR) § 200.302, a recipient must comply with state laws and procedures for expending and accounting for the State's funds. Additionally, the untimely performance of these extensive journal entries may result in Wildlife Resources recording journal entries in the wrong fiscal year, which could result in inaccurate information within the Commonwealth’s Annual Comprehensive Financial Report. Wildlife Resources does not maintain adequate support for its journal entries. CAPP Manual Topic 20405 requires the agency to retain sufficient supporting documentation to provide auditable records containing evidence of required coding elements for journal entries. Wildlife Resources’ journal entries lack documentation related to changes in coding. Further, Wildlife Resources does not maintain supporting documentation for journal entries in one accessible location which would allow for sufficient supervisory review. Not maintaining adequate supporting documentation over journal entries increases the risk of inaccurate or fraudulent transactions. Wildlife Resources also does not have policies and procedures in place that detail how it creates the journal entries, what type of documentation to retain to support journal entries, or how Wildlife Resources ensures it only moves allowable costs to the federal fund. Title 2 CFR § 200.303(a) requires recipients to establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. During fiscal year 2025, in response to our Office’s 2024 Internal Control Questionnaire Review, Wildlife Resources established a bimonthly drawdown and journal entry schedule to ensure timely drawdown of federal funds to reimburse expenses originally incurred within state funds and to assist in remediation of its cash flow issues. Per 31 CFR § 205.33, a state must minimize the time between the drawdown of federal funds from the federal government and their disbursement for federal program purposes in accordance with the actual, immediate cash requirements of the state. The timing and amount of funds transfers must be as close as is administratively feasible to a state's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs. However, based on our analysis of drawdowns, while Wildlife Resources has made progress in the rate of drawdowns since the previous review, due to staff shortages, Wildlife Resources has not fully followed its drawdown schedule to ensure timely drawdowns of federal funds, which could exacerbate the agency’s cash flow issues. Specifically, the drawdown schedule included twenty planned drawdowns, however Wildlife Resources completed only eleven (55%) in accordance with that schedule. Furthermore, Wildlife Resources does not have policies and procedures in place over the completion of drawdowns as required by 2 CFR § 200.302, which requires a recipient to have written procedures to implement the requirements of 2 CFR § 200.305 regarding federal drawdowns. Wildlife Resources did not record program income revenue of approximately $2.3 million in the correct fiscal year for the Fish and Wildlife Cluster. Wildlife Resources recorded the program income received in fiscal year 2025 in a suspense account and did not distribute the income to the proper revenue account until fiscal year 2026. CAPP Manual Topic 20205 requires recording of all state receipts in the Commonwealth’s accounting and financial reporting system in a timely manner within three business days of the deposit. Additionally, the Department of Accounts (Accounts) Fiscal Year-End Closing Procedures require agencies to certify that they properly distributed balances to the correct accounts before final close of Commonwealth’s accounting and financial reporting system. By not properly recording program income, Wildlife Resources may misrepresent financial information to the federal government and report information that does not agree with its accounting records. Wildlife Resources reported federal expenses on its Schedule of Expenditures of Federal Awards (SEFA), a schedule that details Wildlife Resources’ federal expenses for fiscal year 2025, that did not agree to its underlying accounting records. Wildlife Resources reported federal expenses in the SEFA that it recorded as state funds in the Commonwealth’s accounting and financial reporting system due to considering journal entries that they did not record in the system until the next fiscal year. Due to these issues and preparation of the SEFA by a member of management on long-term leave who was not available during the audit, Wildlife Resources could not support amounts totaling over $660,000 in its SEFA. Additionally, Wildlife Resources does not have documented procedures outlining its process for preparing the SEFA in accordance with 2 CFR § 200.510(b), which states that 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. Accounts’ Office of the Comptroller’s Directive No. 1-25 (Comptroller’s Directive) also provides specific directions for compiling the SEFA and supporting schedules to support its preparation of the Commonwealth’s SEFA and related disclosures. Furthermore, the Comptroller’s Directive states that an agency must ensure that it has internal controls in place to avoid material misstatements and/or misclassifications in the attachments and other financial information submitted to Accounts for inclusion in the Commonwealth’s Single Audit. By not implementing adequate internal controls over financial reporting, Wildlife Resources cannot provide reasonable assurance that the financial information it submits to Accounts for inclusion in the Commonwealth’s Single Audit is free of material misstatements. Because of the scope of the matters and errors noted above, we consider this finding to be a material weakness in internal control. Wildlife Resources should improve its financial management of federal funds and documentation of internal controls to ensure compliance with state and federal requirements. The need for strong internal controls is especially important given that Wildlife Resources is exploring additional federal funding opportunities. Wildlife Resources should work with Accounts to develop and implement a federal grants management process that complies with the CAPP Manual. Wildlife Resources should improve its process and controls related to federal fund drawdowns to ensure timely reimbursement of expenses within federal limitations. Further, Wildlife Resources should also improve its controls and procedures related to journal entry processing to ensure it retains adequate support for all entries and enters the entries timely. Additionally, Wildlife Resources should perform a thorough review of its SEFA before submitting it to Accounts and retain supporting documentation to support the SEFA. Finally, Wildlife Resources should develop policies and procedures over all federal grants processes including all compliance requirements. These improvements combined are necessary to ensure accurate accounting and financial reporting in accordance with the CAPP Manual, the Code of Federal Regulations, the Comptroller’s Directives, and applicable accounting standards. Views of Responsible Officials: The views of responsible officials are included in the report related to their organization, which can be found at www.apa.virginia.gov and, in summary, do not express disagreement with the finding.
Finding 2025-003: Preparation of the Schedule of Expenditures of Federal Awards Material weakness/other matter noncompliance Federal Agency: U.S. Department of Homeland Security Program Name: Transit Security Grant Programs ALN Number: 97.075 Award Number: 97.075 Award Year: 2025 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 (SEFA) 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 SEFA for the year ended June 30, 2025, included $2,385,715 in expenditures that were incurred in the year ended June 30, 2024, overstating the total expenditures reported for the federal awards for ALN 97.075 Rail and Transit Security Grant Program. Cause: The existing internal control procedures for processing funding source reclassifications are not structured to fully support the SEFA reporting cutoff deadline. While a process is in place, it does not fully incorporate all necessary stakeholders early enough in the cycle to ensure timely communication, coordinated review, and approval of reclassifications leading to expenditures being included in the incorrect reporting cycle Effect: Not in compliance with the Uniform Guidance (2 CFR 200.510b). There could be impacts on future funding. Questioned costs: None. Context: As a result of the inclusion of fiscal year ended 2024 expenditures, total federal awards for ALN 97.075, Rail and Transit Security Grant Program, were overstated by $2,385,715. Repeat Finding: Yes. This repeat finding designation results from the identification of the $2,385,715 timing difference, which affected SEFA reporting for both fiscal year 2024 and fiscal year 2025. Findings for both fiscal years were evaluated and communicated to management in 2026. Recommendation: We recommend that the Authority review the schedule of expenditures of federal awards prior to issuance. Views of responsible officials and planned corrective actions: Management agrees with the finding and acknowledges that internal control procedures should be strengthened to ensure adherence to the SEFA reporting cutoff deadline. To address this issue, the Authority will implement a verification checklist as required supporting documentation for all funding source reclassification journal entries, ensuring that all relevant departments have reviewed and approved the entries prior to being posted. The Authority will also establish a cutoff date for Program Offices to submit current-year reclassification requests, allowing adequate time for eligibility review and fiscal year-end reporting. In addition, Accounting Policies and Procedures Manual will be updated to include guidelines limiting reclassifications of expenditures incurred in prior fiscal years. The Authority will communicate policy updates incorporate these changes to ensure consistent application across departments.
Assistance Listing, Federal Agency, and Program Name - ALN 14.218, Department of Housing and Urban Development, Community Development Block Grants and ALN 21.027, Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - B24MC260070 2025 and CW 5912A 2026 2021 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR Section 200.510(b), cities and other non federal entities must create a Schedule of Expenditures of Federal Awards (SEFA) if they expend more than $1 million in federal awards during their fiscal year. Condition - The City did not accurately prepare a SEFA that included all federal expenditures in fiscal year 2025, which resulted in a increase of approximately $7.6 million. Questioned Costs - N/A If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The City did not accurately prepare a SEFA based on the activity for the year ended June 30, 2025. Cause and Effect - Improper recognition of federal awards which includes the grant agreement periods and the amount of expenditures originally provided created issues with the amounts reported to the auditors and led to the correction of the SEFA by an amount of $7.6 million from the amounts that were originally provided. Recommendation - The City should assign an individual to prepare the SEFA, along with another individual to approve it to ensure that it is properly recorded. Views of Responsible Officials and Planned Corrective Actions - The City will ensure that all future expenditures of federal awards are included on the SEFA by assigned staff to prepare and review the SEFA and track the amounts throughout the year.
Program: Various, including 21.027 – COVID-19 Coronavirus State and Local Fiscal Recovery Funds; 10.555 – National School Lunch Program – Reporting Grant Number & Year: Various, including SLFRP1965, March 3, 2021, through December 31, 2024; 253NE308N1099, FFY 2025 Federal Grantor Agency: Various, including U.S. Department of the Treasury and U.S. Department of Agriculture Criteria: A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures of Federal Awards (SEFA) is presented properly. 2 CFR § 200.510(b) (January 1, 2024, and January 1, 2025) states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements that includes the total Federal awards expended, the total Federal awards expended for each individual Federal program, and the total amount provided to subrecipients from each Federal program. Neb. Rev. Stat. § 81-1111(1) (Reissue 2024) states, in part, the following: Subject to the supervision of the Director of Administrative Services, the Accounting Administrator shall have the authority to prescribe the system of accounts and accounting to be maintained by the state and its departments and agencies, develop necessary accounting policies and procedures, coordinate and approve all proposed financial systems, and manage all accounting matters of the state’s central system. EnterpriseOne is the official accounting system of the State. Condition: Several programs did not have expenditures or the amount provided to subrecipients reported accurately on the SEFA. We notified the Department of Administrative Services (Administrative Services) of the errors, and the SEFA was subsequently adjusted. A similar finding has been noted for several years. Repeat Finding: 2024-030 Questioned Costs: None Statistical Sample: No Context: Administrative Services is responsible for managing the accounting matters of the State and certifies the data collection form for the Statewide Single Audit. Administrative Services compiles the SEFA from information provided by the individual agencies and submits it to the auditor. During our review, we noted 12 programs for various State agencies needed correction. This included overreporting AL 21.027 by $4,254,865 and underreporting AL 10.555 by $4,757,669. Additionally, a program was originally included on the SEFA for over $16 million that was initially selected as a major program; however, it was determined subsequently that the program should not have been reported on the SEFA. The total expenditures and amounts provided to subrecipients, as both originally reported and per the final SEFA, were as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: Administrative Services did not have adequate procedures to ensure the accuracy of amounts not pulled directly from the accounting system. Administrative Services established a specific account code for aid to subrecipients, but not all agencies utilized this account code. Effect: Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or programs not audited that should be. Recommendation: We recommend Administrative Services improve procedures to ensure the SEFA is complete and accurate. Management Response: We will continue agency training, review of chart of accounts setup, review of object account usage, and working with State employees to help ensure the SEFA is accurate and complete.
Finding 2025-003: Schedule of Expenditures of Federal Awards (Significant Deficiency) Information on the Federal Program: 93.243 - U.S. Department of Health and Human Services. See Finding 2025-002. Finding 2024-003 is a significant deficiency in internal control over compliance in addition to noncompliance related to the Reporting compliance area. There were no questioned costs related to the preparation of the SEFA. This is a repeat finding.Finding 2025-002: Schedule of Expenditures of Federal Awards (Significant Deficiency) Criteria or Specific Requirement: Management is responsible for the complete and fair presentation of the financial statements, including any supplementary information that is presented in relation to the financial statements, such as the Schedule of Expenditures of Federal Awards (SEFA). Also, in accordance with 2 CFR Section 200.510 (b)(2), the Council is required to include all direct and pass-through Federal awards expended during the fiscal year in the SEFA. Condition: During the audit, it was noted that pass-through awards from American Academy of Addiction Psychiatry totaling $240,938 for the year ended June 30, 2025, had not been included on the SEFA. In addition, certain adjustments were made to the initial SEFA that was provided. As a result, management provided a revised SEFA after audit testing had begun. Cause: Since this is a repeat finding, the omission of the pass-through awards appears to be an oversight due to the transition in the finance team. However, the adjustments made to the SEFA are related to Finding 2025-001. Effect or Potential Effect: The SEFA was missing Federal expenditures of $240,938 at the start of the audit. The expenditures in the SEFA were adjusted due to the issues with account reconciliations per Finding 2025-001. When the SEFA is not accurately prepared, it could have an effect on the auditor's determination of major programs and on the auditor's sample selections.Recommendation: We recommend that the Council enhance its procedures related to the preparation of the SEFA to ensure all required amounts are included. Repeat Finding: This is a repeat finding.
Material Weakness in Internal Control Over Compliance Information on the Federal Program: Assistance Listing Number 14.157 – Section 202 Supportive Housing for the Elderly, U.S. Department of Housing and Urban Development Criteria: The regulations in 2 CFR 200.510 requires the auditee to prepare a schedule of expenditures of Federal awards which includes the Federal awards expended for each individual Federal program and in total. Condition: For the year June 30, 2025, the unadjusted schedule of expenditures of Federal awards did not report the correct Federal awards expended for this Federal program. Cause: Management does not have internal control over preparation of the schedule of expenditures of Federal awards or reconciliation of the reported expenditures to source documentation. Effect or Potential Effect: Material misstatements of the schedule of expenditures of Federal awards could be undetected and determination of major program(s) could be based on inaccurate information. Questioned Costs: None Context: This finding relates to the schedule of expenditures of federal awards. It is a repeat finding, #2024-002 from the June 30, 2024 audit, which was not corrected by management. Recommendation: We recommend that management develop and implement internal controls over the preparation of the schedule of expenditures of Federal awards. At a minimum, they should require identification of Federal award source documentation and documentation of how the expenditure amount reported for each was calculated. Views of Responsible Official: The new policy was discussed during the fiscal year for identifying federal awards. The written memo detailing the new policy was updated on September 30, 2025. This is the policy in place to be followed when preparing the schedule of expenditures of federal awards.
Finding 2025-002: Significant Deficiency – Internal Control Over Federal Award Reporting (ESSER III) Type of Finding: Internal Control Federal Program: Education Stabilization Fund - ARP-ESSER ALN: 84.425U Federal Award Year: 2021 Federal Agency: Department of Education Pass-thru entity: PA Department of education Pass-thru nos: 223-21-0422 Questioned Costs: None Repeat Finding: No Type of Compliance Requirement: Reporting Criteria: 2 CFR 200.510(b) requires the Schedule of Expenditures of Federal Awards (SEFA) to fairly present total federal expenditures for each federal program in the period in which they are incurred. Condition: During testing of ESSER III, we noted that the District had unspent funds remaining after reconciling the grant expenditures to the Final Expenditure Report (FER). Upon further review of the FER and discussions with District staff, we determined that expenditures related to the Federal Set-Aside awards had been mistakenly included in the FER for ESSER III, despite the use of separate source codes for each. The District believed the Set-Aside funds were part of the ESSER III award, and therefore included the Set-Aside expenditures when preparing the FER for ESSER III. Because the District’s reports for ESSER III were including the Set-Aside expenditures, the District believe ESSER III had been fully expended when, in fact, allowable ESSER III expenditures remained unreported. During the current fiscal year, the District subsequently identified certain allowable ESSER III expenditures incurred during the 2023-24 fiscal year that were coded to non-federal sources and reclassified them as ESSER III expenditures for that year. These expenditures were not identified as ESSER III expenditures in the prior fiscal year and were not included in the SEFA until they were identified during the current fiscal year. As a result, the SEFA for the year ended June 30, 2024 understated ESSER III expenditures. Cause: The District misunderstood the structure of the ESSER III and Federal Set-Aside awards and believed that the Set-Aside funds were part of the ESSER III allocation. As a result of the misunderstanding, the District included the expenditures for the Set-Asides with the ESSER III expenditures when submitting the FER for ESSER III. Effect: Federal expenditures for ESSER III were understated on the District’s SEFA for the year ended June 30, 2024. A correction was made in the current fiscal year to properly report the expenditures in the period in which they were incurred. Context: The expenditures identified were allowable costs that were incurred during fiscal year 2023-24. The issue did not involve unallowable costs, eligibility violations, or misuse of federal funds. Rather, the finding resulted from misunderstanding the structure of ESSER III and the Federal Set-Aside awards, which led to miscoding and reporting errors. Once identified, the District worked with the auditors to correct the error and properly report the expenditures. Recommendation: We recommend the District provide additional training to staff responsible for federal grant accounting to ensure a clear understanding of grant award structures to facilitate proper grant tracking and reporting. View of Responsible Officials: The District agrees with the finding and the recommendation and will take steps to ensure the staff responsible are properly trained and educated on each grant received by the District.
Research and Development Cluster—Reporting in the Schedule of Expenditures of Federal Awards Background: The Department of Administration (DOA) State Controller’s Office (SCO) is responsible for coordinating with other state agencies to prepare the State of Wisconsin Schedule of Expenditures of Federal Awards (SEFA). The SEFA, which is required to be published in the State of Wisconsin single audit report, is a listing of all federal programs administered by an entity. The SEFA includes the total expenditures for the reporting period and identifies any amounts provided to subrecipients for each federal program. Each state agency prepares a SEFA for the federal programs it administers. For federal programs administered by UW System Administration and UW institutions, UW System Administration staff work with UW institution staff to compile the UW System SEFA. The UW System SEFA is provided to DOA, which compiles the agency-level SEFAs into the statewide SEFA. During our FY 2023-24 single audit (report 25-04), we found that UW System Administration did not have formal written procedures to accurately compile federal expenditures for submission to DOA. We recommended that UW System Administration develop written procedures to improve its SEFA reporting and accurately identify grant expenditures for reporting for the Research and Development Cluster, and provide training to UW institutions on the documented procedures (Finding 2024 712). Criteria: Under 2 CFR s. 200.510 (b), the State is required to prepare a SEFA for the period covered by the State’s financial statements, and the SEFA must include the total federal awards expended and include the total amount provided to subrecipients from each federal program. In addition, for federal awards received as a subrecipient, the name of the pass-through entity is required to be identified in the SEFA. Condition: In our review of the FY 2024 25 SEFA prepared by UW System Administration, we continued to identify multiple errors in the presentation of Research and Development Cluster expenditures. We found UW System Administration incorrectly included a total of $24.4 million in expenditures for 26 other grant programs as part of the Research and Development Cluster in the FY 2024 25 SEFA. For example, $1.2 million in funding provided by the Department of Health Services under the Epidemiology and Laboratory Capacity for Infectious Diseases grant program was reported incorrectly by UW System Administration as part of the Research and Development Cluster. We also identified a similar error in SEFA reporting for this same program in FY 2023-24. In addition, UW System Administration did not meet timelines established by SCO to provide a draft of the UW System SEFA. Context: UW System Administration reported $1.9 billion in federal financial assistance in FY 2024-25. We reviewed the UW System SEFA to assess the reported expenditures. We inquired of UW System Administration regarding its procedures for preparation of the SEFA, and we contacted UW institutions, as needed, to understand the recording of federal grant expenditures. Questioned Costs: None. Effect: UW System Administration is not assured that its SEFA reporting accurately reflects its expenditure of federal assistance. Errors such as those we identified are noncompliant with federal requirements. Cause: UW System Administration is responsible for the SEFA compilation, and it relies on some manual processes. Because UW institutions were permitted to record federal grants in multiple ways within UW System’s accounting system during FY 2024 25, UW System Administration was unable to perform queries of UW System’s accounting system to compile federal expenditure information in sufficient detail without obtaining assistance from UW institutions. The manual processes used introduced the potential for errors, inaccurate reporting, and required additional time to compile the SEFA information. UW System Administration did not develop formal written procedures for compiling the SEFA during FY 2024 25. UW System Administration’s procedures for preparing the SEFA were insufficient to detect and correct potential SEFA errors that related to grant funds passed through to UW institutions from state agencies, which resulted in UW System Administration incorrectly reporting certain expenditures in the Research and Development Cluster instead of reporting them correctly with the grant programs to which they were related. Although UW institutions classified activities under an agreement with other state agencies as research related in its accounting system, neither UW System Administration nor UW institutions adequately researched whether the federal grant program identified in the agreements with other state agencies should be reported in the SEFA as a grant program other than a Research and Development Cluster program. In February 2026, UW System Administration provided the written procedures it prepared after it compiled the SEFA for FY 2024-25. These procedures identify the division of responsibilities between UW System Administration and UW institutions and the need to assess whether certain research activities should be reported as other federal programs in the SEFA. However, it will be important for UW System Administration to provide training to UW institutions to ensure SEFA reporting requirements are understood and UW institutions can accurately differentiate federal expenditures between the Research and Development Cluster programs and other federal grant programs in a timely manner. In July 2025, UW System implemented a new accounting system that UW System Administration will use to compile the FY 2025-26 UW System SEFA. UW System Administration should ensure that grant activity is recorded in sufficient detail to accurately identify Research and Development Cluster expenditures and classify federal expenditures related to agreements with other state agencies for FY 2025-26. Finally, UW System Administration should ensure that its SEFA compilation process can be completed in a timely manner to meet SCO submission deadlines. Recommendation: We recommend the University of Wisconsin (UW) System Administration: -provide training to UW institutions on its new procedures and on its data requirements for preparing the Schedule of Expenditures of Federal Awards (SEFA) to ensure that UW institutions accurately record, identify, and classify Research and Development Cluster expenditures within the new accounting system; -implement procedures to review whether federal expenditures related to agreements with other state agencies that specify the relevant assistance listing number are properly classified in the SEFA; and -revise and document its procedures by June 30, 2026, to specify how federal grants activities will be compiled accurately and in a timely manner for the FY 2025 26 SEFA using the new accounting system. Finding 2025-702: Research and Development Cluster—Reporting in the Schedule of Expenditures of Federal Awards Research and Development Cluster (various Assistance Listing numbers) Award Numbers Award Years Various Various Questioned Costs: None Dairy Business Innovation Initiatives (Assistance Listing number 10.176) Award Numbers Award Years 21DBIWI1006 2021 AM21DBIWI1010 2022 AM22DBIWI1014 2022 23DBIWI1019 2023 Questioned Costs: None Disability Innovation Fund (Assistance Listing number 84.421) Award Numbers Award Years H421C210018 2021 H421F240107 2024 H421F240111 2024 H421F240139 2024 H421F240143 2024 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the University of Wisconsin System Administration: UW System Administration agrees with the audit finding and recommendations.
(2025-030) Title: Internal control over Health Disparities program SEFA reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number and include the total amount provided to subrecipients from each Federal program. Condition: The Department of Health and Human Services’ Service Center must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State’s SEFA. OSC is responsible for compiling this information on behalf of the State. The Office of the State Auditor reviewed amounts reported on the SEFA for the Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises (Health Disparities) program and identified a $1.2 million revenue transfer incorrectly reported as a reduction to expenditures. As a result, the initial amount reported on the SEFA was understated by $1.2 million. Context: In fiscal year 2025, Health Disparities program expenditures totaled $6.7 million. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in inaccurate information used for programmatic, policy, or statistical purposes. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement policies and procedures to ensure expenditures are appropriately reported on the SEFA. Corrective Action Plan: See F-19 Management’s Response: The DHHS and the DHHS Financial Service Center agree with this finding. The Service Center will update policies and procedures to ensure expenditures are appropriately reported on the SEFA by August 2026. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 25-1123-01)
(2025-037) Title: Internal control over PDG SEFA reporting needs improvement Prior Year Findings: None State Department: Health and Human Services Education Administrative and Financial Services State Bureau: Office of Child and Family Services Office of Teaching and Learning Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Every Student Succeeds Act/Preschool Development Grants Assistance Listing Number: 93.434 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Reporting Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR.303; 2 CFR 200.510 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program and the Assistance Listing Number and include the total amount provided to subrecipients from each Federal program. Condition: The Every Student Succeeds Act/Preschool Development Grants (PDG) program assists states in helping low-income and disadvantaged children enter kindergarten prepared and ready to succeed in school, and helps improve the transitions from the early care and education setting to elementary school. PDG is administered by the Department of Health and Human Services’ (DHHS) Office of Child and Family Services. DHHS has a memorandum of understanding in place with the Department of Education (DOE) to assist in administering PDG. The DHHS Service Center (SC) and DOE must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State’s SEFA. OSC is responsible for compiling this information on behalf of the State. The Office of the State Auditor (OSA) reviewed amounts reported on the SEFA for PDG and identified both DHHS SC and DOE incorrectly reported direct expenditures and amounts provided to subrecipients. As a result, the initial amount reported on the SEFA was overstated by $2.6 million. In addition, OSA identified $436,074 incorrectly reported as amounts provided to subrecipients that should have been reported as direct expenditures for the program. OSC subsequently corrected the SEFA for all errors identified by OSA. Context: In fiscal year 2025, PDG expenditures totaled $11.5 million. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Inaccurate reporting of expenditure amounts on the SEFA, which are submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. • Noncompliance with Federal regulations Recommendation: We recommend that the Departments increase oversight and implement policies and procedures to ensure expenditures are appropriately classified and reported on the SEFA. Corrective Action Plan: See F-21 Management’s Response: The DHHS, the DOE and the DHHS Financial Service Center agree with this finding. The Departments will update policies and procedures to ensure expenditures are appropriately reported on the SEFA. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 25-1122-01)
(2025-063) Title: Internal control over Medicaid SEFA reporting needs improvement Prior Year Findings: None State Department: Administrative and Financial Services State Bureau: Health and Human Services Service Center Federal Agency: U.S. Department of Health and Human Services Assistance Listing Title: Medicaid Cluster Assistance Listing Number: 93.775, 93.777, 93.778 Federal Award Identification Number: See E-65 to E-66 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510 The Department must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must include the total amount provided to subrecipients from each Federal program. Condition: The Department of Health and Human Services’ Service Center must complete and submit exhibits and related schedules to the Office of the State Controller (OSC) at the close of each fiscal year to report Federal award information for inclusion on the State’s SEFA. OSC is responsible for compiling this information on behalf of the State. The Office of the State Auditor reviewed amounts reported on the SEFA and identified $11.8 million of Federal expenditures incorrectly reported as amounts provided to subrecipients that should have been reported as direct expenditures. OSC subsequently corrected the SEFA. Context: In fiscal year 2025, Federal Medicaid expenditures totaled $3.4 billion. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: Inaccurate reporting of expenditure amounts on the SEFA, which is submitted to the Federal government, may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that the Department implement policies and procedures to ensure expenditures are appropriately classified and reported on the SEFA. Corrective Action Plan: See F-31 Management’s Response: The DHHS and the DHHS Financial Service Center agree with this finding. The DHHS Financial Service Center will update policies and procedures to ensure expenditures are appropriately classified and reported on the SEFA by February 2026. Contact: Sarah Gove, Director, DHHS Service Center, DAFS, 207-458-6626 (State Number: 25-1106-03)
Finding 2025-006 – Internal Control Deficiency in Financial Reporting – Untimely Recording of Grant Program Expenditures Cluster: Not applicable Sponsoring Agency: United States Agency for International Development (USAID) Award Name: USAID Foreign Assistance for Programs Overseas Award Number: 7200AA19CA00018, 7200AA21LE00003 Assistance Listing Title: USAID Foreign Assistance for Programs Overseas Assistance Listing Number: ALN 98.001 Award Year: 2024-2025 Pass-through entity: Not applicable Compliance Requirement: Schedule of Expenditure of Federal Awards Reporting and Period of Performance Criteria or Specific Requirement Under 2 CFR 200.510(b), the auditee must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the same reporting period as its audited financial statements. The SEFA must present the total federal awards expended during that period, as defined in 2 CFR 200.502. The auditee is responsible for ensuring that the SEFA is accurate, complete, and prepared in accordance with all applicable Uniform Guidance requirements. Identified Condition Across three campuses, we noted that one (1) campus converted to a new financial system effective January 1, 2024. As a result of the conversion, subaward advance balances were migrated into new system project codes using expenditure type 140200 – Subaward Advances, and recording the related advance liquidations (i.e., payment for certain expenditure invoices) were delayed. We noted delays in recording ranging from 4 to 12 months. As a result, certain fiscal year (FY) 2024 expenditures were not properly recorded in the FY 2024 SEFA, but instead recorded and reported in the FY 2025 SEFA as follows: Award Numbers: 7200AA19CA00018; 7200AA21LE00003 | Campus-FY2024 Expenditures: $3,498,905 | Campus-Portion Related to Subawardees: $3,477,528 | Campus-% of Total Program FY2025 Expenditures: 41% | % of Total Program FY2025 Expenditures: 32% Cause This condition resulted from delays in processing liquidations of migrated subaward advance balances in the new system until reconciliation of the individual projects set-up for each sub awardee was completed. As a result, there was a significant backlog in processing. Effect The delay in recording the expenditures and liquidating the advances resulted in FY2024 expenditures being incorrectly recorded in fiscal year 2025 for SEFA reporting purposes. Lack of timely recording increases the risk that that expenditures are charged beyond the awards’ authorized periods of performance. Questioned Costs None. Recommendation We recommend that the campus strengthen internal controls over financial reporting to ensure timely reconciliations of subaward account balances and recording such that amounts are allocated, liquidated, and reported in the proper period. This will help ensure timely and accurate financial reporting. Management’s Views and Corrective Action Plan Management’s response is included in “Management’s Views and Corrective Action Plan” included at the end of this report after the summary schedule of status of prior audit findings.
Finding Reference 2025-02 Assistance Listing Number 21.027 Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency Department of Treasury Type of Finding Material Weakness on Internal Control and Noncompliance Condition During the audit, management initially provided a Schedule of Expenditures of Federal Awards (SEFA) that required revision because the total federal expenditures reported for Program 21.027, Coronavirus State and Local Fiscal Recovery Funds, were incomplete. Specifically, expenditures totaling $1,084,942 that had already been reported to the pass-through entity were omitted from the SEFA, resulting in an understatement of total federal awards expended under the program. A similar condition was reported in the prior year’s single audit as finding No. 2024-05. Criteria In accordance with 2 CFR § 200.510(b) (Financial Statements and SEFA Requirements), the auditee must: 1. Prepare an accurate SEFA that includes the total federal awards expended for the period under audit. 2. Ensure the SEFA is complete, accurate, and properly classified by fiscal year. 3. Provide sufficient information to allow auditors to test compliance with federal requirements. Cause The errors in the preparation of the SEFA indicate deficiencies in internal controls over the financial reporting process related to federal awards. Specifically, management did not implement sufficient oversight and reconciliation procedures to ensure that all federal expenditures were accurately identified, classified, and reported within the appropriate fiscal year. In addition, the review process over the SEFA prior to submission to the auditors was not adequately designed or executed to detect and correct reporting omissions and misstatements. Effect As a result of the deficiencies in internal controls over SEFA preparation, the Schedule of Expenditures of Federal Awards was initially misstated and required revision to properly reflect total federal awards expended under Assistance Listing No. 21.027. The omission of expenditures increased the risk of material misstatement in the SEFA and could have resulted in an inaccurate representation of federal funding expended by the Authority. Additionally, the failure to initially prepare a complete and accurate SEFA resulted in noncompliance with 2 CFR § 200.510(b), which requires the auditee to provide a full and accurate accounting of federal expenditures for the period under audit. Questioned Costs No questioned costs were identified, as the issue relates to the misclassification and misstatement of expenditures, rather than the allowability of costs. Recommendation To ensure compliance with 2 CFR § 200.510(b) and improve internal controls over SEFA preparation, we recommend that the Authority: 1. Implement a formal review and reconciliation process to ensure federal expenditures are accurately reported in the correct fiscal year. 2. Enhance communication between finance and grant administration personnel to improve accuracy in expenditure classification. 3. Provide additional training to staff responsible for SEFA preparation on Uniform Guidance requirements for federal reporting. 4. Require a final, documented supervisory review of the SEFA before submission for audit to prevent reporting inaccuracies. Views of Responsible Officials Refer to Management’s unaudited corrective action plan.
Criteria or Specific Requirement: Entities receiving federal awards must identify in its accounts all federal awards expended and report those amounts on the Schedule of Expenditures of Federal Awards for the period the federal award was expensed. Specifically, in accordance with Uniform Administrative Requirements outlined in 2 CFR 200, the guidance states: • Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. • Per 2 CFR 200.303, entities must establish and maintain internal controls which provide reasonable assurance that federal award expenditures are in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. • In addition, per 2 CFR 200.510, the Schedule of Expenditures of Federal Awards (SEFA) must be prepared to reflect the awards for the period covered by the auditee’s financial statements. 2 CFR 200.510 also states that for costs to be allowable, they should be determined in accordance with generally accepted accounting principles (with exceptions provided in that part). Condition: The University’s year-end cutoff controls allowed for certain costs from Fiscal Year 2023 and Fiscal Year 2024 to be reported in the Fiscal Year 2025 SEFA. Context: During our testing of 40 payroll transactions, we found 1 instance of payroll related expenses that were incurred during Fiscal Year 2023 being charged to the federal program in Fiscal Year 2025 and 12 instances of payroll related expenses that were incurred during Fiscal Year 2024 being charged to the federal program in Fiscal Year 2025. Questioned Costs: Known amounts of Fiscal Year 2023 costs included in the Fiscal Year 2025 SEFA was $813 and known amounts of Fiscal Year 2024 costs included in the Fiscal Year 2025 SEFA was $23,838. Cause: Per the University, the cause for the 13 exceptions was due to the University improperly identifying the awards as State funded at inception. During Fiscal Year 2025, the University discovered that the award through the State of Oregon was Federally funded and re-indexed costs previously recorded on the State award indexes to Federal award indexes. During the re-indexing of these costs, the transaction dates of costs that were incurred during Fiscal Year 2023 and Fiscal Year 2024 were recorded with dates in Fiscal Year 2025 causing them to be included in the Fiscal Year 2025 SEFA. Effect: The University was out of compliance as it relates to identifying and reporting federal costs in the period incurred. Repeat Finding: No Recommendation: We recommend that the University evaluate its cutoff procedures to ensure that federal costs are identified and reported in the correct fiscal year. We also recommend that the University evaluate its internal controls to ensure that federal awards are properly identified as such at inception. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria: Management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles (GAAP), including the proper timing of revenue recognition for costreimbursement grants in accordance with Accounting Standards Codification (ASC) 958. In addition, 2 CFR 200.303 – Internal Controls requires nonfederal entities to establish and maintain effective internal control over financial reporting and compliance to provide reasonable assurance that transactions are recorded in the proper accounting period. Further, 2 CFR 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately reflects federal expenditures for the fiscal year. Condition: During the audit, it was identified that cash received from federal granting agencies under cost-reimbursement grants prior to year-end were appropriately recorded as refundable advances; however, reimbursable expenditures incurred prior to year-end were not fully recognized as contribution revenue and federal expenditures in the appropriate fiscal year. As a result, audit adjustments were required to recognize contribution revenue and federal expenditures related to costs incurred prior to year-end and to update the SEFA to reflect the corrected expenditures. The updated SEFA resulted in an additional federal program being identified as a major program subject to audit. Cause: Internal controls were not sufficiently designed to ensure that reimbursement requests submitted to federal granting agencies were evaluated and incorporated into the revenue recognition and SEFA preparation process. Specifically, while cash received in advance was properly recorded as refundable advances, management did not have a control in place to identify reimbursable expenditures incurred prior to year-end and convert refundable advances to contribution revenue and federal expenditures in the appropriate fiscal period. Effect: Failure to recognize reimbursable grant revenue and federal expenditures in the proper fiscal year resulted in the understatement of contribution revenue and federal expenditures, including amounts reported on the SEFA, prior to audit adjustments. This condition affected the determination of major programs and increased the risk that federal awards may not be accurately reported for audit purposes. Questioned Costs: None. Recommendation: We recommend that management strengthen internal controls over cost-reimbursement grant accounting by implementing procedures to ensure that reimbursable expenditures are identified, reviewed, and recorded in the appropriate fiscal year. This should include reconciliation of reimbursement requests, refundable advances, recorded revenue, and amounts reported on the SEFA, along with documented supervisory review of year-end cutoff procedures. Views of Responsible Officials: Management acknowledges the above finding and will continue to enhance its year-end grant review and reconciliation procedures. During the year ended June 30, 2025, management implemented enhanced grant accounting practices, including engaging an outsourced accounting firm. Management also clarified roles and responsibilities related to federal reporting requirements and implemented additional oversight and training. Management remains committed to the ongoing improvement of internal controls over federal grant reporting and compliance.
Program: Congressionally Recommended Awards / HOME Investment Partnerships Program / Homeland Security Grant Program / Epidemiology and Laboratory Capacity for Infectious Disease Federal Financial Assistance Listing Number: 16.753 / 14.239 / 97.067 / 93.323 Federal Grantor: U.S. Department of Justice / U.S. Department of Housing and Urban Development / U.S. Department of Homeland Security / U.S. Department of Health and Human Services Award No. and Year: Multiple Compliance Requirements: Other – Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the County) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended as determined in accordance with §200.502. §200.331 of the Uniform Guidance states the County is responsible for making case-by-case determinations to determine whether the entity receiving the Federal funds is a subrecipient. In addition, §200.303 of the Uniform Guidance states that the County must establish and maintain effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA we noted the following: • The Sheriff-Coroner Department did not properly identify the amount expended for the Congressionally Recommended Awards, AL No. 16.753. The expenditures reported by the Department were overstated by $2,638,516. • The Orange County Community Resources Department did not properly identify the amount of Federal funding passed through to subrecipients for the HOME Investment Partnerships Program, AL No. 14.239. The amount passed through to subrecipients reported by the Department was overstated by $4,500,624. • The Sheriff-Coroner Department did not properly identify the amounts expended for the Homeland Security Grant Program, AL No. 97.067. The expenditures reported by the Department were overstated by $715,489. • The Orange County Health Care Agency (HCA) did not properly identify the amount expended for the Epidemiology and Laboratory Capacity for Infectious Disease program, AL No. 93.323. The expenditures reported by the Agency were overstated by $486,000. Cause: As a result, the County lacked adequate internal controls to ensure the SEFA is completely and accurately stated. Specifically, the County’s processes for recording and tracking expenditures of Federal awards are not designed so that expenditures are identified when incurred. In addition, the County’s processes for identifying and reporting subrecipients are not designed to ensure appropriate reporting on the SEFA. Effect: Adjustments to the SEFA were required. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used. Program expenditures and amounts passed through to subrecipients were reconciled to the supporting records. Repeat Finding from Prior Years: No. Recommendation: The County, including all its reporting departments, should follow existing policies, procedures and internal controls to ensure all expenditures and amounts passed through to subrecipients are accurately tracked and reported on the SEFA. Personnel knowledgeable of federal expenditures should review amounts coded to federal programs for completeness and accuracy. The SEFA should be prepared and reviewed in a timely manner and reconciled to underlying records as well as the basic financial statements. Views of Responsible Officials: See separately issued Corrective Action Plan.
25-03(Reference per Financial Statements)Material Audit Adjustments Affecting the SEFA U.S. Treasury Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listings #: 21.027 FAIN: SLFRP5410 Federal Award Date: March 3, 2021 Pass-Through Grant #: A-23-R013 Period of Performance: 4/24/2023 – 6/01/2026 Compliance Requirement: Reporting Questioned Costs: $0 Criteria: According to 2 CFR 200.510 of the Code of Federal Regulations, the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 where it states, “The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award 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 grants.” Condition: As mentioned in finding 25-01 above, several audit adjustments were proposed and posted to the Town’s trial balance to correct material misstatements. The material adjustments were related to required expenditure/expense accruals for construction projects and related grant revenues/receivables. This directly impacted the amounts reported in the SEFA for ALN 21.027. Effect of Condition: Without the proposed audit adjustments, the Town’s financial statements would have been materially misstated, including the SEFA. Cause: There was a failure to accrue, as accounts payable, several construction invoices at year-end which were federal grant expenses. Related grant revenues and receivables were also not recorded. Recommendation: Care should be taken at each year-end to ensure that all revenues and expenditures/expenses are reported in the proper period, including accrual of all earned revenues and incurred expenditures/expenses. The adjustments should either be made to the ledger or information related to the accruals should be provided to the auditor before audit procedures commence. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditor’s recommendations. The Town will review each revenue and expenditure/expense account at year-end and ensure that all accruals of earned revenues and incurred expenses are made and reported in the proper period or that information is provided to the auditor before audit procedures commence.
25-04(Reference per Financial Statements) Material Audit Adjustments Affecting the SEFA Environmental Protection Agency Program Name: Drinking Water State Revolving Fund Assistance Listings #: 66.468 Federal Award Date: March 13, 2024 Pass-Through Grant #: CF3-23-3210002-04 Period of Performance: 3/13/2024 – 6/01/2026 Compliance Requirement: Reporting Questioned Costs: $0 Criteria: According to 2 CFR 200.510 of the Code of Federal Regulations, the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. The schedule must include the total Federal awards expended as determined in accordance with 2 CFR 200.502 where it states, “The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award 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 grants.” Condition: As mentioned in finding 25-01 above, several audit adjustments were proposed and posted to the Town’s trial balance to correct material misstatements. The material adjustments were related to required expenditure/expense accruals for construction projects and related grant revenues/receivables. This directly impacted the amounts reported in the SEFA for ALN 66.468. Effect of Condition: Without the proposed audit adjustments, the Town’s financial statements would have been materially misstated, including the SEFA. Cause: There was a failure to accrue, as accounts payable, several construction invoices at year-end which were federal grant expenses. Related grant revenues and receivables were also not recorded. Recommendation: Care should be taken at each year-end to ensure that all revenues and expenditures/expenses are reported in the proper period, including accrual of all earned revenues and incurred expenditures/expenses. The adjustments should either be made to the ledger or information related to the accruals should be provided to the auditor before audit procedures commence. Views of Responsible Officials and Planned Corrective Action: Management agrees with the auditor’s recommendations. The Town will review each revenue and expenditure/expense account at year-end and ensure that all accruals of earned revenues and incurred expenses are made and reported in the proper period or that information is provided to the auditor before audit procedures commence.
2025-001 Internal Controls over Preparation of the Schedule of Expenditures of Federal Awards and Reporting for Maine DHHS 93.044, 93.045, 93.053 Aging Cluster and Maine DHHS 93.778 Medical Assistance Program (Significant Deficiency in Internal Controls over Compliance and Noncompliance) Criteria: 2 CFR 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards, £200.508(b) The auditee must prepare appropriate statements including an accurate Schedule of Expenditures of Federal Awards (SEFA) in accordance with £200.510, Financial Statements. Federal reporting standards require the timely and accurate filing of reports as required by pass-through grantor agreements. Condition and Context: Agreement Closeout Report filed for the Agreement ADS-24-3355B (Medical Assistance Program) for the component period ended 9/30/24 was filed late by 3 days. Federal expenditures were understated for Agreement ADS-24-3355B (93.791 Money Follows the Person Rebalancing Demonstration) by $59,405 due to errors in reconciling grant reports to the SEFA. For the Agreement ADS-24-3004C reporting for the component period ended 9/30/24 contained inaccuracies resulting from budgeted percentage of expenses reimbursable by state and federal agreement funds. Cause: There is a gap in training and understanding of the instructions for the Maine DHHS Agreement Closeout Report and Quarterly Financial Report. There are insufficient internal controls over the preparation, review, and documentation process for the SEFA and supporting documents. Effect: The Agreement Closeout Report was filed 3 days late. Agreement Cost Sharing percentages were incorrectly used on reporting forms. Key information was omitted which prevented the quarterly reports from calculating the amounts due to or from the Agency. Errors in reporting can lead to issues in reconciling and tracking of awards earned and recognized in the financial statements. They could also lead to findings and corrective action with funders. Recommendation: Management should review their processes and procedures over preparation and review of reporting, and for tracking of reporting deadlines. Both the preparer and reviewer should have a clear understanding of the required elements and instructions. As part of the review, required elements should be vouched to original source documents including copies of awards, grant reports, and the trial balance profit and loss reports. Any inconsistencies should be resolved before submission. Management should consider training for staff tasked with completing, reviewing, and filing these reports. Views of Responsible Officials and Planned Corrective Actions: Management will review and update processes and procedures over reporting and additional training will be provided as needed to ensure accurate grant reporting and compliance.
Inadequate Internal Controls Over Compliance Related to Identification and Reporting of Assistance Listing Numbers (ALNs) in Schedule of Expenditures of Federal Awards Federal Program State Energy Program ALN 81.141 Energy Efficiency and Conservation Block Grant ALN 81.128 Name of Federal Agency U.S. Department of Energy Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency on internal controls over compliance and Other Matter. Criteria Title 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR §200.510(b) requires the Schedule of Expenditures of Federal Awards (SEFA) to include the correct Assistance Listing Number (ALN) for each Federal program. Proper identification of ALNs is essential, as different ALNs may be subject to different compliance requirements under the Uniform Guidance and program-specific terms and conditions. Condition During our review of the Schedule of Expenditures of Federal Awards (SEFA), we noted that Federal funds received under the U.S. Department of Energy were not consistently identified and documented under the correct Assistance Listing Numbers. Specifically, expenditures related to ALNs 81.141 and 81.128 were not clearly distinguished or were incorrectly classified. The entity did not have sufficient internal controls in place to ensure that Federal awards were properly identified by ALN at the time funds were received and subsequently recorded and reported on the SEFA. Cause The condition resulted from inadequate internal controls over compliance related to: •The identification of Federal awards upon receipt of funds; •The documentation and tracking of ALNs throughout the grant lifecycle; and •The preparation and review of the SEFA to ensure accurate classification by ALN. Management relied on informal processes and did not implement a formal review or reconciliation procedure to verify that Federal expenditures were recorded under the correct Assistance Listing Numbers. Effect Failure to correctly identify and document the applicable ALN may result in noncompliance with Federal requirements, as different ALNs can carry different compliance requirements, including but not limited to: •Allowable costs and activities. •Period of performance •Reporting requirements •Special tests and provisions; and •Subrecipient monitoring requirements. Misclassification of expenditures by ALN increases the risk that the entity may apply incorrect compliance requirements to a Federal award, potentially leading to unrecognized instances of noncompliance and inaccurate reporting on the SEFA. Additionally, incorrect ALN reporting may affect the determination of major programs and the scope of Single Audit testing. Context Two (2) out of a total of fifteen (15) Federal programs were not consistently identified and documented under the correct Assistance Listing Numbers. Questioned Costs None. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend that management strengthen internal controls over compliance by: 1. Implementing formal procedures to identify and document the correct ALN at the time Federal funds are received. 2. Maintaining detailed grant tracking records that clearly link expenditures to the appropriate ALN. 3. Establishing a supervisory review process over the preparation of the SEFA to verify the accuracy and completeness of ALN classifications prior to submission. Views of responsible officials and planned corrective actions Management of the Department agrees with this finding. Refer to the corrective action plan on pages 114-119.
Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Disease (ELC) Assistance Listing No.: 93.323 Federal Grantor: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award No.: COVID-19ELC114 Award Year: 2021 Compliance Requirement: Other - Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the County) must 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 (including amounts provided to subrecipients) as determined in accordance with §200.502. In addition, section 200.303 of the Uniform Guidance states that recipients and subrecipients must establish effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA and expenditures reported for the ELC program, we noted the County initially reported expenditures totaling $408,471 that should have been reported on the FY 2024 SEFA, as the County incurred the expenditures prior to June 30, 2024. The June 30, 2025 SEFA was corrected for this reporting error. Cause: The County did not have adequate internal controls to ensure the Schedule was prepared completely and accurately. Effect: Prior to the correction, expenditures for the ELC program were overstated by $408,471. We noted the FY 2024 expenditures incorrectly reported on the FY 2025 SEFA did not have a direct and material effect on the FY 2024 SEFA. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used; all program expenditures on the SEFA were reconciled to supporting records. Repeat Finding from Prior Years: No. Recommendation: We the recommend the County enhance internal controls to ensure federal expenditures are reported accurately and completely on the SEFA in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Assistance Listing Number, Federal Agency, and Program Name 14.157 U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (Section 202) Capital Advance Federal Award Identification Number and Year N/A Pass through Entity N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria 2 CFR 200.508 states in part: "The auditee must:... (b) Prepare financial statements, including the schedule of expenditures of Federal awards in accordance with § 200.510." 2 CFR 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. The schedule must include the total Federal awards expended as determined in accordance with § 200.502. The schedule must... (5) For loan or loan guarantee programs described in § 200.502(b), identify in the notes to the schedule the balances outstanding at the end of the audit period. This requirement is in addition to including the total Federal awards expended for loan or loan guarantee programs in the schedule." Condition During the years ended June 30, 2023, 2024, and 2025, National Church Residences entered into capital advance grant agreements (Section 202) with HUD, which were directly funded to affiliates of National Church Residences, and, in turn, National Church Residences entered into notes receivable from the related parties in the same amount as the capital advance. The loan expenditures and outstanding loan balances related to the ALN 14.157 U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (Section 202) Capital Advance were not included on the SEFA for the years ended June 30, 2025, 2024, and 2023. Questioned Costs None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported N/A Identification of How Questioned Costs Were Computed N/A Context Federal expenditures related to ALN 14.157 U.S. Department of Housing and Urban Development Supportive Housing for the Elderly (Section 202) Capital Advance were not included on the SEFA prior to audit entries for the years ended June 30, 2025, 2024, and 2023. Cause and Effect Management had not established a system of internal control that would have ensured proper reporting of the SEFA. Without a proper system of internal control in place that operated effectively, material misstatements of the SEFA remained undetected. Prior to audit entries being made, the SEFA was understated by $9,411,680, $8,049,840, and $3,111,409 at June 30, 2025, 2024, and 2023, respectively. Recommendation National Church Residences accounting and development should consider all relative accounting guidance and agreements for related party transactions and grant/debt agreements (including capital advances) to ensure all federal expenditures are properly included on the SEFA. Views of Responsible Officials and Corrective Action Plan National Church Residences is in the process of establishing additional layers of internal controls to help ensure that all new agreements and any subsequent modifications are captured timely, completely, and accurately within the special purpose financial statements and SEFA.
Federal Assistance Listing Number: 20.205, 20.513 Federal Program Name: Highway Planning and Construction, Transit Services Programs Cluster Federal Agency: U.S. Department of Transportation Pass-through Agency: State of California Department of Transportation, Los Angeles County Metropolitan Transportation Authority (LACMTA) Federal Award Number: N/A for ALN 20.205, CA-2023-236-00 for ALN 20.513 Criteria: Per 2 CFR 200.510(b), Financial statements, the auditee is required to prepare a complete and accurate SEFA that reflects actual federal expenditures incurred during the reporting period. In addition, 2 CFR 200.303, Internal controls, requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal program information, including SEFA reporting, is accurate, reliable, and free from material misstatement. Condition: During our audit, we identified that the expenditures reported for the Highway Planning and Construction Program in the SEFA included $431,605 in state-funded expenditures that were incorrectly reported as federal expenditures. This resulted in a material overstatement of federal expenditures for the program. A correction was subsequently made to remove the state-funded portion, materially reducing the total federal expenditures reported on the SEFA. We also identified an error within the Transit Services Programs Cluster involving an incorrect federal award identification number. One program was initially reported under federal award number CA-2020-167, which did not correspond to the related federal grant. The correct federal award number is CA-2023-236-00. The City has since updated the SEFA to reflect the accurate award number. Cause: The overstatement and incorrect reporting occurred because internal controls over the SEFA preparation and review process did not provide adequate assurance that expenditures and award information were accurately classified and reported. Review procedures were not designed or executed at a level sufficient to detect that state-funded costs had been commingled with federally reimbursable expenditures prior to SEFA compilation. The controls also did not ensure that grant identification details were verified against current federal award agreements, which allowed one program to be reported with an incorrect federal award identification number. Effect: Because non-federal expenditures were included in the SEFA, the federal expenditures reported for the Highway Planning and Construction Program were materially overstated. The incorrect federal award identification number in the Transit Services Programs Cluster also reduced the accuracy and clarity of the SEFA and created a risk of misidentifying the applicable federal grant award, which could affect federal monitoring or audit oversight. Taken together, these issues increase the likelihood of inaccurate reporting to federal and pass-through agencies, may influence the determination of major programs, and could affect the City’s compliance with federal reporting requirements. Questioned Costs: None. Recommendation: The City should strengthen its internal review procedures for preparing the SEFA to ensure that only federally eligible expenditures are reported and that all program information aligns with current federal award documents. This should include a more detailed reconciliation of project expenditures and award data to their underlying funding sources before amounts are compiled, along with a documented supervisory review to confirm accuracy. Staff responsible for SEFA preparation should receive additional guidance on distinguishing federal from non-federal costs and on verifying federal award identification numbers. Implementing a standardized SEFA preparation checklist and requiring formal sign-off at key review stages would help ensure that errors are identified and corrected before the SEFA is finalized. Views of Responsible Officials and Planned Corrective Action: The City is taking corrective action in response to this finding by strengthening its grant management procedures. The Director of Community Development and Public Works is responsible for overseeing these improvements, which include enhancing coordination among the Public Works Analyst, Grants Coordinator, and the City's contracted engineering firm to clearly distinguish between federally and state-funded Highway Safety Improvement Program (HSIP) activities and ensure that program information aligns with current federal award documents. Key measures include requiring identification of funding sources in Staff Reports submitted to City Council prior to grant application submission, assigning unique project numbers and classifications within the City's financial system (Incode), implementing a reconciliation process to accurately align project expenditures with their funding sources before inclusion in the Schedule of Expenditures of Federal Awards (SEFA), and providing targeted staff training along with a standardized SEFA preparation checklist. All corrective actions are set for implementation effective March 18, 2026. Personnel responsible for implementation: Gerardo Marquez Position of personnel responsible: Director of Community Development and Public Works Expected date of implementation: March 18, 2026
Finding No: 2025-002– Failure to Prepare the Schedule of Expenditures of Federal Awards (SEFA) Federal Programs ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds - ARP Act ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency US Department of Treasury (Pass-through from the Puerto Rico Coronavirus Relief Fund Disbursement Oversight Committee) U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Reporting Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards that includes, at a minimum: • The total federal awards expended for each federal program and CFDA/Assistance Listing number; • The name of the federal agency and pass-through entity, if applicable; • The amount provided to subrecipients, if applicable. Condition The Administration did not prepare the Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2025. As a result, the SEFA was not available at the time of the audit and had to be prepared with the assistance of the auditors. Cause Management lacks adequate procedures over the identification, accumulation, and reporting of federal award expenditures necessary to prepare the SEFA. Effect The failure to prepare the SEFA increases the risk that federal expenditures may be incomplete or inaccurate, which could result in noncompliance with Uniform Guidance requirements and improper determination of major programs. Context The Schedule of Expenditures and Federal Awards was not available at the time of the audit and had to be prepared with the assistance of the auditors. Identification of repeat finding None. Questioned costs None. Recommendation We recommend that management establish and maintain effective internal controls and procedures to ensure the SEFA is prepared, reviewed, and completed in accordance with 2 CFR 200.510(b) on a timely basis. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan .
Failure to Identify Single Audit Requirement and Federal Awards (Significant Deficiency in Internal Control) Criteria: In accordance with 2 CFR §200.501, a non-federal entity that expends $750,000 or more in federal awards during the fiscal year is required to have a Single Audit conducted. Additionally, 2 CFR §200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately identifies all federal awards expended, including Assistance Listing (ALN) numbers and pass-through entity information.Condition: The auditee did not identify that it met the threshold requiring a Single Audit. In addition, the auditee did not have adequate processes in place to identify and track all federal funds received and expended during the fiscal year. As a result, the initial SEFA prepared by the auditee was incomplete and did not include all federal awards.Context: The deficiency affected the auditee’s process for identifying and reporting federal expenditures across all applicable programs during the fiscal year.Cause: The deficiency is due to a lack of internal controls over identifying federal funding sources and monitoring cumulative federal expenditures, as well as insufficient understanding of Uniform Guidance requirements related to Single Audits and SEFA reporting.Effect: Failure to identify all federal awards and the requirement for a Single Audit resulted in incomplete financial reporting and increases the risk that compliance requirements applicable to federal programs may not be identified or followed. This condition could result in noncompliance with federal regulations and inaccurate reporting of federal expenditures.Recommendation: We recommend that the auditee implement and document procedures to: • Identify all sources of federal funding, including reviewing grant and contract agreements for federal involvement • Track federal expenditures by program and funding source throughout the year • Perform a year-end assessment to determine whether the Single Audit threshold has been met • Ensure the SEFA is complete and accurate, including all required elements • Provide training to relevant personnel on Uniform Guidance and Single Audit requirements Views of Responsible Officials: Management agrees with the finding and has developed a corrective action plan to address the deficiencies noted. The plan includes implementing procedures to identify and track federal awards and ensure compliance with Single Audit requirements, and will be implemented during the next fiscal year. Auditor’s Conclusion: This deficiency represents a significant deficiency in internal control over financial reporting and internal control over compliance, as the controls over identifying, tracking, and reporting federal awards were not sufficient to ensure a complete and accurate SEFA or timely identification of the need for a Single Audit.
2025-003: Noncompliance related to SEFA, FAC Reports, and Single Audits for fiscal years ended June 30, 2022, 2023, and 2024 Federal Assistance Listing Number: 10.553, 10.555, 10.559, 84.041, 84.010A, 84.060, 84.358B, 84.365, 84.367, 84.323, 84.424A, 84.425D, 84.425U, 84.048, 94.243, and others potentially unknown in prior years. Federal Award Year(s): Multiple Program Title(s): Multiple Name of Federal Agency(ies): U.S. Department of Agriculture, U.S. Department of Education, and U.S. Department of Health and Human Services Name of Pass-Through Entity(ies): Various, including the Colorado Department of Education, Colorado Community Colleges System, and Colorado Department of Human Services COVID-19 Program(s): Yes Criteria: Section 200.510b of the Code of Federal Regulations Title 2, Subtitle A, Chapter II, Part 200, Subpart F (also known as 2CFR200) states that the auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements. The schedule must include the total Federal awards expended as determined in accordance with section 200.502. In addition, in accordance with Section 200.501(a) and (b) of the 2CFR200, a non-Federal entity that expended $750,000 or more in Federal awards during the non-Federal entity’s fiscal year (2022, 2023, and 2024) must have a Single Audit conducted on major Federal programs in accordance with 200.514. The FAC report is required to be submitted the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. Condition: The District has not prepared a schedule of expenditures of federal awards (SEFA), did not have an auditor conduct Single Audits on major Federal programs, and failed to submit the required report to the Federal Audit Clearinghouse (FAC.gov) for the fiscal years ended June 30, 2022, 2023, and 2024 (prior three fiscal years). The FAC report is required to be submitted the earlier of 30 calendar days after receipt of the auditor’s report, or nine months after the end of the audit period. Cause: The District lacked internal controls and awareness of the requirements noted above to prepare the SEFA, conduct an annual Single Audit, and submit an annual FAC.gov report in a timely manner. Effect: The District was noncompliant with multiple requirements of the 2CFR200 for fiscal years ended June 30, 2022, 2023, and 2024. This noncompliance impacts multiple federal grant programs and may impact future federal awards and require increased oversight, heightened risk classification, and/or special monitoring, if imposed by the grantor. The District had conversations with the Colorado Department of Education and obtain an understanding of the impacts of this noncompliance. Additional requirements may be imposed on the District by grantors as a result of this noncompliance and backlog of Single Audits on major Federal programs. Repeat Finding: No. Questioned Costs: Questioned costs are not known, because the Single Audits on major Federal programs for fiscal years ended June 30, 2022, 2023, and 2024, was not performed. However, there is likelihood and potential for questioned costs or fraud that has not been identified without the completion of the Single Audits on major Federal programs. Recommendation: The District must discuss with the grantors regarding this noncompliance and potential remedies, including the backlog of Single Audits on major Federal programs for fiscal years ended June 30, 2022, 2023, and 2024. In the future, we highly recommend that the District maintain proper internal controls and accurate grant records to prepare an accurate SEFA that will allow auditors to perform the Single Audits on major Federal programs, and submit the FAC report in a timely manner. We also recommend that the District evaluate the options to remedy the backlog of Single Audits and internally determine the best course of action for the District.
Federal Program Information: Student Financial Assistance Cluster (ALN: Various), Child and Adult Care Food Program (ALN: 10.558), and Substance Abuse and Mental Health Services Projects (ALN: 93.342) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): L. Reporting - Per Uniform Guidance, §200.510(b), the auditees receiving federal funding are required to prepare a schedule of expenditures of Federal awards (the “Schedule”) for the period covered by the auditee's financial statements. 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. At a minimum, the Schedule should list individual Federal programs by Federal agency and provide total Federal awards expended for each Federal program during the entity’s fiscal year. Condition: During our audit procedures, we noted that the College did not prepare the Schedule for the year ended May 31, 2025. Cause: Insufficient internal controls and administrative oversight with respect to the timely preparation and review of the Schedule. Effect or Potential Effect: Lack of appropriate and timely preparation and review of the Schedule by management increases the risk that the amounts, contract or grant names, ALN information, and classification of the awards are presented incorrectly and that federal awards are not managed in accordance with Uniform Guidance. Questioned Costs: None. Context: The College did not prepare a Schedule for the year ended May 31, 2025. Additionally, management was unaware of certain federal awards received during the year. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the College implement additional internal controls and enhance their current policies and procedures to effectively maintain a detailed Schedule that contains the correct amounts, contract or grants names, ALN information and classification of the awards, which can be more readily reconciled to the underlying general ledger detail prior to receipt by the auditors. We also recommend that frequent cross departmental communication is established to ensure that all federal expenditures incurred and federal awards received during the year are appropriately reflected within the Schedule as required. The implementation of these internal controls will ensure that the Schedule is accurate/complete and also ensure that federal awards are managed appropriately in accordance with Uniform Guidance. Views of Responsible Officials: Management acknowledges the deficiency in the preparation and oversight of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended May 31, 2025. To address this finding, the College will: • Implement a formal SEFA preparation policy aligned with 2 CFR §200.510(b) • Develop and maintain a centralized federal awards tracking log identifying: o Federal agency o Program name o Assistance Listing Number (ALN) o Award number o Pass-through entity (if applicable) o Expenditures by fiscal year • Establish quarterly reconciliations between the general ledger and the federal awards tracking log • Require structured cross-departmental communication between the Business Office, Financial Aid Office, Grants Administration, and program departments to ensure all federal awards received and expended are identified timely • Implement documented management review and approval of the SEFA prior to submission to auditors These corrective measures will strengthen internal controls over federal award tracking, improve the accuracy and completeness of the SEFA, and ensure compliance with Uniform Guidance requirements.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Finding 2025-001 Federal Award Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance - Reporting ALN and Name: 81.042 - Weatherization Assistance for Low Income Persons Federal Agency: Department of Energy (DOE), Passed through the Alaska Housing Finance Corporation Criteria Per 2 CFR 200.510(b) and Uniform Guidance, the auditee is required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate, and to provide information reconciling the SEFA to the financial statements and underlying accounting records. Auditors are required to obtain sufficient appropriate audit evidence regarding the completeness and accuracy of the SEFA and underlying population data. Condition During the audit, it was noted that the Organization did not perform reconciliation procedures between the population data used for federal program reporting of direct client expenditures and the financial accounting records. As a result, the audit team performed additional procedures to assess the completeness of the population and identified an unreconciled difference of $8,254 between the population and the trial balance. Cause The Organization did not have adequate procedures in place to ensure that the population data for federal program reporting was reconciled to the financial accounting records. Effect Due to the lack of reconciliation and the resulting unreconciled difference, the auditor was unable to obtain sufficient appropriate audit evidence regarding the completeness and accuracy of the population data for the federal program. This constitutes a scope limitation and may affect the auditor’s ability to express an unmodified opinion on compliance for the program. Questioned Costs $8,254. This amount represents the unreconciled difference between the population and the trial balance. Context The population data consisted of a listing of all clients (homes weatherized by the Organization, including readiness) with expenditures charged to the major program during the fiscal year being audited. The organization’s procedures did not include reconciling the population data used for federal program reporting to the financial accounting records. Such expenditures in the population data consisted of direct client costs which totaled $495,220 and reconciled direct expenditures reported on the Organization's trial balance totaled $503,474, resulting in an unreconciled difference of $8,254 between the population and the trial balance. This deficiency affects the reporting and internal control over compliance requirements for the program. The lack of reconciliation procedures increases the risk that errors or omissions in federal expenditures may not be detected or corrected in a timely manner, potentially impacting the completeness and accuracy of the SEFA. Recommendation We recommend that the Organization implement procedures to ensure that all population data used for federal program reporting is reconciled to the financial accounting records. This should include periodic reconciliations and documentation of any differences identified and resolved. Views of responsible officials and planned corrective actions Interior Weatherization, Inc. agrees with the finding and will implement monthly reconciliation procedures to ensure that direct client expenditures reconcile and adequately support the financial accounting records and reporting submitted to the grantor. See the corrective action plan.
Criteria: The District is required to have internal controls in place that enable it to prepare complete financial statements, including the schedule of expenditure of federal awards in accordance with generally accepted accounting standards and in accordance with the Uniform Guidance at 2 CFR 200.510(b). Condition: The District did not record federal grant income or expenses for the Water and Waste Disposal Systems for Rural Communities program. Cause: The District failed to have internal controls to properly record all federal grant activity and identify federal funds. Effect: The District did not record federal grant income or expenditures for the Water and Waste Disposal Systems for Rural Communities. The exclusion resulted in a material misstatement of contributed capital and construction in process. In addition, management engaged the auditor to prepare the schedule of expenditure of federal awards. Management reviewed, approved and accepted responsibility for the schedule of expenditure of federal awards prior to its issuance. Recommendation: We recommend that management review their procedures for identifying federal funds and review the costs and benefits involved to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards. Response: Management agrees with the finding and will review internal control procedures related to the recording of federal grant activity and cost to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards.
Criteria: The District is required to have internal controls in place that enable it to prepare complete financial statements, including the schedule of expenditure of federal awards in accordance with generally accepted accounting standards and in accordance with the Uniform Guidance at 2 CFR 200.510(b). Condition: The District did not record material federal grant income and expenses for the Coronavirus State and Local Fiscal Recovery Fund program in the correct period. Cause: The District failed to have internal controls to properly record all federal grant activity in the correct period and identify federal funds. Effect: The District did not record all federal grant income and expenses for the Coronavirus State and Local Fiscal Recovery Fund program in the correct period. The exclusion resulted in a material misstatement of contributed capital and construction in process. In addition, management engaged the auditor to prepare the schedule of expenditure of federal awards. Management reviewed, approved and accepted responsibility for the schedule of expenditure of federal awards prior to its issuance. Recommendation: We recommend that management review their procedures for identifying federal funds and recording federal funds in the proper period. In addition, we recommend that management review the costs and benefits involved to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards. Response: Management agrees with the finding and will review internal control procedures related to the recording of federal grant activity and cost to retain a consultant with the required expertise to prepare the schedule of expenditure of federal awards.
Preparation of and Internal Controls Over Monthly Invoicing and SEFA Preparation Significant deficiency Condition: As a result of our audit procedures and review of the SEFA, we proposed adjustments to the SEFA, which resulted in a material change in total expenditures of federal awards. Additionally, for two months, the Organization didn't update costs incurred to be billed to the federal government on their monthly invoicing. Criteria: 2 CFR Part 200 Cause: There was not an independent review of the SEFA by someone other than the preparer. Effect: Audit adjustments were required for the SEFA to be materially correct in accordance with 2 CFR Part 200.510(b). Recommendation: We recommend that prior to sending the SEFA to the auditors, management perform a detailed review of the SEFA, general ledger, and monthly invoicing spreadsheets for each federal program included on the SEFA, to ensure the reports are consistent and the SEFA is complete and accurate. If possible, this review should be completed by an individual who did not prepare the SEFA. View of Responsible Official and Planned Corrective Action: Management agrees with the finding. See corrective action plan.
Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.
Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.
Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.
Finding 2024-002 Schedule of Expenditures of Federal Awards (SEFA) Preparation (Significant Deficiency) Information on the Federal Programs: Research and Development Cluster. Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Per 2 CFR § 200.510(b), the auditee must prepare a SEFA for the period covered by the auditee’s financial statements. The SEFA must include total Federal awards expended, including Federal awards passed through from other entities, the name of the pass-through entity, and the identifying number assigned by the pass-through entity. Condition: During audit procedures, we identified a Federal pass-through award from under the Research and Development Cluster that was omitted from the preliminary SEFA. The expenditures associated with this award totaled approximately $72,000 for the fiscal year ended December 31, 2024. Cause: The omission resulted from inadequate internal controls over the collection and review of information used to prepare the SEFA. The client relied on a manual process to track Federal awards, and the pass-through award was not included in the final SEFA due to oversight. Effect or Potential Effect: The SEFA provided to auditors was incomplete and did not accurately represent the total Federal expenditures. This could lead to an understatement of total Federal expenditures and result in noncompliance with Uniform Guidance reporting requirements. Questioned Costs: N/A. Context: The SEFA initially provided by FASEB included 45 Federal awards with total expenditures of $1,248,060. The omitted pass-through award represented expenditures of $72,333, or approximately 6% of total Federal expenditures for the year. The omission appears to be isolated to this particular award; however, it was not detected by FASEB’s existing SEFA preparation and review process. Identification as a Repeat Finding, if Applicable: N/A. Recommendation: We recommend FASEB enhance its internal control procedures over SEFA preparation to ensure all Federal awards, including those received through pass-through entities, are properly identified, tracked, and reported. This could include periodic reconciliations between the general ledger and award documentation and a formal review process prior to finalizing the SEFA.